Can you imagine a company that was started less than ten years ago and is now worth $104 billion dollars that never spent a cent on advertising? How about an online application that has over 200 million users and never spent a penny on advertising? Or a local bar that was spending $800/month on print advertising and dropped it completely for a totally free alternative that was far more effective?

Google and Facebook don’t advertise. My friend’s nightclub doesn’t advertise. They have a Facebook Group with hundreds of members, members that want info on what’s going on at the club. If I’m asked about advertising I tell people to try Adwords, Google’s PPC ads, and to do it themselves. Better yet, figure out social media and spread the word to people who are looking for the solution you offer.

The advertising business is poised to disappear, and like the newspaper business, they don’t seem to know it. Consumers are exposed to thousands of ads daily and the result is that we no longer see them. They are meaningless and they no longer affect our buying decisions. I recently bought a computer monitor. Did I buy a magazine and look through ads for monitors? Did I go to a store and talk to a sales rep? No. I went online and read user reviews.

Ad agency people, read that last line and ask yourself if your business is still viable. Tell me one compelling reason why using clever, attractive, intrusive or subtle brand advertising makes any real difference to your clients.

An agency I once worked for did an award-winning (The awards are chosen by other ad agencies, an anomaly that I always thought was pretty self-serving) campaign for a beer brand. Sales increased. But did they increase because of a clever slogan or because beer drinkers liked the product and told their friends? The fact is they don’t know.

I spent the last year marketing a software product that is critical to understanding how brands are perceived in social media. Our intial target markets were PR and ad agencies. We talked to and demo-ed hundreds of agency people. I gave in-person presentations to many agencies. Not one advertising agency bought the service while nearly every PR agency was either buying from us or reviewing competitive products- they understood why they needed this. The typical ad agency response was to interrupt the conversation and glibly announce that they did not understand why they needed this service. After all, if social media is the new marketing medium what are all the creative and media buying people going to do?

Good question. Maybe start engaging customers and adding value to the conversation? Listening and responding to specific requests for improvements?

Unfortunately these activities are difficult to bill for at agency rates. That’s the response I heard every time. It doesn’t fit our business model. Right.

Change the business model. Or get fired when your clients learn that their competitors embraced social media and have a big headstart while they were spending millions on ad campaigns that they cannot put an ROI number on.

The world of marketing has changed completely with the widespread adoption of social media. If I ran an ad agency I’d be working 24/7 to figure out what this means to my business and what I have to change to take advantage of it. I’d have every employee reassessing their skillset and job description to learn how they can apply those skills to an entirely new medium.

Advertising has always viewed itself as the ‘coolest’ profession on the planet. Creativity is king in their minds. Yet many are crippled by this perspective. What if you are wrong? What if the world changed while you were shooting multi-million dollar broadcast ads? What if you run those ads and the response is public ridicule? Or even worse, no response because the people are going to their peers for better information?

BTW, if you’re an agency and you want to build a profitable social media practice we should talk. Contact me via my site, martinedic.com . I’ve been working with agencies on their social business model for the last two years.