• by Mark Read , May 8, 2008

In 2007, the Internet accounted for around 8.8% of global advertising expenditure, with growth of more than 20% expected in 2008 as client budgets follow consumers online.

Key events in our industry in the past year have been: the rapid growth in usage of social networks such as Facebook and MySpace, though advertising revenues still lag as clients struggle to find ways to engage consumers; the blurring of industry boundaries with the acquisition of DoubleClick by Google and of aQuantive by Microsoft; and the focus from technology companies on building advertising platforms and media exchanges, such as Platform A from AOL, as ways to trade digital media.

The transition to digital media, which in the next few years will extend beyond the internet into TV, radio and other media, offers WPP significant growth opportunities. It also presents the Group with some of its more difficult challenges, in particular the need to understand and respond to rapid changes in technology and industry structure, and to ensure we do this not just in specialist digital agencies but in all our companies.

WPP Digital exists to accelerate the Group's response to opportunities offered by this transition to digital media. We do this in three ways:

First, by acquiring and developing best-in-class specialist digital agencies and marketing technology companies.

Secondly, by taking investments in and partnering with innovative digital media companies to bring insights and ideas to our clients, agencies and people.

Finally, by assisting the spread of digital capabilities across WPP through a series of Group-wide initiatives, particularly in the areas of training and technology.

In 2007, we acquired four leading digital marketing companies which added significantly to the Group's digital capabilities, bringing us new talent, important new digital marketing technologies and presence in strategic growth markets such as China and India. We backed two of the industry's leading creatives, Jan Jacobs and Leo Premutico, in their new agency, Johannes Leonardo. We also made a series of investments in innovative start-ups, giving our clients, agencies and people a window into several of the more dynamic areas of digital marketing, such as mobile advertising and search, in-game advertising, online video and social networking.

Mark Read is CEO of WPP Digital. This column was excerpted from his contribution to parent WPP Group's 2007 annual report, which was released on Wednesday.