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WPP Group PLC (WPP.LN), the world's largest marketing company by revenue, Wednesday cautioned that as sentiment in the world economy improves it isn't yet translating into rising orders for expensive advertising campaigns, echoing recent comments from industry figures that suggest a return to growth remains some way off.

While most ad executives now agree that the worst of the recession is over, opinions vary as to when and to what extent growth will return, as clients get used to paying lower fees as advertising firms look to retain their business.

And even when growth does return, the ad industry will look drastically different, as marketers increasingly move spending to digital media and as the shift in economic growth makes emerging markets the future growth drivers.

"[The advertising industry] can return to what it was, but it's not going to be the same," Sorrell said in an interview with Dow Jones Newswires Wednesday following the company's half year results. "It's not going to be in 30-second TV ads, it's not going to be in newspaper or magazine ads, it's going to be in Russia, India, China, Vietnam,...and digital."

Firms across a wide range of sectors have lowered media spending, but for many big advertising holding companies, the sharpest cuts have occurred in automotive, financial services, and business travel.

Dublin-based WPP, whose clients include Unilever N.V.(UN), Johnson & Johnson (JNJ), and Ford Motor Co.(F), Wednesday said pressure continued on the group's advertising and media investment management businesses in the second quarter, with clients demanding greater value amid the difficult economic environment.

Sorrell said it remains too early to forecast an advertising industry rebound, and he expects to growth next year to be flat. Underscoring the continuing slump, pan-European broadcaster RTL Group SA (RTL.BT) Wednesday said it expects no improvement in advertising markets in the second half.

Still, ad industry executives have said the worst may be over. Maurice Levy, chief executive of Paris-based Publicis Groupe SA (PUB.FR), earlier this month said organic revenue declines hit a bottom in June. New York-based Omnicom Group Inc.'s (OMC) Chief Executive John Wren last month said that while he didn't yet see a recovery, the industry had reached a trough. And Fitch Ratings Inc., in a report Tuesday, said the sharp drop in European ad spending appears to be easing.

But even as advertising methods become more complex, customers don't want to pay as much for these services as they did before the slump hit, and that could further delay a recovery.

"There is no one in the industry whose clients haven't said, 'We are under pressure, so you have to cut fees,'" David Sable, vice chairman and chief operating officer of Wunderman, a big direct-marketing firm owned by WPP, told Dow Jones Newswires recently.

Marketers have slashed fees by 5% to 30%, some retroactively, meaning firms are being paid less for work they have already done.

"The recession has forced us to recalibrate everything and we are now looking at getting more value," Procter & Gamble Co's (PG) Chief Marketing Officer Marc Pritchard said at the annual Cannes advertising event earlier this summer.

ZenithOptimedia, a unit of Publicis, expects even by 2011 global advertising expenditure will total $483.8 billion, still down from the $499.1 billion spent in 2008, and Fitch doesn't expect a return to the 2007/2008 peak for several years.

WPP reported a 48% drop in first-half net profit to GBP108.4 million from GBP208.2 million last year, hit by its euro-denominated debt, with interest payments higher when translated into weaker sterling.

Organic revenue, the closely watched metric in the advertising industry that strips out the impact of acquisitions and exchange rate movements, fell 8.3%.

The ad industry has responded to the downturn by cutting jobs as salaries typically represent about 55%-65% of an agency's expenses. As of June 30, WPP shed over 5,800 staff, or 5.2% of its workforce, compared with staffing levels on Dec. 31, 2008.

WPP recently moved its headquarters to Dublin for tax purposes, but it still reports in sterling.

Late Wednesday, WPP shares traded down 1.4% at 513p, while the FTSE 100 was down 0.5%.

-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 40; ruth.bender@dowjones.com