AdAge reports McKinsey & Co. has warned its Fortune 100 clients that traditional television advertising with be just one third as effective in 2010 as it was in 1990.

AdAge says the findings assume:

• a decrease of 15 percent in buying power related to the growing cost-per-thousand rates
• an audience diminished by 23 percent as people switch off their sets
• an attention deficit of nine percent due to multitasking
• saturation-driven attention fatigue with message impact diminished by 37 percent

Other than that, spend away.

In a pattern much like those in radio and print advertising, McKinsey says real spending on traditional prime time broadcast television advertising increased about 40 percent in the last decade while the number of viewers declined nearly 50 percent. You can do the math.

But hey, there’s always the future.

Or not. The McKinsey report says teenagers spend less than half as much time as adults watching television. Don’t worry; it’s not like they’re outside playing ball or performing community service. Teenagers spend 600 percent more time than adults on the internet.

Just a minute: televisions have screens; computers have screens. Isn’t the answer obvious? Uh . . . no. There is not enough bandwidth to accommodate a "simple" shift of advertising resources from one screen to the other. AdAge quotes McKinsey’s Amy Guggenheim:

There wouldn’t be room today if everybody wanted to shift online. Last year [online media] was $12.5 billion, by end of 2007 digital advertising will be $18 to $25 billion. … So we’re seeing a lot of growth, but if you want to match up share of attention and share of dollars it couldn’t happen for that reason.

At the top of the heap these days, but charging 40 percent more to shotgun interruptive messages at an audience that’s diminished by 50 percent, the now $68 billion television advertising industry looks a bit like the naked emperor of yore.

Wired Magazine’s Chris Anderson notes that ABC’s American Idol is watched by just 18% of American households:

During the ’70s, American Idol wouldn’t even have made it to the top 10 with that kind of market share. Collectively, the hundreds of cable channels have now surpassed the networks in total viewership. No single one dominates.

The picture is no more rosy for traditional television extravaganzas. Anderson again:

Even television mega-events have lost their allure. In 2005, the World Series had its worst TV ratings of all time, 30 percent lower than the previous year. Ratings for the NBA playoffs last year reached record lows as well, down 43 percent from 2004. The ratings for the Grammy Awards in 2006 were down 31 percent from two years ago. And the Winter Olympics this year had their lowest ratings in 38 years, down 36 percent from the 2002 Games in Salt Lake City.

The Magazine Publishers Association (MPA) underscored the challenge in 2006 with a 1980s-to-2004/2005 media comparison, excerpted here:

The very notion of prime time is made quaint since time-shifted viewing and DVD rentals put viewers in control of their own viewing patterns (or lack thereof). Add to that multitasking and simultaneous media use and classical advertising of all sorts (not just television) is caught in that dream where they’re trying to get from home room to gym class without anybody noticing they’re not wearing any pants. You see the theme here . . .

The MPA eBook cites a study commissioned by MTV in which Americans reported doing 5.8 more hours of activities than there are hours in the day. Their conclusion is rich:

It has indeed become an attention economy. Did I mention the name of the MPA eBook? It’s Engagement, which the book associates with the terms:

• Involvement
• Connection
• Resonance
• Stickiness
• Experience
• Wantedness
• Relationship

The MPA book is directed at marketers and advertisers and that establishes their frame of reference for engagement: Marketing must be engaging; advertising must be engaging.

Forget about that. Our companies must be engaging.

Unless we’re the only company on the planet who can do what we do, we’d better:

• involve our customers meaningfully
• forge connections with and for our customers
• deliver products, services and experiences that resonate on the frequency where our customers live
• do what we do in ways that are so remarkable – so sticky – that our customers can’t help remarking on what we do and how we do it
• create experiences our customers want to repeat as often as possible
• insinuate ourselves into customers lives in ways that make them want to see us and hear from us
• invite our customers into real relationship on their terms.

In the mid-20th century when 72 percent of American households with televisions tuned in to I Love Lucy every Monday night, if you could pony up the money for a 30 second spot you were golden. As long as you didn’t stumble too badly getting your product to market, mass media exposure led directly to sales.

Half a century later when the only thing 72 percent of Americans do on Monday nights is eat and sleep, engagement is the gold standard. Anything we’re doing that doesn’t end up making our businesses more engaging is a waste of money, time and talent.