IPA: Social Networking Revolution

The report looks at social media and its likely impact on the ad industry, which it claims could face just 1.2% growth per year by 2016 if agencies and clients fail to understand social networking and the ways in which it’s empowering the consumer.

Consumers will increasingly mediate messages between brands and other consumers in the social media arena, according to the report, which could in effect diminish the power and influence of paid-for advertising.

Of the survey’s 100 participants, nearly 95% agreed that more brand messages would be passed on informally from one person to another by 2016, and 90% agreed with the statement: “Some advertising campaigns will be built entirely on messages being passed from individual to individual.

Understanding permission-based advertising will be vital and “brands will have to earn the right to be in this space,” the report said.

Over the next ten years, success will be measured by the degree to which a brand is allowed to blend in with conversations that are going on.

Clients and agencies will both need to develop new ways of engaging consumers in the communication process in order to do this, for example, brands must appear to be more ‘humble’ in their approach.

The report said: “A more integrated, holistic approach needs to be developed so that network communications is viewed as an integral part of the mix.

“Clients and agencies must improve the ability to work in real time and develop new ways to incorporate and engage consumers in ways that reinforce brand vales and build trust.”

IPA’s 2007 ‘Future of Advertising’ report predicted ad expenditure to hit around £36 million, with an average growth rate of 1.2%, by 2016.

However, the new report explains ways in which social media can counteract this; for example, with marketing activities that are currently difficult, expensive and slow, social media can change them and make them easy, cheap and fast.

The report said: “Of those agencies interviewed top growth opportunities in social media will be new forms of campaign and content creation with the industry predicting that client investment through agencies in this are would increase by more than 5%, followed by ‘real time’ data gathering and analysis at just under 5%.

Others include new forms of research and insight generation, using social networking for new product R&D as well as the integration of public relations and word of mouth into planning and execution.

The report predicts that “expenditure on paid-for space will decline by 2016”, however, it also forecasts an additional £16 billion increase in expenditure if agencies and clients both innovate and adapt to the changing marketplace.

Moray Maclennan, IPA president and CEO of M&C Saatchi Worldwide, said: “Social media has been a phenomena for some time, but the industry is only beginning to come to terms with it as a medium. Its potential is undoubted, but the risks are equally clear.”

In December, mobile network Orange reported that the number of people using their mobiles to access social networking sites had rocketed in the previous 12 months (see Mobile social networking rockets).

The study found that the combination of cheap or unlimited internet access tariffs and advanced handsets, which make it easier for people to log on to their favourite sites, had created a boom in social networking.