Facebook Is Concerned About Snapchat’s Penetration: WPP

Facebook Is Concerned About Snapchat’s Penetration: WPP
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Facebook is undoubtedly getting huge competition from Snapchat when it comes to the advertising. According to Martin Sorrell, chief executive officer of WPP, his clients poured $1 billion more into Facebook advertising than they did into Snapchat this year. However, the CEO of the advertising public relations company did acknowledge that the social media giant has been trying to undermine Snapchat, according to Gizmodo.

Snapchat’s young user base a huge plus

Sorrell explained, “Clearly there is some concern [by Facebook] about the penetration Snapchat is getting.”

The WPP CEO disclosed that his clients have spent around $70 million on Snapchat advertising, and he expects them to invest $1.7 billion (far more in comparison to the $1 billion they spent last year) on the social networking site, and $5.5 billion in Google advertising this year. In late August, WPP said it is boosting spending on Google and Facebook, mostly because of an increase in spending on mobile search, notes the WSJ.

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On Tuesday at the UBS Media and Communications Conference, he said for Snapchat parent Snap Inc., ad revenue of $70 million is significant as it is preparing for its initial public offering.  WPP is one of the ad companies that is attracted to Snapchat‘s young user base, but Facebook should not feel threatened about that just yet.

WPP spends $2.2 billion with News Corp, which owns The Wall Street Journal, and $750 million to $1.75 billion with several individual traditional media companies. Sorrell said traditional media owners could put together an effective third force to counter the duopoly of Facebook and Google.

Facebook to be Number 2 next year

WPP also own GroupM, which is the largest network of ad buying agencies worldwide, notes The Wall Street Journal. Sorrell also said that Facebook may become its second biggest media supplier next year. WPP’s number one supplier is Google.

Currently, Facebook holds the third position, while the second place is held by Murdoch-controlled properties, including Twenty-First Century Fox and News Corp. Referring to Google, Sorrell said the power of search is “phenomenal.” The search giant, along with the social media giant, accounts for about 75% of digital spending.

The outlook for next year is similar to this year, with both advertising and GDP expected to grow in the “middling 3% plus” range, said the WPP CEO.

However, he added, “Everything is not wonderful,” meaning that marketers are still focused on costs due to low inflation, low GDP and little pricing power.

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