As people hunker down, lose their jobs, see iconic corporations change dramatically, and face a new reality of a more fundamental lifestyle, we’re going to see a shift of importance in creating value. Value in 2007 was about trading up the ladder by adding features that offered more for slightly less more money.

If you’ve got a brand that’s about creating something of value, then you better focus on it. If you’ve got a brand that has lived on being a lifestyle, then you better find a meaning or plan on being smaller for quite a while. Brands that were making money by being slightly better for slightly less, be aware of the old strategic phrase: getting stuck in the middle.

Brands and companies in the middle will shrink in 2009 and companies that aren’t able to shift down, or hone a premium message, shrink and stay on the top (of mind) will not fair well.

The WSJ reports today that P&G and Google are swapping employees to get a better understanding of each other. With P&G as one of the leading advertising companies in the world, this move has long reaching upside for Google and P&G.

I’ve noted that Yahoo and Google shouldn’t be focusing on each other, they should focus on growing the market and this move goes further than replicating the Madison Avenue model. If Google can show how it creates value to P&G, and P&G can explain how it builds brands, these two players will revolutionize how interactive marketing is done.

During downturns, companies are forced to find new ways to compete that are under-leveraged while creating real consumer value. What P&G begins testing out of this relationship will be worth watching. At a minimum, Google will better understand what big companies need and how to go after a bigger piece of the traditional marketing pie.

Google’s PPC traffic report from comScore today reflects the nature of the emerging recession that is gripping most of Corporate America. While technology VCs would like to think that PPC will be the last element of marketing to be touched, because it is ROI oriented, they may be missing an important temporary facet on this point in the short term.

First, companies cut variable costs quickly when facing a down turn. As a result, PPC advertising may actually be one of the only current costs being used, and as a more variable, more responsive cost in the system may get cut because it can get turned on and off so easily. Interestingly, if people slow down buying, and then ROI gets worse making the PPC returns less compelling, we may be seeing a real-time consumer slow down occur via Google’s click traffic.

Second, most major corporate marketing departments aren’t using PPC as the major element of lead generation or sales. As such, the decision to cut “everything else” in the face of having to get rid of programs means that PPC is still fairly high on the list of things to remove when budgets get cut v. the big media splash campaign that supports a new product in store.

One last thought…
Wouldn’t it be interesting to see Google’s new account spend v. existing account comparables?

More surprising, the growth rate of PPC ad is expected to be 23% in 2008. I’ve bought into the idea that online ad share v. traditional media is not proportionally correct and should shift dramatically, like double from where it is at. With less than 10% share of the overall ad market, online advertising isn’t growing as fast as it seems like it could.

Advertisers don’t seem to be easily going away from the tried and true version of traditional media campaigns to less chartered waters. In the internet world, are there [non-tech] brands that have grown on mostly interactive media? Without concrete poster children, proving to the majors that the media mix should go in a new direction, it won’t.

In all of this talk of interactive v. traditional, let’s step back. 1:1 marketing is value creating in ways that traditional media isn’t. Creating virtuous cycles by fostering conversations with consumers is how brands will win in a people as marketing message world.

How does Yahoo! create *unique* value for those that aren’t more aggressively integrating online ads? They could:

• Prove that the US population is using the internet (seriously, many still doubt it)
• Partner, buy or merge with a major advertising agency and become a force on Madison Ave.
• Approach advertisers with PPC media buys in a way that feels like traditional media
• Integrate more seamlessly with traditional media campaigns in terms of timing and branding
• Get a case study on how branding and sales are grown – prove that it works beyond just getting people signed up
• Create and leverage centers of content excellence that advertisers will want to associate with

Frankly, AOL and Microsoft don’t improve Yahoo’s chances in being more unique when compared to Google, do they?