The swearing-in of Barack Obama as the 44th US president next Tuesday will be epoch-making. And not just because it will herald the arrival of the first African-American in the Oval Office. It will also set the seal on the success of the extraordinary marketing effort that helped propel him there.
History will record it as the most expensive US political campaign of all time, but may also come to recognise it as the moment social media first showed its true power.
Obama's campaign worked because, in the words of one expert, it "built from the bottom upwards, not from the top downwards". Employing 95 web staff, it successfully exploited as never before people's growing eagerness not just to receive messages, but to create them and pass them on to friends via the internet.
Ironically, what's being hailed as one of the wonders of the modern communications world works because it harks back to a bygone era when advertising barely existed and brands found fame through word-of-mouth.
For agencies used to what one senior executive calls a "broadcast mindset", the social networking phenomenon and the way it empowers consumers can seem seriously scary. "There's no doubt that social media will be the hot topic of 2009," Mark Collier, the Dare managing partner, predicts.
Which makes this week's warning from the IPA that, when it comes to social media, the majority of agencies "aren't getting it" all the more disturbing. The verdict comes in a new publication, Social Media Futures - The Future Of Advertising In A Networked Society. A 10-Year Perspective, by the IPA and the Future Foundation. It is the culmination of 18 months' work involving interviews and workshops with 100 IPA member agencies.
The report appears against a backdrop of rapid technological advances that have fuelled and expanded social media. It suggests that the phenomenon is really a global village version of what was once village green gossip. "This increased ability to communicate is not only building on innate human characteristics, it is accelerating social trends," it argues.
Alan Wolk, a US creative director and media consultant, defines social media as "anything that lets you share information with other people". And that includes everything from Facebook to message boards, blogs, podcasts, wikis and social networking.
Just how this upsurge in social media will impact on agencies is an open question. Assuming that a more interactive media environment results in no major power shifts between agencies, clients, media and consumers, analysts suggest the industry would deliver healthy annual growth of 4.5 per cent over the next decade to £52 billion (at 2005 constant prices).
However, the picture looks far bleaker if consumers, empowered by social networks and "blocking" software, significantly diminish the power of paid-for advertising. If that happens, it's predicted that average annual industry growth rates could be a meagre 1.2 per cent.
In reality, the future is unlikely to unfold in such a black-and-white fashion. Indeed, the report predicts that social media will provide significant extra business opportunities for agencies.
Real-time data gathering and analysis, new forms of research and consultancy could mean that, by 2016, some two-thirds of the revenue lost under a worst-case scenario could be regained through these additional products and services. The proviso, of course, is that agencies are getting to grips with this changing market. The report suggests that not enough of them are. But, predictably, agency network bosses plead not guilty to such a charge and are stung by the implication that they are industry dinosaurs threatened with extinction because they won't evolve.
Gary Leih, the Ogilvy Group UK chairman, has won acclaim for the way he has integrated a group of more than 1,270 people covering eight marketing disciplines to produce seamless solutions for clients. He says: "Ever since I joined the industry almost 30 years ago, I've been hearing predictions that agencies are going out of business. First it was the dotcom revolution that was going to finish us, then it was the rise of the internet. It wasn't true then and it isn't true now. There are a lot of very smart people in this business whose job is not only to keep up with social trends but to predict them."
At Publicis, digital work now accounts for 25 per cent of the UK group's revenue. And while income from mainstream advertising has been growing by 0.5 per cent, digital revenues have increased by between 20 and 25 per cent.
And social media is here to stay. Indeed, advertisers are already harnessing it. Nike+ is essentially a social network developed by Nike and Apple to help people with a passion for running. Hollywood, too, has embraced the medium to stoke up interest in movies such as The Dark Knight.
"Maybe there'll be more social networking via mobiles, but people won't stop doing it," David Bain, the planning partner at Beattie McGuinness Bungay, declares. "You might as well try to stop them watching colour TV."
George Bryant, the former planning chief at Abbott Mead Vickers BBDO and a founding partner of The Brooklyn Brothers, agrees. "There's no longer a question of whether or not social media will become important. It is now," he insists. "The real question is whether there's any future in media that can't become social."
John Bartle, one of the founders of Bartle Bogle Hegarty and the non- executive chairman of Dare and ILG Digital, says: "Social media is no hula-hoop and agencies will have to adjust to it. The problem is that it's so new, nobody knows anything about it. You have to work it out as you go along."
This is acknowledged in the IPA report, which says: "The industry is still at a stage where it is experimenting with what is possible in social media."
No surprise, therefore, that the investment in social media advertising remains modest. The IPA Bellwether Report estimates online advertising accounts for just 11 per cent of total UK adspend and that social media is only one part of that.
This is in sharp contrast to the US, where social media adspend hit $1.175 billion this year and is projected to reach more than $1.6 billion by 2013.
Nevertheless, Peter York, the social commentator, believes social media is a permanent fixture because of its youthful associations, its involving nature and its ability to connect people across the world. "The problem at present is the shortage of digital natives in agencies," he points out. "I fear that the early results of agencies trying to come to terms with social networking will be dull."
But if you accept that growth in all media that allow people to communicate with each other is inevitable, then the social media boom presents agencies with a serious dilemma. They recognise that recessionary pressures will accelerate the trend for advertisers to make more use of digital media where response rates can be immediately measured.
Their worry is that clients will want to capitalise on social media before agencies have worked out how they can make money from it. Some onlookers say the changing landscape will force agencies to pay more attention to their intellectual property rights and revenue sharing with clients.
"It's not that we don't 'get it'," Neil Dawson, a founding partner of Hurrell Moseley Dawson & Grimmer, says. "The question is knowing what to do about this very different way of communicating. Nobody has cracked it yet."
