There’s a revolution in the air that’s transforming society. It’s social networking and it’s empowering the consumer; but the majority of agencies aren’t getting it. The ad industry must get to grips with this changing marketplace over the next decade or it could face growth of only 1.2% per year by 2016. This is according to the second future of advertising report to be published by the IPA and the Future Foundation on Monday 19th January 2009.
Social Media Futures - The future of advertising and agencies in a networked society. A 10-year perspective is the sequel to the original 2007 report which put forward three alternative scenarios for the future of commercial advertising. This latest report explores in greater depth the consumer-led scenario in the context of social media (social networks, blogs, virals etc) and its likely impact on the ad industry. The project has taken 18 months and involved interviews and workshops with over 100 participants from IPA membership.
Only a third of those interviewed about their readiness for a socially networked future were in the ‘Ready and waiting’ group. Yet, according to the report, as consumers will increasingly mediate messages between brands and other consumers in the social media arena, the power and influence of paid-for advertising could diminish. Nearly 95% of this same panel 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.”
So if social media does take the lead in the future of brand communications then permission-based advertising could become the norm and understanding this is vital for success, requiring a fundamental shift in mindset. Brands will have to earn the right to be in this space. Success will be measured by the degree to which a brand is allowed to blend in with the conversations that are going on, with or without it, calling for a more subtle softer drip-feed approach.
Furthermore, both clients and agencies need to develop new ways of engaging consumers in the communications process for example brands must appear more ‘humble’ and creativity and innovation need to be at a premium. 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 values and build trust.
New communications models
Currently, digital has developed its own way of talking but it is now time for integrated thinking as well as a higher degree of sophistication in planning and consumer insights. This publication aims to bridge the digital divide between old and new worlds, by relating innovations in social media back to established media measurements and planning principles to provide new guidelines (for example how to target effectively/the key players/relevance of message).
New business opportunities
In the 2007 Future of Advertising Report the consumer-dominated scenario predicted ad expenditure by 2016 to be only £36 billion and average growth rates of 1.2%. However this latest report explains how agencies can create new opportunities out of social media to counteract this. Marketing activities which were previously difficult, expensive and slow can become easy, cheap and fast (for example in the area of consumer research online bulletin boards provide the opportunity for real-time qualitative feedback.
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 area 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, and the integration of public relations and word of mouth into planning and execution. In addition, in this new world, agencies could provide consultancy at board level more broadly than simply just advising the marketing department, could develop new forms of metrics and accountability to track the effectiveness of networked brand communications, and enter into e-commerce to generate further expenditure.
So while it is likely that expenditure on paid-for space will decline by 2016, if agencies and in turn clients can adapt to this changing marketplace as well as innovate, expenditure could increase by an additional £16bn.
Says Moray Maclennan, IPA President, and CEO of M&C Saatchi Worldwide, “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. This report helps give a clear understanding of social medias' impact, how to approach it, it also gives a common set of guidelines to bridge old and new communication models”.
To buy this publication, priced at £63.75 for IPA members and £75 for non-IPA members, please click here.
At the launch event held this week (19th December 2009), a panel of industry practitioners offered their insights into the theme of the report, chaired by IPA President Moray MacLennan. The panel comprised of John V Willshire, Head of Innovation, PHD Media, Charles Wells, MD of Kinship Networking, Cheryl Calverley, Marketing Manager, Unilever, and Nigel Gwilliam, Communities Senior Manager, IPA. Below is a sample of their views:
On the report…
Moray MacLennan (chair): “My view is that whatever type of agency you come from it’ll give you some new perspectives and help bridge the divide between old and new worlds. The report is a good read and well worth getting into from cover to cover.”
Charles Wells: “I would use this [report] as permission to take social networking to your clients. A lot of this you already know how to do i.e targeting correctly, having powerful ideas and understanding your audience, but this now needs to be applied to a socially networked world”
On social networking…
Cheryl Calverley: “My job as a marketer is to make people love my brands passionately. Previously this would have meant creating a powerful TV ad for example , and hoping that this in itself created talkability, but with the rise of social networks we still need to create fantastic content and engagement, and get people out there talking about it. The challenge is still the same .”
On whether this is simply another channel, or something that will affect the communications model going forward...
John V Willshire: “t is not just about social media being at the bottom of the media plan anymore, it is about everything revolving around the social media model.”
Charles Wells: "It is about 360 thinking; it won’t change the principles of communication but it will change how people pay for it.”
Nigel Gwilliam: “There are examples of very effective award-winning campaigns that have centred around social media. But ironically, the traditional media elements of the campaign were far easier to quantify."
Cheryl Calverley: “Measurement is always a thorny issue but for the first time I can sit and watch people talk about my brands and if I want to I can answer them which is incredible!”
John V Willshire: “Compared to traditional media, there is so little evidence of what else is working well in social media. We need context for comparison and lots of examples to look to.”
On possible disintermediation...
Nigel Gwilliam : “The next Google is probably being conceived by 12 year-olds in a garage somewhere. Fortunately their personal skills probably don't match their technical ones so businesses like agencies that have a strong relationship building element are a little safer."
On the impact of regulation restrictions...
Cheryl Calverley: “Regulations are only just catching up in non-traditional channels but regulation will come. The internet is a much freer environment at the moment and strong creative work from clever agencies will be able to use that. What’s key to remember is that consumers are clever and they will see through any attempt to mislead them. They are the ultimate regulators.”
Nigel Gwilliam: “Don't forget it's now a criminal offence for a company to impersonate an individual online”.
Moray MacLennan: “There will be significant movement this year in self-regulation. I think it will come fairly rapidly.”
Cheryl Calverley: “80% of my brand messages are now absolutely not from me.”
On should we be doing things differently....
Charles Wells: “Brands get left out of conversations online because they wade in and shout, but brands must understand that their relationship with the consumer is so much less important to that consumer than the relationship that consumer has with their friends.”
John V Willshire: “It will take time for the industry to turn their approach around. It's up to those who 'get it' to use things like this report to help speed that change.”