This time last year Creativity magazine had chosen to honor the iPhone rather than an ad campaign. It marked the ad industry’s arrival at a tipping-point. A year later, with consumers in control of ever more of the marketing conversation and economic news getting worse, design is now displacing messaging as the engine of brand success.

Brilliant design cuts out the marketing middleman – the traditional art directors and copywriters – and creates its own media. Like Occam’s Razor, it whittles the marketing equation down to simplest principles: the best experience wins.

Not the best promise. Not the cleverest copy. Not the Big Idea or the biggest budget. The best experience wins.

Apple didn’t invent the smart phone. They simply transformed the users’ experience. iPhone demonstrates how focused, user-driven design thinking can be more profound than any “equal” amount of creativity applied to traditional marketing communications. Let me count the ways:

1. Design has the potency to rearrange markets. The iPhone dramatically accelerated the world market for smart phones as well as capturing market share for Apple. In another Apple category, Dell’s vaunted direct-selling model has proved unsustainable as more consumers move to laptop computers. A laptop is personal. People want to touch it and handle it before they buy.

2. Design trumps cosmetics. That’s because smarter companies have finally realized that design is not cosmetics. It’s strategy for making remarkable things happen. Tarted-up Blackberrys like “Curve” and “Pearl” outsold the original, but employees at Fortune 500 companies are clamoring for iPhones. The best experience wins.

3. Design creates an architecture of participation. Great brands turn audiences into participants because experience is personal in ways that media can’t be. (I was just in Times Square this weekend and overheard a little French girl point and say, “Look, Maman! They have McDonalds here too!”) Design gives iPhone a top gear that competitors don’t have. Apple opened up the platform for independent application developers and inventive users and look what happened. Wikipedia is an architecture, too. It grows every day, often in unexpected ways like a coral reef, as user/participants add their mites of knowledge.

4. Design determines the conversation. In law, res ipsa loquitur means “the thing speaks for itself” better than any argument could. A design like the iPhone speaks for itself. Sure, Apple ran ads for iPhone. But their campaign had none of the “insights” and slick imagery that are 21st century arguments for technology brands. It didn’t promise to make us cool or more productive. Instead, iPhone ads are throwbacks to Ron Popeil’s Vegematic TV demonstrations - “It slices! It dices!” - of the 1970’s that simply showed the thing in action. (Check apple.com to see an irresistible fifteen-minute version of those ads.)

WHAT SHOULD SCARE thinking people at the world’s ad agencies is that these ads could easily have been done in-house.

Today’s smartest advertisers are working miles upstream from most ad agencies. They are putting more intelligence, more imagination and more money into the product experiences they provide.

Brands like Apple and Google are harbingers of a tectonic shift in what matters to people; and even today’s best Internet-only shops have as much to fear as any legacy agency. The Internet is an all-way street, and creatives are no longer in control. The pathways that transmit viral messages can doom a new entry as quickly as they can build buzz. Those “Come see our cool new thing” websites are new media behaving like old media, with better addressing and better metrics. There’s nothing wrong with that, but clicks don’t necessarily represent real participation any more than using the TV remote to change channels. YouTube may be growing ( and fall under the increasingly silly term “new media” ) but 99% of the experience is still passive viewing, like network TV on steroids. Plus ça change, plus c’est la même chose.

NEW MEDIA OR OLD, crappy products still look great in advertising and great products still work better in real life. By “products” I mean all the artifacts and actions of a brand – the item itself and how it does what it does, the website, its packaging, the store, how its people say “hello”– the ease and beauty and rightness of every step of the consumer’s journey.

Advertising can play a crucial role, but design is the broader platform because it is our experiences that shape our actions and beliefs.

As more marketers apply design thinking to their brands, ad budgets may become the price that their competitors pay for mediocre design – a tax on laggards. This is good news for some of us. Products that will still need to be pushed, will keep agency creative departments busy and media shops flush.

AT PRATT INSTITUTE in Brooklyn there used to be a course that helped designers learn how to be ad agency art directors. Instead of creating things that people experienced directly – touched, handled, lived in, used, shared, adapted and made their own – the designers learned how to construct ad images. You can sometimes hear this concept revererate through old school agencies: “I used to be a designer…” As if the thing itself, and all the experiences that sailed in it, was less important than the lengthened shadow an art director could learn how to cast.

Shadow plays still work a lot of the time, but agency economies built on casting images alone are increasingly fragile. All it takes to disrupt them is one iPhone. Or one Google. One blindingly singular something that speaks for itself and that people simply love.

IN A TALK at last year’s Web 2.0 Conference, NYU media topologist Clay Shirky calculated that Americans spend 100 million hours each weekend just watching TV commercials. 100 million hours. That’s a lot of passive viewing. Especially when you figure that “only” 100 million hours of active individual intellectual effort went into creating Wikipedia so far. (If America put its mind to it, we could build another Wikipedia during the commercial breaks in a single weekend.)

The larger point is that your mother was right. There are much better things to do than watch TV. Most of us just don’t know what those better things are until somebody designs them for us.

Like consumers, 21st century advertisers have lots more channels on their remote, but what they really want is for their brand to be one of the consumer’s Fab Five, and have the consumer put some energy into the relationship. Advertisers want participation, not passivity, and the 200 billion hours that U.S. consumers now spend watching TV is where the time will come from as more compelling experiences are designed.

The question that design asks is: “What would you like consumers to do with you?” instead of “how many more messages can get them to watch?”

DO YOU WANT a “persuasion score”? Or do you want to actually change minds and shape behavior? The pressures on clients to maintain meaningful, differentiated brands in this economy will be mind-bending. As GE’s Geoffrey Immelt told the IBM CEO survey, “We’re now all just one step away from Commodity Hell.”

Not quite all. There’s only one Apple. There’s only one Google. One Method. One Facebook. One TOM’s Shoes. They each deliver a singular experience.

And the best experience wins.