With the long-predicted slowdown in advertising revenue finally kicking in, the industry is proving there is some truth in the saying "hard times never kill", at least not yet.

Though it is still too early to determine the effect the harsh economic conditions are having on agencies, anecdotal evidence points to the fact that they are feeling the pinch and with that the increased pressure to prove their worth.

To do so, renewed focus has been put on innovation and cost effectiveness.

Clients are demanding effective campaigns but at slashed budgets, which is a big challenge, given that the industry has just been through a boom period.

In the past four years media advertising spend has more than doubled from R10,9bn in 2003 to R22,5bn in the year to end-September 2007, according to Nielsen Media Research.

Topping the list of the country's top 10 biggest advertisers are Unilever SA, Vodacom, Shoprite, Pick n Pay and MTN, who jointly spent R1,5bn last year.

However, it is clear the growth rate is decelerating.

In 2003-2004 advertising revenue grew by an impressive 24%. This fell to 20% in 2004-2005, 18% in 2005-2006, and 17% in 2007.

Now it's back to basics for agencies who are forced to find cost-effective ways of delivering on their promise while also maximising the exposure their clients' products get.

A recent example of an innovative campaign that saved both the agency and its client a bit of money was the award-winning Cliff Jennings viral crusade last year.

Created by Ogilvy Johannesburg for M-Net to promote the channel's talent search programme, it generated R1,8m in publicity value for Idols and Jennings became a social media phenomenon with over 7 000 friends on Facebook, 9 000 hits on MySpace and more than 14 000 views on YouTube.

All that Ogilvy did was hire an actor to pose as a determined but talentless contestant on Idols. The actor followed the competition to every city despite being turned down by the judges who, together with the public, believed he was genuine.

Jennings' persistence and likeable personality endeared him to thousands of viewers and earned him a huge following.

The advertising industry is also finally waking up to the age of new media.

Locally, agencies such as Draft FCB, Lowe Bull, BBDO and TBWA\Hunt\Lascaris have spent the past few years investing heavily - either acquiring digital partners or establishing such divisions in-house.

From cellphones and social networks to iPods, advertising agencies - especially at an international level - are going where the consumers are, interacting with them using platforms that are engaging.

Of course, the low Internet penetration levels continue to be a deterrent or excuse for most agencies who still prefer the tried and tested - television as well as radio and print to get their clients' products out there.

However, the Internet has proven itself. Online advertising has grown tremendously between 2003 and 2007, from R98,5m to R245m. But it is mobile advertising, which will be the buzz word for the next three years, that is expected to really take off - especially in developing markets such as SA where cellphone penetration is nearing saturation.

This hugely penetrative medium is expected to attract more than R1bn come 2010.

DraftFCB CEO Neil van der Weele says the fast rate at which companies are launching new products is forcing agencies to continue to work at delivering effective campaigns that have powerful impact - only faster.