"How To Sell Soap"

'Love this illustration of WOM.

A short movie about viral marketing produced
by vm-people, a company based in Berlin, Germany

http://www.vm-people.de

Rapid Growth of WOM for National Brands

Word-of-Mouth Marketing On The Upswing

by Mark Walsh, Friday, Nov 16, 2007 7:00 AM ET

WORD-OF-MOUTH MARKETING IS EXPECTED TO surpass $1 billion in 2007, making it one of the fastest-growing alternative media formats. In a new research report, PQ Media also predicts that spending on word-of-mouth marketing will grow at an annual rate of 30.4%, and will hit $3.7 billion by 2011.

Helping drive the growth of WoM marketing are Web 2.0 technologies such as social networks, blogs that allow consumers to share information, and opinions about brands and products. While 90% of WoM activity is estimated to take place offline, marketers are shifting more spending to online vehicles that can provide more measurable results. Findings of the PQ Media study were presented Thursday at the Word-of Mouth Marketing Summit 2007 in Las Vegas.

What exactly is WoM marketing? PQ Media defines it as an alternative marketing strategy that uses online and offline tactics involving peer "influencers," WoM communities and brand advocates to encourage consumer dialogue about products and services.

The category doesn't include what are considered unethical tactics such as spam, "sock puppeting," (assuming a false identity online to promote a product or company online), or paying someone to talk about a brand without disclosing that they work for the company.

Also not counted in WoM estimates were spending on activities like in-store product sampling, coupons and loyalty programs, and advertising on social networks and blogs. So Facebook's new social ads, which let marketers attach messages to the communications of members who have identified themselves as "fans" of a particular brand, would not be included.

Only marketing through fully disclosed brand advocates on blogs or other online outlets would be included. "The brand advocates or agents have to state that 'We are hired by this particular company,' or 'we were given a sample of a product,'" explained Leo Kivijarv, vice president of research for PQ Media.

Wal-Mart and Sony both ran into trouble last year when they used paid writers to create authentic-seeming blogs evangelizing their brands.

Kivijarv says 2006 was a turning point for WoM marketing, when it went from being an experimental media buy to becoming "increasingly included in fully integrated marketing campaigns." Marketers are no longer just monitoring WoM efforts, but expecting to see a return on investment in increased sales or buzz surrounding a product.

That trend is expected to continue in 2007, when WoM will grow an estimated 37.7% to $1.35 billion. Overall, however, WoM remains the smallest marketing segment, capturing less than 1% of industry dollars. Direct marketing, branded entertainment, and business-to-business promotions garner the lion's share of spending.

Kivijarv estimates that there are about 200 agencies and technology companies that either specialize in WoM marketing or have units dedicated to it.

While no specific data is yet available on WoM spending by product category, food and beverage, media and entertainment, and sports and recreation are among the most active in employing WoM strategies.

Mark Walsh can be reached at walsh@mediapost.com

My Take

Mr. Walsh's article covers data and projections for national brands.

But you as a local contractor or professional are part of the Word-of-Mouth Wave already. "Huh? How's that?" Well, you Feel your ears burning?

Your clients, customers, friends and neighbors are talking about you right now in the grocery store, on the sidelines of sporting events, walking their dog and at PTA meetings. They're
registering with more social networks daily to discuss carpooling, child raising, retirement planning - and guess who else they're talking about.

The Web will allow you to engage your satisfied clients using these same social networks to convert more of these discussions into qualified leads for you. And you in turn will be able to reward them and strengthen your relationship - while benefiting the community.

It's the new advertising. There are many benefits to your company including fully variable expenses and improved cash flow.

Stay tuned. The YouGottaCall.com "Connect-gine" is coming.

Is viral marketing the same as word of mouth?

Is viral marketing the same as word of mouth?

From the blog of Seth Godin: Marketing Wed, 10/17/2007 - 5:13am.

I got a note from a college student last week, explaining that his professor told him he couldn't use the term 'viral marketing' in a paper. It doesn't exist, apparently, it's just a new-fangled form of word of mouth.

I found the interaction fascinating ("I'm not certain what benefit is gained by arguing with an instructor" is my favorite quote from his teacher) but I got to thinking about whether the instructor had a point.

"Viral marketing" shows up 2,000,000 times in Google, "ideavirus" shows up 200,000 times. Of course, you could argue that just because millions of people are using a term doesn't make it legitimate (though you'd be wrong).

Anyway...



Viral marketing ≠ word of mouth. Here's why:

Word of mouth is a decaying function. A marketer does something and a consumer tells five or ten friends. And that's it. It amplifies the marketing action and then fades, usually quickly. A lousy flight on United Airlines is word of mouth. A great meal at Momofuku is word of mouth.

Viral marketing is a compounding function. A marketer does something and then a consumer tells five or ten people. Then then they tell five or ten people. And it repeats. And grows and grows. Like a virus spreading through a population. The marketer doesn't have to actually do anything else. (They can help by making it easier for the word to spread, but in the classic examples, the marketer is out of the loop.) The Mona Lisa is an ideavirus.

This distinction is vital.

For one thing, it means that constant harassment of the population doesn't increase the chances of something becoming viral. It means that most organizations should realize that they have a better chance with word of mouth (more likely to occur, more manageable, more flexible) and focus on that. And it means, most of all, that viral marketing is like winning the lottery, and if you've got a shot at an ideavirus, you might as well over-invest and do whatever it takes to create something virus-worthy.

And yes, I happen to think that arguing with the instructor is a very good idea.

My Take

If you are a successful business owner who sells in your local area and are not generating substantial revenue from word-of-mouth leads, then your business is dying. Your failure to generate word-of-mouth referrals indicates a structural failure in your business model.

Yet, as Mr. Godin points out, word-of-mouth is itself a decaying function. What you need to achieve is viral growth.

What if - with no additional effort - you could tie your word-of-mouth leads to a virally spreading engine? A "Connect-gine^tm". What if you could give your friends, neighbors and clients a means for passing along the leads that they normally give you - along with an incentive and a means of benefiting the community?

Now that would be cool :-)

- - Tim

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Tags: wordofmouth, viralmarketing

Thursday October 18, 2007 - 12:58pm (EDT)