Ad giant WPP: We think Amazon has earned $2.5 billion from digital advertising

There are more signs that the advertising world is taking Amazon extremely seriously.

Sir Martin Sorrell, chief executive of the world’s largest ad group WPP, has given the biggest estimate yet of how much Amazon makes from digital advertising.

During WPP’s half-year earnings call, he estimated that Amazon had earned $US2.5 billion (£1.95 billion) from digital advertising. He didn’t give a time frame, but the wider context of his remarks was digital ad spend in 2016.

That’s the biggest public estimate of Amazon’s current advertising earning power out there. eMarketer last year pegged Amazon’s ad revenue at $US1 billion (£781 million) for 2016, and predicted that it would rise to $US1.81 billion (£1.41 billion) this year.

Sorrell said Amazon controlled a small but “increasing” share of the digital ad market, which is currently dominated by Google and Facebook. He said Amazon could be a possible “third force” against the two dominant firms. He has previously said Snapchat, ad tech firm AppNexus, and Oath could be viable third forces.

Amazon’s ad business is small fry compared to Facebook and Google’s, but it’s growing rapidly. The company is hiring more staff to that area of the business, and CFO Brian Olsavsky said growth had been “strong and fairly consistent.” Still, Google made $US22.7 billion (£17.4 billion) from advertising in the second quarter, while Facebook made $US9.2 billion (£7.2 billion). And Sorrell said WPP would spend about $US6 billion (£4.7 billion) on Google this year, and more than $US2 billion (£1.56 billion) on Facebook.

He warned against another walled garden however, where marketers embrace a new platform but struggle to control data around customers. Facebook, Snapchat, and Google have all been criticised by the ad industry for not being transparent enough about the way they measure ad effectiveness.

Sorrell said: “It’s a question of who controls data. It’s all very well going on Amazon’s platform — as clients have found with Google and Facebook, control of the data is critically important.”

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