My friend Rob Hyndman has a great post up about how the Web is playing havoc with the traditional structure of the advertising industry. But he’s not talking about things like how Google’s AdSense is revolutionizing the ad business, or how Craigslist.com is disemboweling the newspaper industry’s main profit engine, or any of that stuff. Rob’s point is a little deeper than that. He wonders if Web 2.0 doesn’t make traditional advertising a whole less effective, by allowing people to instantly fact-check and reality-check the ads they are subjected to. In that sense, Google itself provides the tools to make its own ads less relevant — an interesting snake-eating-its-own-tail conundrum.

“I’ve been noticing lately that over and over again the advice and information provided on the blogs of real people who share my interests and experiences are providing much more compelling information than any advertising that reaches me. Putting aside for now the question of branding, I’m finding that I’m repeatedly turning to blogs to find authentic and trusted buying advice from people who share my interests.”

This “democratization”of advertising, as Rob calls it, threatens a lot of the advertising that companies have grown accustomed to using, from TV ads to billboards and magazine spreads, all the way down to packaging. Yes, those tools can still raise “brand awareness,” but their message can also be almost instantaneously fact-checked and tested against the opinions and analysis of literally hundreds of people with a simple Google search. Not long ago, you would have had to read Consumer Reports magazine to get that kind of sample. Obviously there’s a lot of noise too, and blogs can (and will) be used to help extend brands and advertising. But the Web has changed that relationship fundamentally.

Plenty of food for thought. I recommend you read the entire post.

Update:

I just came across a link from Rex Hammock’s blog to a piece written by Richard Edelman, president and CEO of the world’s largest independent public relations firm, in which he discusses what he calls the Me2 Revolution — very much on the same theme as Rob’s post. And an unidentified advertising guy who calls himself Brand Cowboy has some thoughts about the concept of brands in the new media world (thanks for the tip, Stuart)

Google hasn’t made many billion-dollar bets, except for the recent one on AOL (which was more of a hedge) so the deal announced for dMarc Broadcasting is notable if only for the potential price tag. Up front costs are only $100-million, but the potential outlay for Google if certain performance targets are met is $1.1-billion over three years (eBay’s acquistion of Skype has similar terms).

Although Google has been reaching its tendrils into “offline” for a little while now, including a deal to run ads for its AdSense partners in print publications, I think it’s safe to say that for many people, saying the word Google does not make one instinctively think “radio.” After all, how do you click an ad that’s on the radio? Mark Evans says he finds the deal a little odd. However, Henry Blodget — the former Merrill Lynch brokerage analyst — says he thinks this could be the beginning of a big business for Google: namely, replacing big ad-buying agencies who place ads in all kinds of media.

Search Engine Roundtable says if we have AdWords and AdPrint, and now AdRadio, it’s likely only a matter of time before we get AdTV, and Google starts running ads on television. And Danny Sullivan says any dispute about whether Google is a media company or not can be put to rest. Ross Rader of Tucows seems to agree, while Eric Schoenfeld of the Business 2.0 blog says there is potential for serving ads based on tracking your digital radio listening habits. As usual, Good Morning Silicon Valley has a great headline: “Sorry officer — the last thing I remember is trying to click on an interactive radio ad.”

Update:

Staci over at PaidContent points to a comment by a reader who has some expertise in the radio advertising business, and doesn’t see how Google is going to make much headway in the industry.