Word of mouth marketing is becoming increasingly important in a bad economy for several reasons:
1) Traditional advertising is less effective as people are overwhelmed by ads and ignore them, while word of mouth is noticed and trusted more.
2) Word of mouth aligns better with customers' desires for participation and customization compared to traditional one-way advertising.
3) Word of mouth is more likely to stimulate real action and engagement from customers compared to advertising that people can easily ignore.
4) Word of mouth marketing costs less per impact than traditional advertising but has greater longevity in influencing customer purchase decisions.
4. Yikes, Advertising is taking it on the chin...
- Group M forecasts media spending down 3 2% in 2009
3.2%
- Zenith Optimedia forecasts 5.7% down in 2009
- Morgan Stanley could envision a +10% drop in spending depending on the economy
5. How will we carve up the media pie?...
Well, we’ll be eating less media:
- 93% of CMOs believe the economy will have a significant/moderate impact on their budgets
y g p g
Source: Epsilon
- 70% of CMOs plan on reducing their marketing spending
6. The Long Slow Decline into Irrelevance
Perhaps a premature
announcement, but why
wait.
2009 Anticipated Declines:
- 15% Newspapers
- 13% Consumer Magazines
- 10% T
Terrestrial R di
t i l Radio
- 4% Network TV
Source: Jack Myers Media Report
11. The Fastest Growing Marketing/Media
g g
Segments
Expected 5 year
Compound Annual Growth Rate
Word of Mouth 27%
Internet/Mobile
It t/M bil 14%
Branded Entertainment 13%
Custom Publishing 11%
Out of Home
Out of Home 10%
Source: Veronis Suhler Stevenson
12. Word of Mouth is Catching On…in All Its Forms
Buzz Marketing Customer Collaboration Social Media Brand Communities
Influencer Marketing Influencer Marketing Referral Programs
Social Networks
Grassroots/Cause Experiential Viral
User Generated
Marketing Marketing Marketing
Content
13. Fact - Most Traditional Media is an Inefficient Cost…
…Word of Mouth is a Wise Investment
15. Advertising Attention Deficit Hurdles
3,000 ads get pushed at us each day - 6 times the
volume vs. 40 years ago…the tougher it is to
breakthrough, the more we do and invest
16. Reason #1 – Word of Mouth Gets Noticed
‐ 4% any ad recall from last TV show ‐ 93% of people believe word of mouth is
watched(down from 34% in 1965)
watched(down from 34% in 1965) the most reliable way to find out
the most reliable way to find out
Source: NBA information about products and services
(up +26 pts. Vs. 25 years ago)
‐70% of people frequently consume
Source: NOP World
Source: NOP World
multiple media simultaneously
Source: eMarketer
17. One Way
One-Way Communication Hurdles
Customers demand interaction and customization,
Marketers require it
18. Reason #2 – Word of Mouth Taps The Values of
New,
New Customer Participation Culture
Word of Mouth
Mass Media
Customers Now Want: Participation Values Grade Participation Values Grade
Freedom 2/10 9/10
Customization 2/10 8/10
Scrutiny 3/10
/ 9/10
/
Integrity 2/10 9/10
Collaboration 1/10 10/10
Entertainment
Et ti t 8/10 8/10
Speed 5/10 8/10
Innovation 2/10 9/10
Evaluation Score 25/80 70/80
19. In a bad economy, marketing has to punch harder
and create action…
20. Reason #3 – Word of Mouth Stimulates Action
‐ 70% ‐ percentage of people affected by
‐ 90% ‐ proportion of people who can
word of mouth conversations
skip ads, do skip ads
‐ 37% buy it/try it
‐ 24% consider it
‐ 69% ‐ percentage of people who
‐ 9% avoid it
are interested in skipping ads
Source: Keller Fay
completely Source: Yankelovich
p y
22. Reason #4 – Word of Mouth Has Longevity
‐ Average people have 17 word of mouth
‐ Over 30% of the broadcast content we see
conversations each day
conversations each day
in mass media is advertising or promotion
‐ How much is interactive? High
‐ How much is conscious? Low
‐ How much is spoken? High
‐ How much is attentive/lean
‐ How much is internalized? High
How much is internalized? High
forward? Low
f d? L
‐ How much is retained? High
‐ How much is well‐received? Low
‐ How much is behaviour altering?
