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.

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. WOM is becoming a key strategy to build sales and customer loyalty.

But if you are a local contractor or professional you're already part of the Word-of-Mouth Wave . "Huh? How's that?"

Well, do 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 more of them are registering with social networks each day where they discuss carpooling, child raising, retirement planning, etc. And guess who else they're talking about. You.

The Web will soon allow you to engage your satisfied clients using these same social networks - and convert more of these discussions into qualified leads for you. 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.

Defining Social Media

Dave
Evans
Columns

By Dave Evans , November 7, 2007

The other day a friend asked, "Just what, exactly, is social media?" Over the past few months there have been any number of thoughtful articles, speeches, columns, and citations that present in one form or another possible answers to this question. You'd think it'd be a slam dunk. It's not.

I took a look at Wikipedia. Certainly I'd find the answer there. And I did...sort of. Actually, what I found was even better. I found a discussion of what social media may be. It's a sort of recursive irony wherein one of the ultimate social media platforms is used to define social media itself. What really caught my attention, though, was the two distinct camps forming around the definition of social media.

The two camps are ordinary people -- the kind who post their thoughts to blogs (think posts, but even more so comments) or photos and videos to such sites as Flickr or YouTube or who create buildings and characters in virtual worlds like There or any of the thousands of other places where self-made content can be shared. In a nutshell, these are the folks who put the "social" in "social media."

The other camp? Marketers. For this group, the term "media" has their attention, and they're still trying to figure out the "social" part. This is the rub. There's even a viewpoint (you'll find it among the posts and comments in Talk pages associated with social media and places like Robert Scoble's blog) cautioning against the "hijacking by marketers" of social media.

I don't want to see my social spaces cluttered with ads. Sõo Paolo enacted a city-wide ban on outdoor advertising, citing "preservation of the cultural aspects and character" of the city. People look upon social spaces in pretty much the same way: they're about socializing. Of course, there's more to it than that, and advertising is a part of it.

America is, among other things, the land of the consumer. We advertise with a passion and intensity absolutely unmatched anywhere else on the planet. We have the economy to prove it. Advertising and marketing are part of what drives us. A big part. Such a big part, in fact, that wearing logos (Donna Karan T-shirt, $56) and tattooing a brand name on ourselves (think Harley-Davidson) are commonplace. Marketing hijacked social spaces a long time ago, evidently with permission.

The real issue doesn't revolve around who's doing what or where. Rather, it concerns how it's done. I met with a couple of people a few weeks back who were pitching a social media concept that goes like this: "Create a bunch of videos that look like YouTube and post them. Create some communities and postings talking up the products featured in those videos."

I had one of those "OK, one of us isn't on Earth...is it me or them?" moments. I reached down, felt my chair, and decided it was them. I asked them about the Wal-Mart "Drive Across America" campaign. They'd never heard of it. I asked about deceptive advertising. Response: "We've got clients willing to pay!" Suddenly, "hijack" makes sense.

Like e-mail, like word of mouth (itself a major component of social media as applied to marketing), social media will go through growing pains. Hucksters will try to fit in. Fortunately, because social media is driven by a collective (everyone who participates in it), the hucksters will be exposed. Quickly. The greatest thing about social media is it corrects itself. Traditional media really can't do that, but then again it was never intended to.

As for that definition: the emerging Wiki definition is pretty good, particularly this excerpt: "Social media is the democratization of content and the understanding of the role people play in the process." Applied to marketing, the implication is that going forward, a lot of the messages that drive sales will be passed around, if not outright created, by anyone with a related interest or point of view. Marketers are certainly in that group.

Here are some things marketers can do to advance the state of social media and use it in a way that's likely to be accepted:

Participate in forums, blogs, and collectives on social media. A great place to start is Jerry Bowles's "Social Media Today." In one place you'll find discussions by leading social media thinkers.

Join the Talk group that's building the social media entry. Add your expertise, and help build related areas, like word of mouth and social media optimization. As the entry says, it's in need of an expert. How about you?

As an advertiser, build campaigns in ways that genuinely tap the power of your audience. Provide them with the raw materials to share and extend your message.

As a marketer, work to improve your products and services continuously. Roger Adams recently left Home Depot as CMO. "Ad Age" noted in a related editorial that Home Depot needs (in order) "a better floor experience, better trained associates, and more traffic." I'd bet 99 percent of the CMOs, CEOs, and COOs out there would see numbers one and two as operation issues and only number three as marketing. Baloney. When it comes to social media, they're all marketing issues. The floor experience, including the ability of an associate to help a customer, creates the very experience that drives more traffic.

Do you have a definition for social media? Let me know. I told my friend I'd get back to him with an answer.

My Take - My definition of Social Media:

Social media – the space in which the naturally occurring dissemination of thoughts, opinions and experiences takes place between people. Social media may occur in print, video, broadcast and Web-based form, but it is differentiated from commercial media (print, broadcast and Web based forms) by the absence of a profit motive.

Also see:

Buzz or viral marketing - true buzz or viral marketing only takes place within social media. Artificial buzz marketing takes place within commercial media. It counterfeits the dynamics (enthusiasm, passion – positive or negative and sincerity) of “true” buzz marketing, but can rarely reproduce it.

Tim O'Reilly on OpenSocial

Tim O'Reilly Wed 11.07.07

OpenSocial: It's the data, stupid

While I'm a huge fan of the idea of an open social networking platform, I'm bemused by all the enthusiasm over Google OpenSocial. As I sit with what I learn, the mild skepticism I expressed the other day has turned into full blown disappointment. This is nothing like the social network operating system that I got so excited about when I first heard Brad Fitzpatrick and David Recordon's thought's on the subject.

