These words come from Sequoia Capital partner Mark Kvamme, in a New York Times interview he accorded. Mark Kvamme is a venture capitalist, which had some experience in social media. Indeed, he believes that social media is way cheaper than advertising, and with the Spike of uses of those social network, you can have a large audience to interract with.
I believe that advertising is still very powerful, but somehow, I think he is write. We are still far from this era where we won't need advertising for mass media marketing. But at some point, we have already some examples of companies which would rather spend money on social media than on TV advertising. As a matter of fact, more and more advertisers switch their budgets from TV, which TV markets is collapsing, to the Internet, which is actually becoming the main investment.
Social media could be way more efficient than advertising, because it allows customers to interract with a brand, and there for provide a great customer relationship.
What is interesting, it is that it is not the words of an advertiser, but of a venture capitalist, which is more interested into return on investment than on brand equity. I believe this is a sign.