‐ How much is retained? Low
High
‐ How much is banked in
How much is banked in
memory? Virtually nil ‐Brand Communities don’t reach full maturity
to 18 months
‐ 82% of community members refer more
people to a brand after joining
23. Ad inflation is running wild
In a down economy, advertising is a tougher
discretionary expense to justify
24. Reason #5 – Word of Mouth Costs Less Per Impact
Choose Your Flavour:
Choose Your Flavour:
‐ Cost to Prod ce a National TV Ad
Cost to Produce a National TV Ad
‐ Year Round Community ‐ $100‐500k
‐ $360,000
‐ 26 week Word of Mouth Campaign ‐
pg
‐ Min Media Cost to Air a National
Min. Media Cost to Air a National
$40‐150k
Campaign in Canada
‐ $1,200,000
‐ Blog/Social Media Outreach $30‐100k
g
‐ Typical Research Cost Associated with TV
‐ Advisory Panel ‐ $15‐75k
‐Campaign
‐ $25,000 ‐ $100,000
$25,000
‐ Buzz Marketing Tactic $5‐100k
25. In a bad economy, few markets increase, it’s a
battle for share growth
26. Reason #6 – Word of Mouth is a Competitive Advantage
‐ Only 1‐2% of marketing budgets are
‐ Canadian advertisers spend $19 billion
p $
currently spent directly on creating word of
on media ‐ $674 per adult
mouth
‐ Advertising is spent on very similar
formats: TV 30
f TV – 30 second ad
dd ‐ Marketers are just beginning to activate
Print – Full page, ½ page word of mouth variants, but still low
Web – Banner, Search ‐ Influencer programs ‐ 22% of marketers executing
‐ Buzz/Stunts 15%
Buzz/Stunts ‐
Radio – 30, 60 seconds
R di 30 60 d
‐ Branded Entertainment 14%
‐ 10% ‐ Percentage of CFOs who believe
‐ A 7% increase in positive word of mouth
marketers can assess impact of budget on
marketers can assess impact of budget on
equates to 1% business growth
sales
Sources: VSS, Agent Wildfire, London School of Economics
Source: Canadian Marketing Association, MMA
27. In today’s connected economy, grassroots
influence is key
Less than 10% of your customer base controls a
big chunk of what the rest of us buy, think and do…
why not target them?!
28. Reason #7 – Word of Mouth Targets Influence
‐ With rare e ception (i e maga ines)
With rare exception (i.e. magazines), ‐ 70% of Wikipedia’s content is prod ced
70% of Wikipedia’s content is produced
mainstream media has a tough time by 1.7% of its audience
targeting audiences and specifically
influencers ‐ Top ranked Influencer belief “I love
Top ranked Influencer belief – I love
talking to others about things I’ve just
discovered”
‐ Influencers are 2x more active, more
conversational and/or more brand‐
involved than the mainstream consumer
involved than the mainstream consumer
Sources: Agent Wildfire, Keller Fay
29. Need for ROI for marketers in a bad economy is a
mantra
30. Reason #8 – Word of Mouth is More Measurable and
Linked to Growth
‐Word of mouth activities have much
better measurement ability because of
‐ Mass media has challenges auditing its
their digital nature and opportunity to
own traffic
mine relationship with customer/member
l h h / b
‐ Mass media weight cannot be linked to
‐ The #1 factor linked to business growth
sales
is word of mouth referral
i df th f l
‐ When measured, it only measures
‐ Word of mouth measures the key
presumed eyeballs not real engagement
business drivers of engagement and
business drivers of engagement and
advocacy
Sources: Agent Wildfire, Bain
31. Trust has eroded in our institutions, a bad
economy will accelerate this contempt
…but we still trust our friends and “people like me”
but
Source: Edelman Trust Barometer
32. Reason #9 – Word of Mouth is More Trusted
⌧60% of people have a much more Word of mouth is the #1 trusted
negative view of marketing and source, up 50% vs. a generation ago
advertising than a few years ago
advertising than a few years ago
61% of people claim to buy the same
⌧27% trust manufacturers brands as their friends (+28 pts. Vs. 4
years ago)
years ago)
⌧ 14% trust ads
90% trust their spouse
⌧ 8% trust celebrities
8% trust celebrities
82% trust their friends
Sources: Yankelovich/Henley Centre Sources: Keller Fay/Yankelovich/Henley Centre
34. The Customer is the New Battleground
