As if we needed any more proof that the traditional advertising model is in freefall, Ad Age devoted a recent cover story to the matter at hand. And, while reading a round-up provides a broad brush perspective on the issue, I was also able to hear about the pain first-hand at a recent industry panel discussion.

Held by PR News and VMS, the ‘integrated communications’ session included representatives from the PR agency and client-side worlds as well as experts from direct response and integrated marketing shops.

Everyone agreed that, because of the horrific cost/benefit ratio of traditional advertising (i.e. Word-of-mouth, digital and other one-to-one communications are so much more effective at reaching consumers in a disintermediated media world), we’re seeing more and more ad shops providing traditional PR services.

We’re seeing this happen on some of our larger accounts. So, as our peers in advertising see their budgets reduced year-after-year, they come to our clients with ideas and recommendations sounding surprisingly like ours.

While there’s still a dividing line between our disciplines it’s becoming murkier and murkier. So, while we in PR debate whether Web 2.0 is a separate phenomenon or merely another communications channel, the ad agencies are scrambling to retrofit their models so they can sound more like ‘earned media’ as they like to describe media relations.

The panel was extremely enlightening and, for me, served as a real wake-up call that PR is not THE place to be, but a place that increasingly desperate ad agencies also want to be.