WPP group chief executive Sir Martin Sorrell has accused traditional media owners such as Rupert Murdoch of panic-buying internet companies because of falling ad revenues.
Sir Martin, the country's most influential advertising man and in charge of the world's second largest ad group, said there was "deep cause for concern" among TV and newspaper owners.
Speaking at Engage 2005, the Internet Advertising Bureau's inaugural online marketing conference, he said it was "intriguing to speculate" why Mr Murdoch, the chairman and chief executive of News Corporation, had launched a multimillion dollar internet shopping spree, and accused him of buying web operations "willy-nilly".
"In the last two or three months he has decided to spend or try to spend I think it is about $5bn on internet properties of various sorts," said Sir Martin.
"This was the second attempt by Murdoch and News Corp to penetrate this [market]. He must have been panicking because he even said he might hire [management consultants] McKinsey to help him out with his strategy.
"Why is it that he is so preoccupied with this and willing it appears to make investments almost willy-nilly? I think I can use the word panic - that is probably overdoing it but maybe I am not."
Mr Murdoch's News Corp began its $1bn new media spending spree in July when it bought Intermix, the US firm behind internet offerings including myspace.com, a two-year-old website which allows friends to share weblogs, photos, instant messages and music online.
The following month News Corp subsidiary Fox Media Interactive snapped up US online and magazine sports publisher Scout Media, and then in September the company bought online video gaming company IGN Entertainment.
And earlier this week, UK satellite broadcaster BSkyB, in which News Corp is the largest shareholder, paid £221m for broadband outfit Easynet.
Sir Martin said there was a "considerable degree of panic" among traditional media owners over the speed of the onset of the digital age.
"I think they see circulation figures, TV viewing figures and revenue figures that give them deep cause for concern," he said.
"Over the last couple of years I cannot recall seeing a very happy media owner, certainly not of the traditional type. They are all worried about what is going on."
Sir Martin said the scale and speed of the digital revolution was "faster and bigger than we could have anticipated".
He said newspapers had succeeded in putting their content onto the internet, but had only just woken up to the fact that they also had to charge for it. He used the example of the New York Times, where he said earnings were down 50%.
"Everyone has been consumed by sales and numbers of hits and market share rather than with profitability," he added.
Sir Martin warned that TV networks could "no longer increase the price of advertising more than the level of general price inflation".
"The media industry is in a tremendous state of flux. Look at the experience of the major networks [in the US]. NBC dropped $900m in revenue. At its heart is the issue that how can traditional media continue to charge more for less?
"That issue has accelerated to a far greater degree than even what we thought 12 or 24 months ago. The problem is that most of these companies are run by 50 to 60-year-olds who have difficulty in getting it and really don't want major change on their watch."
Sir Martin has long been a proponent of the growing importance of the economies in the Far East, and in particular China.
As an example of its size and willingness to embrace technological change, Sir Martin said 800m phone votes had been cast in China's equivalent of Pop Idol, Supergirl - twice the number of mobile phones in the country.
"It is true that China is only 4% of the worldwide advertising market, and it is true that the internet is only 4% of the worldwide advertising market. But both these things are changing at a tremendous pace which I don't think we fully understand.
"Saying, well, the next generation, my kids, and my grandkids, are going to have very different media consumption patterns is a little bit of a cop-out. It's actually happening now."
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