Peter Cowie, the former head of new business at JWT and the managing partner of the marketing consultancy Oystercatchers, believes the answer is simple. "The digital space allows agencies not only to offer consultancy and intriguing solutions, but to charge properly for them," he says.
But the social networking culture doesn't help in resolving the problem. "Social networking sites are a lot like pubs, where people interact with each other," Bain explains. "Both are difficult places for brands to have conversations with people."
He adds: "At present, such sites are amplification spaces rather than commercial spaces. However, once the gap between recommendation and purchase has been shortened, there's bound to be more profitable things for brands to do."
Collier forecasts that the coming year will see the arrival of a few false prophets in adland claiming they can lead clients into social media's promised land. But he warns: "While it will be relatively easy to talk the talk, it will be much harder to walk the walk."
He goes on: "Social media should be viewed as a discipline in its own right and doing it properly will require genuine specialists who live and breathe it. But it will need to be closely allied to core marketing strategy and execution if it is to be relevant and effective."
Some, though, claim that the agency system, as currently configured, will not be able to cope with the new forms of communication personified by social networking. Steve Henry, the former TBWA\London executive creative director, believes this will precipitate a new wave of agency launches that are better attuned to changing times. "The current agency model needs rethinking because it's run out of steam," he declares. "Remember that a lot of digital agencies are ten years old and you have to ask if they're flexible enough to seize the opportunities on behalf of clients.Many clients are starting to feel that the agency they need doesn't exist. That's to say one that understands the mechanics of social networking as well as delivering the upstream strategy and thinking."
It may be that the industry will be helped in this by its young workforce (about half the 19,000 staff in IPA member agencies are under 30). Many are themselves fuelling the boom in social media. As the report says: "Social networking is a young person's game."
"A lot of the ideas that emerge are going to be terrible and a few will be fantastic," Bartle comments. "What's certain is that the future is going to provide tremendous opportunities for our young people."
Equally clear is that tapping into this new form of communication will be tricky. The upside is that, because social media airtime costs are zero, there's scope for investment in quality creative work, in an area where production values are generally low.
Moreover, marketing activities that were previously difficult, expensive and slow to implement suddenly become cheap, easy and fast. Social media apologists also claim it enables advertisers to spot and address negative attitudes towards their brands before they become widespread.
The downside is the ease with which brand owners can alienate social networkers by talking to them in the wrong way. "Humility is a virtue," the report points out. "Overstep the mark at your peril."
Russ Lidstone, Euro RSCG's chief strategy officer, says: "People get involved in networks for shared interest and that shared interest can't easily be forced on people. Advertisers can't treat the space in the same way they might treat other more traditional forms of marketing communications."
He believes the big debate will centre on the extent to which brands potentially taint their own reputations and those of the networks by "communicating" there in the first place.
Some, like Bryant, believe social media represents the industry's last best hope of sustaining its viability. "A new, more connected, vocal, vociferous, badly behaved, creative consumer is the most important media we've got," he says. "Arguably, they are the last mass media. And unless agencies connect with these new consumers in new ways, clients' budgets will fall woefully short of their marketing needs."
HOW SOCIAL MEDIA HELPED TO DISARM BRITAIN
Social media played a pivotal role in creating extra impact for Disarming Britain, Channel 4's series of programmes highlighting the increase of weapons and violence by young people on Britain's streets.
The broadcaster had ambitious aims. It was eager that the series should be a catalyst for change. But it also wanted to find out what the implications might be for future programming, particularly for news and current affairs.
That meant establishing a dialogue with a traditionally hard-to-reach teenage audience with a reputation for apathy and indifference.
Profero, which was assigned the brief, built its strategy around Bebo. The social networking site was identified as an ideal way of getting into conversation with teenagers without patronising or preaching to them.
"Teens will engage if they are treated with respect, especially if the topic is one they can relate to and they are encouraged to feel that their input is actually having an impact," Nick Clarke, Profero's marketing chief, says.
The Bebo audience was encouraged to react via various devices. They included a campaign hub in which three fictional characters - a crime victim, a witness and an ex-gang member - drew people into the debate in a series of chat rooms.
This was backed up by using the witness character, Sushil, as a character in Bebo's Sophia's Diary, the popular web drama.
The other key element was DeadEnds, an online game highlighting the consequences of violent street crime.
The result More than 90,000 views on the Bebo hub, more than 1,500 comments and pictures left in the dedicated chat rooms and more than 170,000 viewings of the "Sushil" episode on Sophia's Diary.
The digital marketing company iCrossing, commissioned to measure how well the initiative had worked, was in no doubt. It found that while the Channel 4 series had raised awareness of street violence, the Bebo initiative had undoubtedly sustained it.
TIPS FOR CREATIVE SUCCESS
1. Online display ads risk "shouting" but not being heard.
2. Tagging is an extension of search in the social media arena: controlled brand messaging linked to words/sounds. Risks being intrusive or irritating if overplayed.
3. Viral and video films need high entertainment value to win acceptance. Inviting participation through uploads/re-edits plays to the strength of the medium.
4. Incentives need to be motivating: a discount, premium content, access to a site's archives etc.
5. Brand profiles only work for high-involvement brands, because low-involvement brands won't attract traffic.
6. Bulletin boards need integrity; publishing good and bad proportionate to response rates.
7. Online surveys should include open-ended questions to allow for personal expression.
8. Community sites need to be subject-led and brand-"sponsored".
9. Widgets travel furthest when not directly attributed to the brand donor.
10. Third-party blogs and fan campaigns may be instigated by the brand, but can only be activated by the consumer.
Source: IPA/FF workshop.