Does Advertising Affect Word of Mouth?

Determining the Impact of Advertising on Word of MouthBased on WOMMA Gold Award for Research 2010
April 2011

Until Recently WOM Was Often Seen To Be In Conflict With Advertising
2
Advertising and WOM were
widely viewed as polar
opposites. This started to
change in late 2007

49%of all brand conversations contain a specific reference to marketing or media as a content source
Source: Keller Fay, base: 162,376 conversations
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22% of all brand conversations contain a specific reference to advertising
Source: Keller Fay
4

The Issue of Proof
UM are great supporters of Keller Fay. Keller Fay data provides very useful evidence for claimed media effectsBut such consumer claimed effects could in certain instances be over-claims e.g. TV often claimed as the primary source of ad awareness even when TV is not part of the media plan! We need a validation procedure to corroborate the Keller Fay findings, and help us understand the role of WOM in future comms planning
5

Build A Model
Probe changes in: a) overall word of mouth levels and b) shifts in media spend by channel To help determine and verify the likely relationship between the WOM and advertising
6

AimsConstruct A Model Explaining How Ads Might Impact WOM
7
Is there a link between Sony Electronics media advertising and the subsequent word of mouth
If so, can we build a model that can quantify this effect and, ideally, assess if there are other major advertising effects, such as competitive activity, of which we should be aware
Better still, can we determine the relative effect of each advertising media channel by two criteria:
Volume or intensity of brand mentions
Efficiency or Marketing-ROI on word of mouth

Two Prime Data Sources In Model
To focus the model on the effects of media advertising on Sony word of mouth, two data sources were used:
1. Sony Brand Mentions
Using Keller Fay Talk Track extracted weekly brand mentions of Sony in the Consumer Electronics category
2. Media Spend by Channel
Initially Sony Electronics only, but we subsequently determined competitive activity was a major adverse factor. Weekly data came from Kantar for all media except digital which was sourced via Nielsen
8

Strong Fit between Media Spend & WOMBased on Kantar & AdRelevance Reported Spend
9
Predicted Peak
wk of Jan 25 10 115.9 MM
(+/- 7%)
Rolling 8 weeks Keller Fay Sony Mentions
Fit Actual vs Projected WOM (r2) : 83%
Adjusted r2 = 80%
Source: UM regression analysis of Keller Fay TalkTrack, Kantar & AdRelevance

Sony’s Mentions Can Be Broken Down
10
Sony’s media spend - which can be further broken down by specific channels
Competitive media spend – which negatively affects WOM
Base Level - the proportion of overall WOM primarily affected by factors other than advertising (e.g. seasonality)
Ad-generated WOM in Summer ‘09 eases down to base level owing to limited Sony activity
Predicted Mentions by Driver
Rolling 8 weeks Keller Fay Sony Mentions

14% of Sony WOM is from AdvertisingBut competitive erodes 23% of Sony WOM
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Source of WOM: Full Model143 weeks ending June 21, 2010
Every $6 million of Sony TV/Digital/Magazine/OOH/Radio media spend (planner budgets) increases Sony WOM by 1%
Every $59 million of competitive TV/Digital/Radio spend (Kantar & AdRelevance) decreases Sony WOM by 1%
This is consistent with our previous model and confirms the significant effect of competitive activity

Source of WOM by Channel
12
Five media contribute to WOM: TV, Digital, Magazines, OOH and Radio
Channels with largest media investment, TV, Magazines and Digital have similar ROI coefficient in driving WOM
Map Key:
WOM Volume is the % each channel contributes to total WOM
ROI Efficiency is the coefficient per $ million spent in driving WOM
Size of bubble reflects the total media $
Source: UM regression analysis of Keller Fay TalkTrack; Kantar, Nielsen

Major Media – Too Close to Call?Mags Lead But Competitive Digital and TV Also Critical
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Source: UM regression analysis of Keller Fay TalkTrack; Kantar, Nielsen

A Clear Link To Both Sony MediaAnd Competitive Share of Voice
Clear link between media spend and brand mentions:
Advertising accounts for 14% of WOM
Competitive erodes WOM by -23%
Absence of Sony media spend can result in a decrease in mentions to the base level
For Sony, all of the main media except for newspapers exhibit a clear relationship to WOM:
While magazines lead, ROI of Sony media spend in TV, Magazines and Digital is broadly similar
Yet for competitiveonly, TV and Digital negatively correlate with Sony mentions. Critical to view overall WOM contribution of channels not only in terms brand activity but also competitive share of voice by channel
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Appendix
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Mechanics of the WOM Model
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Coefficients
Coefficients are ratios that show the effect, per thousand dollars spent, each media channel has on the volume of Sony mentions
OOH and Radio’s high coefficients are by-products of the relatively low spend that Sony invested in those media. So while it may appear that they are more efficient drivers of WOM, this may not in fact be the case
The coefficients for competitive spend are all negative, because they detract from Sony mentions
P-Values
P-values reveal the tendency for each media to deviate from the model. In other words, they show how closely each media correlates with the model’s output of mentions
Ideally, p-values should be as small as possible, with the standard being 0.15 or lower. In this model, each of the media has a p-value below 0.05 and, in the majority of instances, below 0.00001

Does Advertising Affect Word of Mouth?

by Word of Mouth Marketing Association on Apr 20, 2011

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Does Advertising Affect Word of Mouth? — Presentation Transcript