The digital advertising business can increasingly be defined as Google, Facebook, and everybody else.
The two web giants now control and estimated two-thirds of the giant, fast-growing digital ad market. And while the traditional giants of the advertising world are still making good profits, the future—as we all know—is digital.
That doesn’t bode well for traditional power players in the industry. London-based global advertising firm WPP suffered its worst one-day plunge in a decade Wednesday, as its shares fell 11 percent after it reported disappointing first-half numbers.
With a drop like that you’d expect that the company reported an ugly loss. It didn’t. In fact, profits rose rose 81 percent, after controlling for currency fluctuations, to 634 million pounds for the first half of 2017.
But WPP cut its forecast for future profits, citing reduced spending by big consumer goods companies. Those big companies are the lifeblood for advertising firms like WPP. And the decline in ad spending comes amid the ongoing disruption of widespread shifts to digital advertising.
For its part, WPP executives didn’t sound worried about the rise of digital advertising.
“It’s more of an opportunity than a problem, but it does create significant disruption and pressure in client companies, let alone our own,” said Martin Sorrell, WPP’s chief executive.
Such opportunities include WPP acting as useful middlemen to help both consumer companies navigating the new digital landscape and Silicon Valley companies trying to make inroads with new non-tech clients of their own. WPP said Google is now its ninth biggest client, for instance.