You are on page 1of 4

Guess which medium has grown fastest over the last six years in terms of advertising spend?

Online, of course. Wrong. The US internet advertising marketing was worth $6bn dollars in 2001. It looks likely that this market will be worth around $20bn in 2007 – a very healthy aggregate growth rate of 300%.1 But compare the growth of word of mouth marketing (admittedly probably a discipline rather than a “medium”) over the same period. In 2001 the market in the US was worth $76m. 2007 is likely to be worth $1.35bn2. As Crocodile Dundee might say, “That is growth!” Word of mouth has been in the news elsewhere. Grey London recently bought a stake in Wildfire, a London-based word of mouth marketing company. What’s this all about (briefly)? You could argue that brands are indistinguishable from mass media. Before mass media, companies and the products they made of course had reputations. And as such consumers, one assumes, talked about the products. But “brands” – (loosely) a range of emotional & functional associations made by consumers around a product, service or company – could not exist without mass media. Advertising only became possible because of mass media. And reputations only became “brands” once companies sought to influence the former through advertising. Since mass media gave birth to advertising much has changed in the world. But two developments are most relevant. Firstly, advertising became a very, very big business3. We are now immersed in advertising4 – no one should be surprised if effectiveness decreases as the total volume of advertising increases. The second is more recent. Rising broadband penetration has led to increasing use of social media. This has shifted the focus to the connections between consumers and away from the connection between consumers and mass media outlets or professionally produced content. These two trends – the proliferation of advertising & growing use of social media – are increasingly convincing marketers that their communications can be powerfully augmented by getting consumers to pass their messages on, or in any other way talk about their brand.

1 2

Statistics extrapolated from IAB/PWC report, June 07: http://tinyurl.com/2ogfbh Statistics from report by PQ Media, Nov 07: http://tinyurl.com/37kvtr 3 PWC report of 2005 predicted that the global advertising market would be worth $500bn by the end of 2010: http://en.wikipedia.org/wiki/Advertising 4 Estimates as to the number of advertising messages an individual is exposed to vary considerably. A range of estimates for the US market, from 250 – 3000, plus the sources of these estimates is here: http://answers.google.com/answers/threadview?id=56750

A number of the world’s best known brands have initiated word of mouth marketing campaigns, among them: Nokia, American Express, Pfizer and Kellog’s. However the large marketing budgets which these companies command dwarfs that required to test word of mouth – global corporations therefore have little reason not to experiment with word of mouth marketing. The real tests are a) whether these companies maintain and increase their commitment to word of mouth; and b) whether smaller spending marketers see a reason to shift budget out of traditional advertising channels. To do either of these, marketers will need to be clear on what word of mouth can and can’t do. If there’s one thing which all word of mouth marketing companies have to hand it’s a stat showing that while, very few of us trust advertising, all of us trust our friends and family to tell us about products or services5. No one is doubting that endorsement, whether from a friend, colleague, a blogger or a news network, is a powerful force in shaping the way we feel about brands. But the story is not as simple as word of mouth companies make out, for a number of reasons. Firstly, and at the risk of making an argument over semantics, one can question how much it matters that only 14% of consumers believe advertising. Making a straight-forward product claim, which consumers can believe or not believe, is, as I see it, less common now than implying an emotional benefit. It is harder for consumers to believe or disbelieve advertising in which the claims are implicit and emotional. This does not necessarily however make that advertising any less effective. Secondly, word of mouth marketers cannot6 argue that word of mouth did not operate around brands before it became a marketing discipline. One rejection of word of mouth marketing would state that companies should simply focus on delivering products and services which generate positive word of mouth without the involvement of the Marketing Department. First Direct and Apple are two companies whose offering is sufficiently differentiated to generate natural word of mouth. The problem with this argument is that it could equally well be applied to advertising in general: why do you need to advertise, using word of mouth or otherwise, when you could just focus on creating a unique product or service? Arguing that word of mouth should happen naturally only is, in other words, a little naïve. A third issue which word of mouth marketing will need to confront is scale. There is much you can accuse of the advertising industry of, but providing a service which is not scalable is not among them. The work of a handful of individuals in a single agency can be, and is, reproduced far and wide. This is good for advertisers since it means they can spread the fixed costs of producing advertising assets over the declining variable costs of reproduction and media.

5 6

See Wildfire’s website: www.wildfirecompany.com/ (and do not)

Scale will be harder to achieve in word of mouth marketing. Word of mouth marketing agents are in the main not paid, and even if they were it would presumably not be possible to get volume reductions in the same that it is when buying media. A related difficulty: if word of mouth agents are unpaid, is there a natural ceiling to the number of agents a word of mouth marketer will be able to recruit? I would argue that there must be, and that this ceiling is probably rather low. A second difficulty in achieving scale in word of mouth marketing relates to effectiveness. Increasing pervasiveness is likely to lead to declining effectiveness (sound familiar?) Indeed widespread use of word of mouth marketing is likely to lead to cynicism more quickly than has been the case with established advertising techniques. Who wants their acquaintances dropping in references to brands into everyday conversations? And would you be left with a good impression of the brand if they did and you knew they were working on behalf of the brand? A final problem for word of mouth marketers is messaging: not only can a TV, print, radio or internet ad be reproduced at low cost, it also says exactly what you want it to say. Thoughtful word of mouth marketers have realised that if they tell their agents what to say, either these agents won’t say it, or people the agent talks to will receive the brand message with incomprehension or cynicism. Agents at Bzzagent, a US word of mouth marketing company which has recently opened an office in the UK, are asked simply to share their honest opinion about a product or service and then asked to feedback on these conversations7. In other words, to get people to talk about their offering, advertisers may have to forego control of the message. These points are not made because we don’t believe word of mouth marketing has a role. But this role will be to work alongside more conventional advertising techniques, not replace them. Word of mouth marketing will be useful in reaching influential audiences, whose endorsement is likely to improve sentiments towards the brand further afield. It will be useful also in engaging with audiences which are hard to reach through advertising in mass media. There are many other circumstances in which word of mouth will have a role: product launches, neutralising negative brand sentiment, for campaigns with a particular geographical focus. Finally, some would argue that word of mouth marketing is not just about “advertising” anyway; but rather that it’s a way for brands to connect with consumers in order to get a clearer sense of what the latter want. There is much talk of the advertising industry’s need to keep up with changing consumer behaviour. We certainly don’t disagree with this8. Word
7

Another issue, relevant for Bzzagent in particular but word of mouth companies whose work is done offline in general, is simpler still. How do they know that their agents are doing anything, and not just reporting back on entirely invented encounters? 8 They must change often, those who would be constant in happiness or wisdom - Confucius

of mouth will be one discipline which will benefit, but it will certainly not the only one. Sam Ashken, Dec 07 www.hyperhappen.com