Original URL: https://www.theregister.com/2008/01/21/dld_sorrell_net_ads/

WPP chief sees headroom for Internet ad growth

'Disconnect' exists between spend and consumer activity

By John Lettice

Posted in On-Prem, 21st January 2008 10:28 GMT

DLD08 The amount of money companies spend on the Internet remains out of sync with the extent to which consumers are using it, claims WPP CEO Sir Martin Sorrell. Speaking at the opening of the DLD08 conference in Munich yesterday, Sorrell said that his company's clients spend about 10 per cent of their budgets on digital media, whereas consumers now spend 20 per cent of their time online - there is "a disconnect that has to correct," Sorrell said.

This disconnect has some effect on how the ad industry should view Google. Sorrell describes the Internet giant as a "frenemy", or possibly a "froe", and notes that although its market cap is five times that of the top four agencies combined, its revenues are only two thirds of theirs. So if the agencies move a higher proportion of their clients' money onto the web, and we take into account the fact that advertising is only a part of Google's revenues, the company's position is possibly not as dominant or secure as often thought. Which might explain Sorrell's ambivalent attitude.

Sorrell has good cheer for the global economy, but bad news for Europe. There will be no recession in 2008, but the possibility of a "real issue" in 2009, in both cases thanks to China, where a post-Olympics correction could trigger destabilisation elsewhere. Europe, however, is two speed, "half-speed in the west, and full speed in the east." So WPP is betting big on Asia.

Most of the rest of the opening panel happily agreed that Europe was doomed (which was not quite what Sorrell said), and a bizarre consensus that the UK would be the sole economic survivor was almost detectable. We think we're safe excluding Sorrell from this lunacy too, and the rest of them clearly haven't visited recently. ®