PARIS — Travelers at the Liverpool Street Station in London were surprised one morning last January when several hundred of their fellow commuters, instead of scurrying toward the 11:15 train to Southend-on-Sea, started dancing to the sounds of Lulu's "Shout."
A day and a half later the routine, captured by hidden cameras, showed up during a break in the reality television show "Celebrity Big Brother." The seemingly spontaneous performance turned out to have been an advertising stunt for T-Mobile, a wireless telephone network that used it for a campaign built around the slogan "Life's for Sharing."
Sharing is exactly what happened next. While the ad, in its entirety, was shown only once on television, word of it spread via e-mail, blogs and social networks, until it was watched more than 15 million times on YouTube. The spot spawned spoofs and imitators who organized similar events, including one that shut down Liverpool Street Station a few weeks later.
"It seemed to spread a bit of joy at a time when people really needed it," said Kate Stanners, executive creative director at Saatchi & Saatchi London, the agency that created the ad.
The campaign may have cheered up recession-weary Londoners, but it also showed why many people in the media business feel spurned these days. Advertising as it has long been known — television commercials, newspaper ads and the like — is a shrinking part of the marketing equation. What happens elsewhere, mostly on the Internet, is what increasingly matters.
Advertisers did not suddenly wake up to the Internet; they have been shifting growing portions of their budgets online for years. But the popularity of social networking and other Web 2.0 phenomena is helping them use consumers to spread the word for them, allowing them to cut down on paid advertising. While music companies, movie studios and publishers, among others, are trying to figure out ways to get consumers to pay for their content online, advertising is moving in the other direction.
Marcel Fenez, head of the media practice at PriceWaterhouseCoopers, said that during the current economic downturn, a lot of paid advertising would be lost for good, separating this downturn from previous ones, when ad spending recovered relatively quickly. After a 12 percent plunge this year, global ad spending will not climb back to 2007 levels for another five years, Mr. Fenez said.
"It's different this time," he said. "There's obviously some element of cyclical in it, but our belief is that it is largely structural."
Not surprisingly, PriceWaterhouseCoopers's forecasts are gloomiest for newspapers and television, which it expects will suffer from ad spending declines of 16 percent and 11 percent this year, respectively. But even Internet advertising will fall by 2 percent, and it will recover only slowly, the company said.
Some formerly high-flying Internet businesses like MySpace, owned by News Corp., have been brought to earth by the recession. With advertising in decline, the social networking service recently announced plans to cut 30 percent of its staff. Other Web 2.0 businesses, like YouTube, owned by Google, are still trying to figure out how to monetize the vast amounts of traffic they generate.
Amid such a broad-based downturn, the advertising industry has also been hurt, and the mood is sober as representatives from all over the world gather this week in Cannes for an annual get-together. Instead of competing to host the most lavish beach parties, as they have in previous years, agencies are trying to outdo each other with understatement.
Martin Sorrell, chief executive of WPP Group, the world's largest advertising company, calls 2009 a "write-off" for the industry. While marketers are slightly less pessimistic than they were a few months ago, they remain cautious, and a recovery in ad spending is likely to lag behind improvement in the economy, he added.
"While the head and the heart may be better, I don't think that has extended to the hand writing the checks," he said.
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