More than 100,000 fans chat to each other on the Facebook page of Asos, the new darling of the pureplay online shopping sites. Each of the fans has an estimated 25 other friends whom they chat to away from the Asos page – so that's a potential reach of about 2.5 million shoppers. Add this community to the five million who already visit the Asos online shopping site and you have what Sean King, head of British publishing agency Seven Squared, calls the "holy grail of marketing".

"Here you can see the power of social media to connect brands with their customers and fans," says King, whose company created the Facebook page for Asos. "Social media is proving to be a powerful marketing tool. Research shows that recommendations from friends and virtual strangers are the best advocates in persuading people to buy products, much more effective than traditional advertising."

As well as the Facebook page, Asos uses Twitter, has its own men's and women's magazines helping to spread the word to its community of fashionistas, and is fast establishing itself as a media channel in its own right. It clearly works: recent financial results showed Asos doubled its profit to €16.5m on sales of €194m and is adding 1,000 new products a week. So good is its performance that Tesco is launching its own e-commerce site to go head to head with it.

King cites a recent Nielsen survey which showed that 90% of people questioned said they trusted the views of friends and opinions posted by consumers online more than any other form of advertising; well up on the 61% who said they trusted newspapers or TV.

This is another reason retailers have leapt on social media as a marketing tool: they can see how effective it is to go directly to the public. "I predict that we will see the phenomenon spreading to other brands in the financial-services industry while online could also work well in the public sector too," says King.

Seven Squared has a specialist public-sector division which he hopes will protect the business from the downturn – at least until spending cuts really come into force after the next British general election. It provides research for the UK's Revenue & Customs and the Department for Environment, Food and Rural Affairs as well as digital consultancy for the Metropolitan Police, and magazines for the Serious Organised Crime Agency.

Recent figures from the industry show that clients now spend more on their own media, magazines and online than they do on advertising in magazines. Not only is it an efficient way for retailers to find out all they could ever want to know about their customers, but it is also proving to be a new source of pickings for Seven Squared where content, of course, is king. As King points out, the latest Mintel data on customer publishing estimate that the sector is now worth more than €1bn in total in Britain.

"What we are seeing is that big-brand clients are actually becoming media owners with their cross-channel platforms direct to the consumer. We sit in the middle of this because we provide the clients with creative content, and pass it on to the consumers. And we get paid for it," King says, predicting that brands will continue to push more and more into the online space with more social networking, whether it be Facebook or Twitter style, and soon the mobile phone. "Now we have the iPhone, companies are going to really push content on to the mobiles."

For now the mainstay of King's business is still the stable of 30 or so customer-produced magazines such as the consistently award-winning Sainsbury's one – hitting record sales recently of 450,000 on its 15th anniversary – and averaging 300,000 copies a month. It also publishes magazines for British Airways, English Heritage, Grant Thornton, Fortnum & Mason and the Lawn Tennis Association.

As well as Sainsbury's magazine, Seven Squared works for the supermarket chain with other social media such as in-store sampling.

King has a team of 180 people, and an increasing number with digital expertise. He recently hired Kevin Sutherland, from rivals John Brown and Redwood, as planning director and Mike Burgess, from Emap, as head of digital.

King believes that Seven Squared has, for now at least, stolen a march on those rivals because of the way it works with clients to find new platforms to reach audiences. He has the backing of another media player, the Guardian Media Group, which is a 43% shareholder, and Caledonian Investments with another big chunk. It helps having big backers, says King, but he still runs the business as though it were his own – which it was until two years ago when he sold out his Square One Group to Seven Publishing.

King started out as a reporter on Menswear magazine, and it was while editing Video Home Entertainment that he decided to do his own thing. So with a colleague, Peter Dean, they set up the agency in 1994, building it into the fastest-growing independently owned publishing agency in the UK. They sold out because they felt they needed to add muscle to pitch for the big-branded players. With that now underway, his next ambition is to take Seven Squared overseas. "We are at the stage now where we have enough knowledge and creativity to take our ideas to the big brands in the international market. I would like to think that over the next few years our footprint can be global."

King and his specialist-customer publishing agency has clearly found a niche which the big media players must envy. He has clients who pay for their content to reach a wider customer base – online and in print – while the rest of the publishing industry is desperately in search of its own magic formula, which is to dare to charge readers for content online.

What does he think will happen? King shrugs and grins: "No one seems to have cracked it yet and it's going to take five to 10 years, I suspect, before they work it out. But there will be consolidation and huge changes, that's for sure."