As an industry, we have only just begun to scratch the surface of social media.
There’s a revolution in the air, and a pseudo-science to describe it that leaves
many of us searching for a better understanding. The tech-savvy creatives
among us are leaping to experiment; strategy people are living in the
‘planosphere’; new ways of thinking and talking are emerging.
There’s a lot of hype, but less understanding of the reality.
This publication aims to bridge the digital divide between the old and new
worlds. It seeks to make sense of social media with reference to both old and
new communication models and, in so doing, provide common ground for
debate and collaboration.
As media convergence really begins to take hold, and brand owners seek to
integrate social media into their overall communications strategy and plans, it
is incumbent on agencies to help them navigate this new reality.
In so doing, we will also arrive at a clearer understanding of social media’s
likely impact on marketing and agency budgets, structures and services, and
find it easier to take effective action.
We can also identify new business opportunities for agencies beyond brand
communications, where insight, planning and marketing database skills can
be applied to reputation management, listening and monitoring, new product
development and e-commerce.
We are delighted to be partnering with the Future Foundation for a second
time, on this most constructive research and consultation programme.
IPA President and Chief Executive, MC Saatchi Worldwide
Introduction and rationale 4
Scope of work 4
Management summary 6
1 | Demystifying social media 8
1.1 | What are social media? 9
1.2 | An anatomy of social networks 10
1.3 | Key characteristics of social media 12
1.4 | Who uses social media? 12
1.5 | How networks are changing society 13
1.6 | Why networking is challenging brand communications 15
2 | Social media and
brand communications 16
2.1 | New models for brand communications 16
2.2 | New advertising formats for brand communications 16
2.3 | New business opportunities beyond brand communications 17
2.4 | Applying social media ‘netiquette’ to brand communications 18
2.5 | Applying industry Codes of Practice to social media 19
2.6 | Social media and intellectual property 21
2.7 | Case examples of current practice 22
2.8 | Integrating social media 26
2.9 | Brand conversations online 27
3 | Learning from academia 28
3.1 | Five academic theories of social networks 28
3.2 | Relating academic theories to practice 34
3.3 | Planning guidelines for social media 36
4 | Agencies and social
media – the Delphi research 37
4.1 | Predicting the future of brand messaging
over social media 37
4.2 | Painting a picture of the future of social media:
the next 10 years 39
4.3 | Agency readiness for the social networked future 43
5 | Assessing the top-line business impact 45
5.1 | Opportunities for business growth in social media 47
5.2 | Broader opportunities for revenue generation 49
5.3 | Sizing the opportunity 50
5.4 | Broader market opportunities 50
5.5 | Comparing the consumer-led scenario of 2008
with that of 2007 51
Post-script: The future impact of technology 52
30,000 36,000 42,000 48,000 54,000 60,000 66,000
Total commercial advertising in 2016
Source: The Future of Advertising and Agencies, IPA/Future Foundation
1996 2001 2001 2011 2016
The consumer-led scenario
£bn at constant 2005 prices
Source: Future Foundation
£bn at constant 2005 prices
Introduction and rationale
In January 2007 the IPA and the Future Foundation published The Future of
Advertising and Agencies: a 10-year perspective. This thought-provoking study
put forward three scenarios, of many possible, for the future of commercial
advertising as we know it: a central scenario, which was deemed to be the most
likely, and two alternative scenarios, one media-led, one consumer-led, which
pushed to the extreme the impact of changes in the media and consumer landscape.
The central scenario painted a picture of a healthy industry growing at an
average 4.5% per annum to £52bn (at 2005 constant prices), with a shift
towards more named, screen-based and two-way communications activity. It
assumed that there would be no major shifts in power between agencies, clients,
media and consumers, despite a more interactive digital media environment.
The media-led scenario described a world in which brands would have to ally
themselves to media owners to get their messages through to consumers in
order to overcome stringent restrictions on paid-for advertising in a growing
number of categories.
The consumer-led scenario, on the other hand, described a future in which the
consumer, empowered by social networks and ‘blocking’ software, increasingly
mediated messages between brands, themselves and other consumers, and
radically diminished the power and influence of the paid-for advertising industry.
Not surprisingly, on this basis, the consumer-led scenario
was predicted to be the most negative to the industry in
terms of future growth. Indeed, the Future Foundation’s
model of total commercial advertising in 2016 indicated
a £16bn revenue gap between the best-case scenario
(central) and the worst-case scenario (consumer-led); with
total commercial advertising expenditure figures of only
£36bn and average annual growth rates of 1.2%.
The report suggested that some, though not all, of the
revenue lost to commercial advertising would transfer
to the wider communications industry, and be taken
up by new forms of advertising and new channels of
Scope of work
The broad purpose then, of this further exercise, was to
explore in greater depth the consumer-led networked
scenario; test the accuracy of the assumptions made about
its likely impact on the future of advertising and agencies;
provide a series of recommendations and principles for
agencies to consider in order to maximise the potential
of the growth of social media for their businesses; and
New forms of advertising: the consumer-led scenario
Source: The Future of Advertising and Agencies, IPA/Future Foundation
identify a range of new revenue generating activities which
social media would create for the industry.
This report is a summary of the research, development and
consultation undertaken and has, as its core objectives, to:
1. Demystify social media
2. Make sense of social media in a brand communications
and broader business context, and provide case examples
of current practice
3. Use academic theory to create guidelines for planning
the use of social media for brand communications
4. Explain agency perceptions of social media and its likely
impact on the future evolution of commercial advertising
5. Assess the top-line business impact of social media on agencies, and the
implications for the future evolution of agencies.
