If you’re running a small traditional ad agency, do you think you’ll be around in 10 years? According to the Institute of Practitioners in Advertising’s recent report, you’ll have a tough time growing if you’re not prepared for social media and digital communications.

We Are Social pulls together a nice summary of the report. The quote that sticks in my mind is from Steve Henry, the former TBWA\London Executive Creative Director:

“The current agency model needs rethinking because it’s run out of steam. 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.”

While social media is exploding right now, there’s plenty of opportunity for some of the popular social media sites (Facebook, Digg, Twitter, Delicious, YouTube, LinkedIn, Scribd) to flame out. Remember Friendster? They were the top dog before MySpace took over. Now, Facebook is challenging MySpace.

But regardless of which sites thrive, customers now control the conversations about brands and interruption marketing is disappearing.

Many traditional agencies simply won’t be able to make the transition–it’s too great of a shift in how to approach the marketplace. New digital agencies are sprouting up every week, run by different people with a clear understanding of how to blend in and become part of the person-to-person conversation.

If you’re one of them, this is your wakeup call. It’s time to address the elephant in the room.

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Today I ran across PR 2.0, a great blog by Brian Solis. Brian is Principal of FutureWorks, a PR and New Media agency in Silicon Valley, and is among the original thought-leaders who paved the way for social media. 

Brian does a great job of covering the role of PR in new media. What is his main point? 

PR is changing, and it’s fueled by technology. The Web and social media have created transparency that allows PR people and their clients to truly engage with the public. 

If you’re stuck using traditional PR or working with clients that need to move (or start) a conversation online, devour his stuff. Check out his free ebooks, including

PR for Startups

The Essential Guide to Social Media 

If you’re new to social media, it can be intimidating and confusing. How can Facebook help me grow my business? What’s the value of a 140 character messaging system?  Who uses social bookmarks? Why should I create a wiki? 

All are great questions. I’m still learning, but everything started to click when I realized that all of the social media sites are about having one-to-many conversations on the web. Some sites focus on video, some on pictures, some on music, some on links, some on documents and some on personal profiles, but they’re all about sharing and communicating. 

For visual learners, Brian created a great graphic called the Conversation Prism that shows all the different social media categories and sites for the “conversation” on the web:

If you’re just starting, read his ebooks and focus on generating word of mouth online. 

The benefits are substantial: 

• Sell your expertise with content.
• Expand your PR.
• Generate leads.
• Strengthen your competitive positioning.
• Build your brand.
• Improve your customer retention.

While the names like Web 2.0, PR 2.0 and eventually social media may seem like fads, the essence of them will not fade away. 

It’s simply too powerful.

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