A few days ago I was talking to the CEO of a large media company. They’ve been experimenting with different advertising models on their long form video content. She’s excited about the results.

A week earlier, a CTO of one of the leading blogging companies talked to me about their experiments with social network-based viral ads and how they search for influencers. In between those two conversations a CEO from a European agency told me that CPG companies are struggling trying to redefine their advertising approaches at “the moment of truth” – when customers are making their purchase decision. All of them agree on one thing: advertising is changing and they are not sure where it is going to take them.

What we have been seeing for the last several years is just the beginning of systemic changes to the entire advertising industry. And these changes are accelerating. Since early March, U.S. prime-time viewership for the four biggest broadcast networks was down 2.7 million to 37.6 million people, from 40.3 million during the same period in 2006 – only some of it due to PVRs. The change is more profound: our media consumption is changing. In addition to spending more and more time on the Internet, PVRs, iPods, Zens, and other devices means that we are watching TV very differently than we were watching even a year ago, but we are using the same old measurements – adding a 24-hour window after the shows to measure PVR watching doesn’t reflect the extent of changes in our viewing habits.

The Internet has its own problems. Just 3 weeks ago IAB published an open letter to comScore and Nielsen/Netratings asking them to submit to an audit of their numbers.

At the same time advertisers are asking for data about commercial watching on TV and time spent on websites rather than just page views. The advertising value chain is changing, the lines between promotion and advertising are blurring, new forms and approaches to advertising are constantly being tried. But measurements haven’t caught up. We can’t agree on what we are supposed to measure and how.

It is one of those rare moments when the entire domain model that everyone has been using for many years is changing. Unfortunately we are still thinking about the industry using traditional archetypes. We talk about TV advertising dollars moving to the Internet, inserting ads into VOD, selling avails on eBay, measuring page views, and using upfronts for the Internet. Instead, we should look at the entire advertising system as a single structure that needs to be planned, developed, managed and measured across media and methods using integrated approaches measured and adjusted in real time. This is not going to happen soon. And it is not going to be easy. It will require reorganization of agencies, media distribution, marketing departments and budgets, development of new automated systems, integration of measures, ad planning and media buying not only for TV and the Internet but also digital signage and radio, and close coordination with direct mail. A key prerequisites of these new realities: data capture and aggregation from as diverse sources as STBs, Internet, game consoles, POS, location sensing devices, portable media players, kiosks, etc., is not only difficult technically but will require partnerships that are not going to happen for quite sometime.

It is time for the advertising, media industries, and advertisers, to develop this vision and to figure out how to get there as soon as we can.