Percentage of
executives who
believe the Customer
Experience is the
new battleground
‐ 95%
Percentage that
believe they are
b li h
delivering a positive
customer experience
‐ 80%
Percentage of their
customers who agree
customers who agree
‐ 8%
Word of Mouth gets you closer to your customer
frontlines
35. Reason #10 – Word of Mouth is More Customer
Centric
Mass Media Provides: WOM Provides:
Entertainment Value
Entertainment Value
Informational Value
Information Value
Information Value
Explicit value (rewards)
Intrinsic value (feeling of belonging)
Extrinsic value (ego/reputation)
g p
Experiential value (immersion)
Social value (making connections)
Talent value (expressing skills/creativity)
Service value (adds to the product)
Collaborative value (1+1=3)
36. CEOs are Expecting More From their Marketers –
Marketers need to be Leaner and Keener
Word of Mouth accommodates those needs
37. Reason #11 – Word of Mouth Simply Provides More
Communication
Comm nication Communication
Advocacy
Ambassadorship
Buzz
Insight
Real world feedback
Solutions
S l ti
Innovation
Support
Operational Improvements
Operational Improvements
User Generated Content
38. Marketers want WOM for a variety or reasons
Accelerate sales 19%
Alt l 19%
Deliver visitors/traffic 17%
Hard
Referrals/Leads/Members 32%
Measure
Provide learning 6%
Drive brand loyalty 32%
Generate user generated content 19%
Get Insight /solutions 10% Awareness/Buzz 35%
Seed influencers 32%
Soft Target tough to reach audience 19%
T h h di 19%
Measure Launch a product 22%
Build a better customer experience 21%
Support a cause 6%
S t 6% Enhance credibility 14%
Participate in a conversation 26% Support a cause 6%
External
Internal
Source: Agent Wildfire Question ‐ What are the top 3 objectives for launching a word of mouth based initiative?
39. Don’t skate to where the puck is , skate to where it
is going to be
40. Reason #12 – Word of Mouth is the Now & the Future
⌧ Canadian Marketers plan on spending 58% of marketers agree that
more/less in 2009:
/l i 2009 word of mouth influence will overtake
df h i fl ill k
More Less traditional media influence within a
Newspaper 5% 32% generation
Radio
Radio 5% 33%
5% 33%
TV 4% 37% 73% of marketers believe marketers will
Magazines 3% 39% become much more important in an
Social Media 23% 16%
Social Media 23% 16% organization by leveraging word of mouth
organization by leveraging word of mouth
strategies and tactics
Source: Veritas Source: Agent Wildfire
41. A Palette of New Strategies & Tactics Await
What forms of word of mouth will experience the
hf f df h ill i h
most growth in the next few years ? (top 3 choices)
Social media marketing
S il di k ti 37%
Social network marketing 35%
Mobile marketing 34%
User‐generated Content
User generated Content 31%
Influencer marketing 28%
Brand communities 20%
Customer forums
Customer forums 17%
Branded entertainment 16%
Cause‐related marketing 14%
Brand microblogging
Brand microblogging 14%
Buzz marketing 13%
Corporate/brand blogging 11%
Source: Agent Wildfire
42. Recap – The 12 Reasons Why Word of Mouth (WOM)
is Primed for this Economy
1 ) WOM Gets Noticed
2) WOM Taps Participation Values
3) WOM Stimulates Action
4) WOM has Longevity
5) WOM has Less Cost/More Value
6) WOM is a Competitive Advantage
7) WOM Targets Influence
8) WOM is More Measurable
9) WOM is More Trusted
) d
10) WOM is More Customer Centric
11) WOM Provides More
12) WOM is the Future
12) WOM i th F t
44. We plan, seed, incubate execute, measure, live and
breathe the spectrum of word of mouth
Integrated
Brand Community‐building
Advisory Panel
Influencer‐driven
Challenge/intervention
Referral‐driven
Grassroots sponsorship/cause‐driven
Offline
Experiential
Buzz/Guerrilla
Online
Social Media Production/Outreach
Social Network Production/Outreach
Viral
Affiliate/Referral ‐driven
User‐generated
User generated
Advergaming
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45. Let’s Start Your Next Brand Conversation…
Prakash Ranjan
prakash@id8labs.com
Phone: 09711990078
URL: www.id8labs.com
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