WPP's CEO Thinks Internet Advertising Has a Long Way to Grow

Ad agency WPP's (WPPGY) CEO believes that while ad spending will recover with an improving economy, it will never be the same as it was. One big reason for this is the transition from traditional media to the internet.

He explains that companies currently spend only 13% of their ad budget on web-based advertising, despite the fact that people now spend 20% of their time online. This alone implies that online advertising still has a long way to grow. If one imagines that we'll all spend increasing amounts of time online, and that ad budgets should track the amount of time we spend on any one type of media, then online advertising could easily double from where it is now. At least.

Still, WPP believes that the overall advertising environment will remain subdued for quite some time.

We describe the recession as L-shaped, which implies that it will never go back to where it was before. The forecast for levels of increase in ad spending, both traditional and nontraditional, are pretty anemic for the next two or three years.

Check out the full WSJ interview below.