My disappointment with OpenSocial was crystallized by an exchange between Patrick Chanezon, Google's developer advocate for the program, and an audience member at the OpenSocial session at Web 2.0 Expo Berlin. The audience member asked something about building applications that can remix data from the participating social networking platforms. Patrick's answer was along the lines of: "No, you only have access to the data of the individual platform or application."

This is SO wrong. And it shows a fundamental failure to understand two key principles of Web 2.0:

• It's the data, stupid. (Formerly "Data is the Intel Inside")

• Small pieces loosely joined.

Let's start with the first one. If all OpenSocial does is allow developers to port their applications more easily from one social network to another, that's a big win for the developer, as they get to shop their application to users of every participating social network. But it provides little incremental value to the user, the real target. We don't want to have the same application on multiple social networks. We want applications that can use data from multiple social networks.

And data mobility is a key to that. Syndication and mashups have been key elements of Web 2.0 -- the ability to take data from one place, and re-use it in another. Heck, even Google's core business depends on that ability -- they take data from every site on the web (except those that ask them not to via robots.txt) and give it new utility by aggregating, indexing, and ranking it.

Imagine what would have happened to Google maps if instead of supporting mashups, they had built a framework that allowed developers to create mapping applications across Microsoft, Yahoo! and Google as a way of competing with MapQuest. Boring! That's the equivalent of what they've announced here.

Would OpenSocial let developers build a personal CRM system, a console where I could manage my social network, exporting friends lists to various social networks? No. Would OpenSocial let developers build a social search application like the one that Mark Cuban was looking for? No.

Set the data free! Allow social data mashups. That's what will be the trump card in building the winning social networking platform.

IBM: The End Of Advertising As We Know It

Duncan Riley blogged this on TechCrunch:

IBM released an interesting new report earlier this week that predicts the end of advertising as we know it within 5 years.

To quote IBM

Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising. To survive in this new reality, broadcasters must change their mass audience mind-set to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices. Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices. All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels…

The report observes four change drivers tipping the advertising industry balance of power:” control of attention, creativity, measurement, and advertising inventories.” Consumers’ attention has shifted, with personal Internet time rivaling TV time. Consumers have tired of interruption advertising, and are increasingly in control of how they interact, filter, distribute, and consume their content, and associated advertising messages. IBM’s survey findings demonstrated that half of DVR owners watch 50 percent or more of programming on re-play, and that traditional video advertising doesn’t translate online: 40 percent of respondents found ads during an online video segment more annoying than any other format. Amateurs and semi-professionals are increasingly creating low cost advertising content that threatens to bypass creative agencies, while publishers and broadcasters are broadening their own creative roles. Advertisers are demanding accountability and more specific individual consumer measurements across advertising platforms. Self-service advertising exchanges are attracting revenues that were once exclusively sold through proprietary channels or transactions.

My Take:

This study is important for owners of small businesses who sell locally even though its focus is on changes in broadcast advertising by national firms.

New forms of interactive advertising are poised to benefit contactors, professionals and local merchants at least as much as they will benefit huge brands.

Tags: wordofmouth, viralmarketing, y

Local Mobile e-Commerce B2C Site in NYC

My Take: 8Coupons.com

This site is cool. According to them:

"8coupons.com is your local NYC "deals on demand." We feature the best restaurant, shopping, entertainment, beauty and spa deals in New York."

Look like a neat way to get coupons for local (NYC only - for now) businesses on your PC or cell phone.

I don't see a built-in social component. 'Or a viral component either.

'Looks like a natural candidate for Facebook integration to get it to spread like wildfire.

Judy's Book To Shut Down

Excerpted from: Local Search Site Judy's Book To Shut Down at Search Engine Land (Oct. 24, 2007) by Greg Sterling

TechCrunch first reported (confirmed on CEO Andy Sack's blog) that local search site Judy's Book is shutting down and/or looking for a buyer. After struggling to monetize its traffic, the site shifted its business model to emphasize coupons and local deals. The firm had raised over $10 million in two investment rounds. This follows the sale of Judy's Book competitor InsiderPages to IAC's Citysearch and the failure of Backfence.com.

Some might be inclined see this latest closure of a local site as evidence that local's not working. The truth is that it's quite complicated with little room for error by startups. For online consumers, however, local is growing in importance. Just to put the discussion in larger context, here are some facts and stats about local that I quickly compiled:

Internet ad spending will reach $62 billion and surpass all other media by 2011; local online spending will reach $19.2 billion. Local search is projected to be $4.1 billion. Veronis Suhler Stevenson, August 2007

Local search is the second most popular online activity after e-mail
Piper Jaffray (2007)

60% of all local business searches now happen online (33% happen in print yellow pages) and 82% of the people using local search sites follow up their research with offline action
TMP Directional Marketing-comScore, August 2007

Out of the 130 million monthly unique users of Yahoo last year, 116 million of them came to Yahoo with local intent.

Hilary Schneider, Executive Vice President, Global Partnership Solutions, Yahoo!

The Internet will influence a trillion dollars in offline/local retail spending by 2010/11
JupiterResearch, Forrester Research, 2007

Here's some additional recent data on consumer usage of the Internet to find local information from WebVisible and Nielsen. I've also got some additional discussion of the Judy's Book closure on my personal blog Screenwerk.

My Take

Mr. Sack, a seasoned tech founder, has been a pioneer in the area of energizing local commerce with online tools. Via his blog, he remained very open about the lessons he was learning while leading Judysbook.

The failure of Judybook to be profitable highlights the need for:
1. a model with a new approach to monetization - membership subscriptions and ad revenue fall short
2. achieving an early break-even - minimization of advertising expenses.