The head of the world's largest advertising agency WPP has warned of the threat that Amazon's growing advertising presence poses, calling it the "elephant in the room" alongside the Google and Facebook digital advertising duopoly.

The head of the world's largest advertising agency says that Amazon, as much as Google and Facebook, is the biggest threat to the industry.

Copyright by World Economic Forum by Sebastian Derungs
Copyright by World Economic Forum by Sebastian Derungs

In the wake of Amazon announcing that it's adding a camera to the increasingly popular Alexa personal assistant WPP CEO Sir Martin Sorrell said: "The elephant in the room is really Amazon."

Speaking about the Echo Look 'style assistant' feature, he said: "So you are looking for clothing, and one could assume that the artificial intelligence or algorithms will be able to order you clothing. You can try it on, like you would in the changing room of a bricks [and mortar] retailer, using digital technology. So the data that comes from that will become critically important."

Speaking at a dinner for 300 French digital marketing professionals in London last night – via video link from New York – Sorrell was responding to a question about the rise in programmatic advertising and the issues this creates around access to data and data privacy.

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"I see unlimited opportunities for programmatic," he said. "But the constraint is going to be privacy and having walled gardens like Apple, Google, Facebook, Alibaba, Tencent, Amazon and the like. It is our ability to get access to that data."

Advertisers are increasingly determined to hold onto this customer data so that they can better target ads.

Sorrell explained how WPP's second-biggest client, Unilever, recently bought online shaving good retailer Dollar Shave Club to highlight the growing importance of customer data.

He said of the deal: "[It's] not a way of competing with Gillette, it is really a channel of engagement and distribution. So they buy three and a half million names, 70 percent male, and what they are trying to do is control the data."

Amazon's advertising business mainly comprises sponsored products at the top of its search results, and in the fourth quarter of last year its ad revenues, listed under 'other revenue', grew 60 percent in North America year-on-year.

Sorrell described Google and Facebook earlier in his speech as the digital advertising "duopoly", and said the whole industry is eagerly awaiting the results of European Commissioner for Competition Margarethe Verstager's ongoing antitrust proceedings against Google.

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WPP spent $5 billion worth of media buy with Google and $1.7 billion with Facebook last year alone, Sir Martin said.

"The issues around brand safety which Google and Facebook have been facing very strongly over the past few weeks put this whole issue into sharp relief and this whole issue of control of data and privacy become more important," he said. "This is all really important stuff."

General Election

Sorrell – an outspoken Remainer – also spoke about the upcoming general election in the UK.

He said: "I'm biased, you ask me if there is a good way [to exit the EU] and my answer to that is no. If there was a less bad way it would be a soft Brexit, so a negotiated deal with a transition arrangement, free movement etc.

"What I worry about in this coming election is I think the Conservatives will win the election... I don't think they're going to win by as big a margin as perhaps some people think. I think the Liberal Democrats will do better than people expect and Labour will have a very tough time.

"I think what happens is the Prime Minister gets a better mandate, not as good as I think she thought she might get. So she will have less people stabbing her in the back, which I think was the problem, she will know who is stabbing her in the front."