Is Online Advertising Ending?

You gotta wonder where online advertising is headed after you’ve sat through a full day of sessions at a conference — thrown by Ad Age, no less — and there are no ads.

Well, maybe a couple of ads. Three, tops.

But what was remarkable about the first day of Ad Age Digital was the near-complete absence of advertising and its attendant disciplines, such as media buying, selling, and planning. Union Square Ventures’ Fred Wilson set the tone during his keynote on earned media, or “media you earn and you don’t buy. Paid media and earned media go hand-in-hand. Marketers are buying media when they could earn it, and earn it much less expensively.”

Is it just the recession, or is media buying suffering an irredeemable hit?

Even before any of us had ever heard of social media platforms such as Facebook, Digg, delicious, and Twitter, marketers have been rolling their own media. They’ve been doing it for as long as there have been Web sites, more so when blog platforms hit the scene.

The trend online, and it’s a rapidly growing one, is to buy as little media as possible. Wilson’s remarks at the conference simply restated the obvious, with updated case studies.

He pointed to Kogi BBQ, the barbecue truck phenomenon that’s pretty much built its foundation (and rabid following) on Twitter. “They’re heavily engaged with their community. It’s an authentic, earned media approach,” Wilson observed.

What’s the Agency Role?

So if media is earned or created, but less often bought and sold, what’s the agency’s role? The very word “agency” refers to the core role as media buyers — agents who collected a commission for their efforts.

“The total amount of money flowing out of marketers’ pockets to agencies won’t decline and will likely go up,” Wilson said. “But the mix is headed for important changes.” He predicts that as paid media spend goes down, creative and technology expenditures are likely to rise.

What Wilson didn’t say, but was pretty much an elephant in the room, is that an agency can help a great deal with social media marketing, but it isn’t absolutely essential to the process. Bet Kogi BBQ doesn’t use one. In fact, SEMPO released research last month that finds a full 40 percent of advertisers say their social media programs are based in-house.

Agencies will have to become agile as a result, either incubating new social media marketing programs in-house or snapping up some quick acquisitions.

How Will Online Media Survive?

We all know online advertising won’t disappear completely. But there’s no doubt it’s dwindling, which is hardly welcome news to a news and media industry that’s already on its knees.

Yet almost at the same time Wilson was telling an audience of marketers and advertisers that media buys are going bye-bye, Google CEO Eric Schmidt was delivering a very different message in his keynote at the Newspaper Association of America’s annual conference: advertising will save you.

Maybe not today, of course, as more than one online arm of a traditional media organization would happy to tell Schmidt. Or, for that matter, Craig Newmark. But Schmidt is promising online newspapers that if advertising can keep Google alive, there’s hope for online content creators, too. That is, when ads become richer, more relevant, more interactive, and are layered with functionality such as e-commerce tools.

“Advertising that is useful is going to work,” Schmidt said in his address.

The question that remains, then, is how quickly will advertising become really useful? Before or after the media properties that depend on it for survival go under?

Because, in the meantime, media’s there for the taking. You don’t have to buy it. Just build it. Or earn it.

Join ClickZ Expert Julie Batten for a new Webinar: Should You Outsource Your Online Marketing Services?, Thursday, April 16, 2009, at 1 pm (EDT). Learn why outsourcing your online marketing activities — including search marketing — can help you save money and achieve better results.