In the postcard-perfect seaside town of Kinsale, Co Cork, holidaymakers wondered earlier in the day why they had trouble getting a table in the town's better eateries.

They approached the cliques of people wearing torn-jeans, tee-shirts and suit jackets, and sunglasses to hide the night before, asking, "are you famous?"

And they are, in a way . . . in that most people would have seen their work.

They are the 'creative' end of the advertising business, the people who think up words and images in an attempt to persuade you. To buy a product or service. To change your beliefs. To act.

This was two weeks ago, at the 44th year of the Shark Awards, the International Advertising Festival of Ireland. It might look like your above-average industry piss-up. But beneath the surface lurks a debate raging around the world . . . fed by the rise of boxes that fast-forward over the ads, younger viewers deserting TV for MySpace and YouTube, and consumers less willing to be told what to do . . . about whether the advertising industry as we know it has a future at all.

"I thought this was a bad time to be in advertising, " said Donald Helme, chairman of Grey Helme. The pessimism is surprising to hear, as Helme was for many years the chairman of the Sharks festival. This year is his last.

"If I had a kid of 18 I'd say don't do this, do something else, something more worthwhile, like grave-digging. But for God's sake don't go into advertising."

Helme, who first attended the awards in 1969 as a punter and token 'suit' of the ad industry sent to keep an eye on the longhaired 'creatives', has seen Irish advertising radically transformed.

Decisions about marketing spend gradually were taken more and more outside of Ireland, to the point where more than two-thirds of the advertising spend is decided offshore, by Helme's estimation.

Advertising is now a globalised business with razor-thin single-digit margins. Something that has limited creativity.

Something Helme heard in Kinsale this year lessened his gloom. Patrick Collister, the former creative director at Ogilvy & Mather in London, argued that people will consume a fixed quantity of media. As people have greater choice about what they will look at or listen to, advertisers will just have to work harder to get their attention. For the truly creative, the situation should offer hope, not despair.

But most advertising agencies are just beginning to understand the new rules. In Ireland, the situation is probably worse, because the lack of broadband penetration has meant the market has to some extent been insulated from the trends buffeting traditional media in the US or UK.

John Hegarty, chairman and worldwide creative director of London-based agency BBH and the man behind the Levi's laundrette ad and 'Vorsprung durch Technik', was the head of this year's festival jury.

"This is an industry founded on interruption, " he told the Sunday Tribune. "The old way of thinking was, I'll interrupt and force my message onto people till I drum it into their brains."

But with the rise of the internet, that model has broken down. "Now that the consumer is in control they can decide what they want to see. They create their own media framework."

The new challenge facing the industry is to produce advertisements you'd actually want to watch, in other words, not because you're trapped and have no choice.

'Virals', industry shorthand for short videos or animations designed to be spread by willing consumers via email, or posted to MySpace or YouTube, to some extent offer a taste of the future.

But it's a game that, because of its low cost, can be played not just by advertising agencies. Dublin public relations firm Thinkhouse has created a number of short videos for clients which it then released onto the YouTube social networking website. A PR stunt for Imagine broadband, with men and women stripping naked on Sandymount strand, was viewed more than 1,000 times, without having spent an additional cent on air time.

"A TV ad is a man on a soapbox bellowing at you through a megaphone and not listening to a word you have to say, " Matt Smith of London agency Viral Factory told a somewhat sceptical audience. "Viral is your mate coming up to you in the pub and telling you a good joke."

Smith also pointed to an example that should offer some hope to creatives, the Crispin Porter ad agency based in Miami, Florida, which produced a series of ads for Volkswagen collectively called 'UnPimp My Ride', aimed at boy racers and featuring a slightly creepy German engineer destroying customised Ford Fiesta-type cars in hilarious ways. At last count, something like 12 million people viewed the adverts on YouTube, costing the advertiser nothing to reach those viewers above the cost of producing the ads.

This should mean a global levelling of the playing pitch and allow the creatives in Irish ad agencies to stake a new claim.

Which is what makes the Sharks intriguing, as it puts the best Ireland's advertising industry has to offer head-to-head with entrants from around the world. And ads picked as winners by the international jury tended to entertain.

The winner of the overall Grand Prix was 'Balls', made by Fallon in the UK, featuring millions of colourful balls bouncing down a steep San Francisco street, to promote the Sony Bravia LCD TV.

The biggest winner of the Irish entries was arguably Owens DDB, which produced an advert for Carlsberg titled 'Reactions', featuring the tearful reactions of Danes watching the lorry of lager leaving the country. It won a gold in a domestic Irish category and a bronze in an international category.

"It's a very rare thing for an Irish ad to win an international, " said Colin Murphy, creative director at the agency. "You're competing against literally hundreds and hundreds of entries. The international Guinness ads, for instance. So it's fantastic to get that."

The agency shot the ad in Denmark, spending three days in freezing November sleet.

Murphy said that while in the long term he agreed there would a shift towards the internet, TV advertising would remain king for some time to come.

"It's the prime form of advertising as it gives the brand a premium feel. TV allows you to get across a story in a way that other media don't."

Martin Cowman of Cawley Nea/TBWA was equally delighted at the agency's win for its wry ad for Irish Pride bakeries, featuring a series of characters giving short shrift to their jobs . . . "people who don't give a shit" . . . and memorably ending up with a truck trapped by the too-short ceiling of the Dublin Port Tunnel.

"It's the mark of a good client that understands creativity, " Cowman said of Irish Pride. The firm hired director Declan Lowney, who has worked on Father Ted and Little Britain, to direct the spot. That quality of having an ad the viewer would actually choose to watch, a 60-second bit of entertainment with gags that punch like those in the programmes mentioned above, will increasingly become necessary in order to persuade people to actually want to watch.

The irreverent streak was shared by practically all the winning Irish entries . . . even a public service spot for Irish Rail by AFA O'Meara made the point as gently as possible to lorry drivers to pay attention to the clearance heights of rail bridges.

"You can't buy an audience anymore, " said Cowman. "TV used to be about making sure a big enough group of people were in one place and somehow that bought their loyalty. Now you have to earn it. It's no coincidence that these days the ads that win creative awards are the ones that also win awards for effectiveness."

Deirdre Gunning of DDFH&B, which took bronze in one category and tops in special effects for Amstel adverts 'The Flood' and 'Troy' respectively (the latter honour to production company Screen Scene), agreed with Murphy of Owens DDB that TV ads themselves still send a message.

'Troy', for example, was filmed in Morocco, a popular spot for film locations in recent years. "We wanted it to be really epic. We wanted to relaunch a beer to be a premium lager. We wanted to basically show to our target market, we're serious about this."

Donald Helme, having had his optimism renewed about the fate of his industry, enthuses about the challenge. "One of the more exciting things about this business is that we do get better at it all the time, " he said. "I have no truck with people who say, 'oh remember the great ads, we don't see those anymore'.

That's bollocks. There are still great ads.

They're just different."