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Martin Sorrell

WPP CEO: Facebook trying to undermine Snapchat

Global ad giant WPP is spending about US$70 million with Snapchat on behalf of clients, said WPP’s CEO, Martin Sorrell. He also said that WPP will continue to up the ante on its ad spend with Facebook, which has been “trying to undermine Snapchat”, The Wall Street Journal reported.

The US$70 million represents a sizeable chunk of Snapchat’s total ad revenues: its parent company Snap Inc, which is currently preparing for an IPO, told investors that it expects to make US$250 million to US$350 million in advertising revenue this year.

Speaking at the UBS media and communications conference, the WPP CEO disclosed that his clients have spent around US$70 million on Snapchat advertising.

However, social giant Facebook is undoubtedly getting huge competition from Snapchat when it comes to the advertising.

Clearly there is some concern [by Facebook] about the penetration Snapchat is getting.

The figure is just a pinch of the money WPP spends on other digital platforms — in late August WPP said it continued to boost spending with Facebook and Google, largely due to an increase in spending on mobile search. The company this year expects to spend about US$5.5 billion with Google, compared with US$4 billion last year, and US$1.7 billion with Facebook, compared with US$1 billion last year.

“Traditional media owners themselves could put together an effective third force to counter the duopoly of Google and Facebook,” said Sorrell.

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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