Ad agencies long ago perfected their craft of persuading marketers to devote their dollars to advertising ahead of other means of persuading consumers of the worth of their products.

But with the changes in media, it’s becoming a harder argument, and around the world marketers are shifting, if incrementally, their spending away from traditional advertising in favor of those other marketing tools.

That’s the upshot of a new report from Group M, the parent company of WPP’s worldwide media operations. The study finds that worldwide advertising’s share of total marketing communications expenditures will shrink to 54.4 percent in 2007 from 55.4 percent in 2000.

“Mass audiences in the West are getting harder to reach. Marketers are beset with choice, much of which doesn’t involve advertising,” says Adam Smith, Futures director at Group M. Smith says the report is one of the first to size and forecast the entire global marketing communications industry. 

This insight comes as part of a forecast that predicts worldwide media and marketing services revenues will grow by 6.2 percent in 2006 to $673 billion. Growth of 6.0 percent is forecast for 2007.

Within this figure spending on media, such as TV, radio and the internet, is expected to grow 6.1 percent to $367.0 million in 2006 and 5.7 percent in 2007.

Meanwhile, the forecast growth for marketing services, of which public relations, market research and direct marketing are a part, is slightly higher at 6.3 percent this year and 6.2 percent next.

Interestingly, the slow shift of resources from media to marketing spending runs against history, believes Smith. In recessionary times, marketers typically move spending from media to direct marketing, a medium that provides short-term results that can be measured. Says Smith, “When risk is rising all around you, this certainty is useful.”

Then as recovery came about, leading to boom times, marketers typically shifted money back into advertising.

Not so with this more recent recovery. The money is staying put. “We have seen an end to the economic cycle effect,” explains Smith. “So once money has moved into marketing services it tends to stay there.”

This is happening for several reasons. One effect of fragmentation of media is that advertisers are spending more on market research to figure out where to spend their media dollars. They may also look for alternative ways to reach a mass audience outside of the traditional media.

The rise of the internet, too, plays a role, with its deflationary effect on media prices. Marketers are getting more for the same dollars, so there’s less sense of a need to shift additional dollars back into media.

As one would expect, this is a general pattern, and it varies by region of the globe.

In the U.S. the shift to non-media spending is happening faster than average, whereas in Europe it is slower. In Europe the shift is slower in part because so much direct marketing has shifted to the internet, and spending on the internet is classed as media spending.

The shift is also slower in emerging economies, which tend to be more reliant on advertising and less so on marketing services in comparison with developed countries.