Many of the lessons from last year’s exercise came from observing how ‘think-
tank’ teams, drawn from the IPA membership itself, were able to respond
to alternative scenarios and invent new organisational forms in the face of
radically different circumstances. This second-stage project has been no
different, and has involved the same process of consultation and research
among the IPA membership. This has been amplified, at different stages, by
desk research into social network theory, a literature review of relevant reports
and articles, and by case material provided by IPA member agencies. The
statistical model has also been recalibrated by the Future Foundation.
In total, the project has taken 18 months and involved over 100 participants
from the IPA membership. The full schedule of activity is outlined below.
Schedule of activity
May. . . . . . . . . . . . . . . . . . . . . . . . . Scope of work
June. . . . . . . . . . . . . . . . . . . . . . . . Exploratory workshops
July - September. . Desk research into social network theory
October. . . . . . . . . . . . . . . . . . ‘Visioning’ workshops
March. . . . . . . . . . . . . . . . . . . . . Delphi Stage 1 – online research
June. . . . . . . . . . . . . . . . . . . . . . . . Delphi Stage 2 – online research
July. . . . . . . . . . . . . . . . . . . . . . . . . Modelling – future forecasts of market size
September. . . . . . . . . . . . . Draft 1 – peer group review
October. . . . . . . . . . . . . . . . . . Desk research - trade press Oct 2007 – 2008
November. . . . . . . . . . . . . . Draft 2 – peer group review
January. . . . . . . . . . . . . . . . . . Publication
The spread of online social networking is a profound, deep-rooted social and
technological revolution that is changing many aspects of society. It is one
that, for the purposes of this study, requires a serious evaluation in terms of
the scale and depth of impact on consumer interactions with all forms of brand
The growth of social media provides significant opportunities for increased
business for agencies. New forms of campaign and content creation come top of
the IPA member list of future priorities, with the industry predicting that client
investment through agencies in this area would increase by more than 5%. Real-
time data gathering and analysis was identified as the second most important
growth area for agencies (just under 5%).
Other important growth opportunities are: new forms of research and insight
generation; applications of network understanding to new product and service
research and development; and the integration of public relations and word of
mouth into brand communications planning and execution.
While it is undoubtedly true that income from these new business activities
will take time to build, it is possible to calculate that, by 2016, getting on for
two-thirds of the potential revenue ‘lost’, when comparing the consumer-led
scenario to the central scenario (the start-point of this exercise), could be
regained through these additional products and services.
If the analysis is extended to include the more general additional services that
agencies might provide e.g. board-level consultancy; new forms of metrics and
accountability; and e-commerce; then the additional expenditure generated
increases from £10.6bn to £16.4bn – which coincidentally brings the level
of expenditure back to exactly the same level as was previously shown in the
As with all revolutions, what is new does not replace existing technologies;
these often remain in place for decades. As each new medium appears and
the doom-mongers presage the end of the previous era, the most common
outcome in reality is an overlay and interlinking of the platforms in new and
What results is an ever richer and more complex media and communications
landscape for brands to orchestrate, and for the consumer to navigate. Needless
to say, this troubles the consumer much less than the brand owners or agency
executives whose job it is to understand and exploit this rapidly shifting
environment for commercial purposes.
Understanding these dynamics is vital for future success in brand
communications. We can see that permission-based ‘advertising’ requires a
fundamental shift in mindset. Creative guidelines are already beginning to
emerge which can act as ‘rules of thumb’: high-involvement categories fare best;
creativity and innovation are at a premium; humility is a virtue.
The interactive nature of social media has value-added benefits too – marketing
activities which were previously difficult, expensive and slow to implement
suddenly become easy, cheap and fast.
However, if social media are going to play a significant part in the future of
brand communications, a higher degree of sophistication in planning and
insights development will be needed. The main difficulty with innovations
in this area is that many of them fail to relate back to established media
measurement and planning principles, creating a disconnect between old and
new. By extrapolating detailed lessons from the academic review, it is possible
to provide a more scientific framework for integration between social media and
other communications channels.
The ‘Delphi’ research results give an interesting perspective on what leading
IPA agencies believe will be the impact of Web 2.0 and social media and, as you
would expect, there are divisions between IPA member agencies when thinking
about the future of the business operating in a networked society. In terms of
agency preparedness, agencies appear to fall roughly into one of three groups:
ready and waiting; concerned but unprepared; and sceptical but confident.
Overall, both clients and agencies need to develop a more integrated, holistic
approach to all aspects of the brand communications process, in order for it
to be fit for purpose; they need to see network communications as an integral
part of the mix alongside other routes. They need to understand, measure
and predict the operation and impact of communications in this evolving
environment. Specifically, they need to improve their ability to work in real
time, and develop new ways to incorporate and engage consumers in the
communications process. They should explore ways that reinforce brand values,
build trust and maximise the potential inherent in these changing consumer
behaviours. Many agencies are already adapting to this challenge.
Thus, this investigation of the likely impact of social media on market size
proposes that levels of expenditure by clients with agencies can be maintained
as long as agencies adapt to changing market conditions in the next 10 years.
While it is possible that expenditure on paid-for space will decline, there is a
degree of optimism about the opportunity this release of funds will create for
increased investment in creative content, data analysis, PR, word of mouth and
brand insight; and in new products and services generated by the real-time
functionality of social media and its application to e-commerce, reputation
management and effective targeting. Those agencies who innovate appropriately
have potential for significant income growth in these new value-added areas.