CEO of WPP, the world's largest advertising group, says the company plans to spend $200M on Snapchat ads in 2017, after spending $96M in 2016
Alex Heath / Business Insider :
Context & Ripple Effects
WPP's Snapchat line item keeps getting revised upward: CEO Martin Sorrell guided to just $70M of 2016 Snapchat spend in December, the company actually spent $96M, and now it plans $200M for 2017 — still small next to the $5.5B going to Google and $1.75B to Facebook, but the fastest-growing piece of the portfolio.
The move lands in a market where Snapchat's US ad revenue was forecast to grow 158% in 2017, far outpacing Facebook and Google — and against a backdrop of holding companies actively hunting for scale outside the duopoly, later crystallizing in Publicis, Omnicom, and WPP boosting Amazon spending by 40% to 100%.
First-order effects
- The world's largest advertising group more than doubles its committed Snapchat budget year over year, giving Snap one of its largest single agency clients heading into 2017.
Second-order effects
- Rival holding companies face pressure to match the allocation or risk being underweight on the fastest-growing major platform, feeding the search for duopoly alternatives that later shows up in their Amazon commitments.
Third-order effects
- If agency budgets keep rotating toward emerging platforms faster than overall digital growth, the Facebook/Google duopoly's hold on incremental ad dollars loosens and platforms begin competing on agency relationships and ad-tooling rather than audience size alone.
The trend: Major agency groups are deliberately diversifying spend beyond the Facebook/Google duopoly, with Snapchat as the first scaled test case.