Geoff Ramsey, chief executive of eMarketer, said that online communities were a 'great place to test new marketing concepts without spending lots of money'. About a third of UK internet users visit social networking sites.
Media consultant Clay Shirky highlighted the power of online groups by profiling the Facebook 'HSBC rip-off' group, which forced the bank to perform a U-turn on a particular student overdraft deal. He said the action for marketers is in 'going after the consumers who are producing content'.
Ramsey explained that building an online community should not be about the brand, but focused on a community interest that the brand can be brought into. He warned that marketers have to 'learn to tolerate the negative' as transparency within a branded community would raise consumer trust of the brand.
The difficulty of making money out of online communities came to the fore in a panel session entitled 'Harnessing the power of online communities'.
Digital agency Outside Line claimed that the value of online communities was not necessarily in ad revenues, but more in brand-shaping.
Procter & Gamble's head of interactive marketing, Emma Jenkins, insisted that the key to successful digital marketing was in using an online community presence as a temperature-gauge for consumer feedback. 'A community is not a campaign,' she said. 'The only way we can have confidence in what we are doing is by understanding consumers. It is a dialogue. You need an open mind about the role of a community for a brand.'
Despite the rise of social networking, Ramsey said marketers were still 'schizophrenic' about using the sites for their communications.
eMarketer expects UK adspend on social networking sites to rise from £127m this year to £244m in 2010, when it is expected to account for just 5.2% of total spend.
Ramsey warned that advertisers have a huge hurdle to overcome as consumers have 'banner blindness' when using social networks: 'They are not interested in ads on social networking sites.' In the UK, 78% of users do not click on ads on these sites.
Professional networking site LinkedIn achieves about 25% of its revenue from advertising, but is very cautious of a making a serious ad push. Its European managing director, Kevin Eyres said: 'We currently have no advertising in our discussion groups. We are looking at this in the future, but we have to be careful. We are still trying to find the balance. We are not a pure ad-funded model.'
Andrew Walmsley, co-founder of i-level, said: 'Digital is becoming the key environment for brands to talk to consumers and see what they are saying about them. But advertisers don't have an automatic right to be in consumers' worlds, which is probably why yields are so poor in advertising inventory on social networks.'
AKQA founder Ajaz Ahmed warned that in 'channel me' portals such as Bebo, 'consumers are interested in content about them and their friends, not the outside world'.
He warned media owners that the rise of social networking meant that advertisers were trying to interact with consumers directly to promote their brands. 'Media owners need to innovate,' said Ahmed. 'Advertisers are going to be investing more in their own brands rather than through media owners.'
In a session on video, YouTube and online video company Videojug raised the problem of attracting advertising around content that appeals to smaller communities. YouTube head of media solutions Jonathan Gillespie said: 'It is an aggregation game. Media companies need to aggregate enough quality content for advertisers to advertise around.'
Nancy Cruickshank, global chief executive of Videojug, agreed: 'The issue for advertisers is scale. You are never going to advertise to attract five people.'