WPP’s Martin Sorrell Says Snapchat Could ‘Well Be’ a Third Digital Ad Competitor to Facebook and Google

His agency contributed $90 million to the app’s 2016 revenue

WPP chief Martin Sorrell talks about the rise of Snapchat and more.
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BARCELONA, SPAIN—As Snapchat gears up to go public tomorrow morning and start trading on the New York Stock Exchange, WPP chief Martin Sorrell sees the app as a legitimate competitor to Google and Facebook for its ad dollars.

During a keynote interview by CNBC’s Karen Tso at Mobile World Congress in Barcelona, the CEO covered a broad set of topics including how WPP slices up its media budgets across platforms, why he thinks Amazon is Google’s biggest competitor and what Trump’s “America First” vision means for business owners.

According to Sorrell, 40 percent—or roughly $8 billion—of WPP’s $20 billion 2016 revenue came from digital and the company handled $75 billion in media spend. (It should be noted that WPP plans to report new quarterly results on Friday.)

In terms of how digital spend breaks down per platform, WPP spent $90 million with Snapchat last year, $5 billion on Google ads and $1.7 billion with Facebook. The Murdoch family of businesses—including Fox and News Corp—got $2.5 billion from WPP and AOL, Yahoo and Microsoft collectively made up another $750 million. Back in September at the Dmexco conference, Sorrell expected Twitter to make up $350 million in spend for 2016.

WPP spent $90 million with Snapchat last year, $5 billion on Google ads and $1.7 billion with Facebook.

Snapchat is, “a good example of a company that got $400 million in revenue last year but limited profitability,” he said. Per Sorrell’s calculations, spend from WPP clients made up a little less than 25 percent of Snap’s 2016 revenue.

Snap’s revenues are far below either Facebook or Google—who control the majority of all digital ad spend. “In the interest of our clients, we want balance in the marketplace,” Sorrell said. “Snapchat [is] very important and I think it’s a defining moment in that it could well be the third force.”

At the same time, Sorrell doesn’t expect for ad spending to slow down for either Facebook or Google. For 2017, he expects for WPP’s investment in Google to top $6 billion, while Facebook could spike to $2.5 billion.

“The reason that Google has been so successful in my view is because the results are very clear,” Sorrell said. “Facebook it’s a little bit more holey—I’ve always referred to Facebook as a brand mechanism, as a way to build brands.”

In terms of competition, Sorrell sees Amazon as Google’s biggest threat because of the ecommerce site’s search functionality and that, “its tentacles are spreading rapidly into all areas.” For Facebook, he said Snap is the company’s biggest threat.

Sorrell also talked about measurement—which have recently been major issues for both Facebook and Google—as well as viewability, brand safety and fraud.

"Snapchat is a good example of a company that got $400 million in revenue last year but limited profitability."
-Martin Sorrell, founder and CEO of WPP

“There are a number of very basic issues that have surfaced since we last met here in Barcelona,” Sorrell said, referencing his Mobile World Congress keynote last year.

Specifically, he called out Nielsen’s measurement of TV ads in the U.S., saying that, “certainly the audiences are underestimated.” He added, “There is no doubt that screen viewing of all types is on the increase, not on the decrease.”

Sorrell ended the interview by talking about President Trump’s “For-America” vision.

“This administration is a dramatic difference to the previous administration—whereas the Obama administration was diffident or I would say almost dismissive of the business community, this is an administration that is clearly—from a U.S. perspective—pro-growth, pro-business and heavily engaged.”

“Whatever you think about the president’s agenda for the past four weeks, it has been peppered with engagement with different parts [from] the factory industry to the healthcare industry across the spectrum,” he added. “It is the biggest engine and if the biggest engine is growing faster that ultimately is certainly good for America but it’s not necessarily bad for the rest of the world.”

While Trump still needs to implement promises on tax, regulation and spending, “the atmosphere is remarkably different than what we’ve seen in the last eight years for good or bad.”