WPP WPP PLC

By Jack Marshall 

Google and Facebook continue to strengthen their grip on the online advertising market, but there's another "gorilla in the room" that troubles WPP Chief Executive Martin Sorrell more: Amazon.

The online retail giant has for years been described by ad executives as a "sleeping giant" in the digital advertising world, but its $13.4 billion acquisition of grocery chain Whole Foods could further strengthen Amazon's ability to influence how and where WPP's clients choose to spend their money, Mr. Sorrell said.

The deal could extend Amazon's already powerful data about consumers' online behaviors and consumption habits to real-world stores.

The Whole Foods deal "is going to change the way clients control their budgets and think about their budgets in a meaningful way," Mr. Sorrell said in an interview hosted by the Financial Times at the Cannes Lions advertising festival on Wednesday.

Amazon still isn't a big digital ad player -- eMarketer predicts it will generate $1.81 billion in ad revenue worldwide this year, for a 0.8% market share.

Beyond Amazon, Mr. Sorrell once again expressed concern about the growing power of the online ad "duopoly" of Google and Facebook, and their changing role in the digital media landscape.

The two companies currently control 75% of digital advertising, he estimated, but WPP questions the transparency they provide given their surging revenues, margins and market caps. (Emarketer estimates that the tech titans earned 77 cents of each new dollar spent on digital advertising in the U.S. last year.)

"Who knows how their algorithms work? Their algorithms change and there's no explanation," Mr. Sorrell said.

He said the duo should take more responsibility for the content that's hosted on their platforms and behave like media companies.

"In my view Google and Facebook are media companies, they are not technology companies. They are responsible for the content they distribute and they can't walk away from that," he said.

Representatives for Google and Facebook had no immediate comment.

Some advertisers pulled their spending from Google and YouTube earlier this year after revelations their ads ran alongside objectionable content. Google has made efforts to win them back, including improving the technology that screens videos and giving marketers more control. Those efforts have won over many marketers, though other notable ones still remain on the sidelines.

Write to Jack Marshall at Jack.Marshall@wsj.com

(END) Dow Jones Newswires

June 21, 2017 12:52 ET (16:52 GMT)

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