Word of Mouth – A Prescription for a Bad
              Economy
This economy is bad…like really bad…
           y                  y
It looks like we’re in the big R…
                             g
Yikes, Advertising is taking it on the chin...




- Group M forecasts media spending down 3 2% in 2009
                  ...
How will we carve up the media pie?...




Well, we’ll be eating less media:
- 93% of CMOs believe the economy will have a...
The Long Slow Decline into Irrelevance

           Perhaps a premature
           announcement, but why
           wait.

...
Smart Marketers are Now Rethinking Traditionally
Held Views...
H ld Vi
Crisis requires radical shifts in thinking
         q                               g
Another
 Change
You Can
 Believe
    In Is
 Coming
 Ci
      …
Here Comes the Next Wave of Marketing & Media
                                        Media…
The Fastest Growing Marketing/Media
                   g         g
 Segments
                                  Expected 5 ...
Word of Mouth is Catching On…in All Its Forms




   Buzz Marketing       Customer Collaboration     Social Media    Brand...
Fact - Most Traditional Media is an Inefficient Cost…




                  …Word of Mouth is a Wise Investment
Advertising Attention Deficit Hurdles




3,000 ads get pushed at us each day - 6 times the
   volume vs. 40 years ago…the...
Reason #1 – Word of Mouth Gets Noticed




‐ 4% any ad recall from last TV show          ‐ 93% of people believe word of m...
One Way
       One-Way Communication Hurdles




Customers demand interaction and customization,
             Marketers re...
Reason #2 – Word of Mouth Taps The Values of
New,
New Customer Participation Culture




                                 ...
In a bad economy, marketing has to punch harder
and create action…
Reason #3 – Word of Mouth Stimulates Action




                                           ‐ 70% ‐ percentage of people af...
Lifetime customer value trumps short term lift
Reason #4 – Word of Mouth Has Longevity




                                              ‐ Average people have 17 word of...
Ad inflation is running wild




    In a down economy, advertising is a tougher
           discretionary expense to justi...
Reason #5 – Word of Mouth Costs Less Per Impact




                                             Choose Your Flavour:
    ...
In a bad economy, few markets increase, it’s a
            battle for share growth
Reason #6 – Word of Mouth is a Competitive Advantage




                                               ‐ Only 1‐2% of mar...
In today’s connected economy, grassroots
                  influence is key




 Less than 10% of your customer base contr...
Reason #7 – Word of Mouth Targets Influence




 ‐ With rare e ception (i e maga ines)
   With rare exception (i.e. magazi...
Need for ROI for marketers in a bad economy is a
                    mantra
Reason #8 – Word of Mouth is More Measurable and
Linked to Growth




                                              ‐Word ...
Trust has eroded in our institutions, a bad
      economy will accelerate this contempt




…but we still trust our friend...
Reason #9 – Word of Mouth is More Trusted




     ⌧60% of people have a much more         Word of mouth is the #1 trusted...
Who do you trust?
The Customer is the New Battleground
                                       Percentage of 
                               ...
Reason #10 – Word of Mouth is More Customer
Centric




       Mass Media Provides:        WOM Provides:
                 ...
CEOs are Expecting More From their Marketers –
   Marketers need to be Leaner and Keener




  Word of Mouth accommodates ...
Reason #11 – Word of Mouth Simply Provides More




  Communication
  Comm nication              Communication
           ...
Marketers want WOM for a variety or reasons

                      Accelerate sales 19%
                      Alt         ...
Don’t skate to where the puck is , skate to where it
                  is going to be
Reason #12 – Word of Mouth is the Now & the Future




 ⌧ Canadian Marketers plan on spending       58% of marketers agree...
A Palette of New Strategies & Tactics Await


                    What  forms of word of mouth will experience the 
      ...
Recap – The 12 Reasons Why Word of Mouth (WOM)
                       is Primed for this Economy

                        ...
…Don’t Despair
We plan, seed, incubate execute, measure, live and
           breathe the spectrum of word of mouth

                     ...
Let’s Start Your Next Brand Conversation…




                          Prakash Ranjan
                          prakash@i...
Wom In A Bad Economy
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Wom In A Bad Economy

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Wom In A Bad Economy

  1. 1. Word of Mouth – A Prescription for a Bad Economy
  2. 2. This economy is bad…like really bad… y y
  3. 3. It looks like we’re in the big R… g
  4. 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. 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. 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
  7. 7. Smart Marketers are Now Rethinking Traditionally Held Views... H ld Vi
  8. 8. Crisis requires radical shifts in thinking q g
  9. 9. Another Change You Can Believe In Is Coming Ci …
  10. 10. Here Comes the Next Wave of Marketing & Media Media…
  11. 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. 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. 13. Fact - Most Traditional Media is an Inefficient Cost… …Word of Mouth is a Wise Investment
  14. 14. 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
  15. 15. 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
  16. 16. One Way One-Way Communication Hurdles Customers demand interaction and customization, Marketers require it
  17. 17. 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
  18. 18. In a bad economy, marketing has to punch harder and create action…
  19. 19. 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
  20. 20. Lifetime customer value trumps short term lift
  21. 21. 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
  22. 22. Ad inflation is running wild In a down economy, advertising is a tougher discretionary expense to justify
  23. 23. 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
  24. 24. In a bad economy, few markets increase, it’s a battle for share growth
  25. 25. 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
  26. 26. 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?!
  27. 27. 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
  28. 28. Need for ROI for marketers in a bad economy is a mantra
  29. 29. 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 
  30. 30. 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
  31. 31. 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
  32. 32. Who do you trust?
  33. 33. 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
  34. 34. 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)
  35. 35. CEOs are Expecting More From their Marketers – Marketers need to be Leaner and Keener Word of Mouth accommodates those needs
  36. 36. 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
  37. 37. 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?
  38. 38. Don’t skate to where the puck is , skate to where it is going to be
  39. 39. 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
  40. 40. 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
  41. 41. 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
  42. 42. …Don’t Despair
  43. 43. 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 44
  44. 44. Let’s Start Your Next Brand Conversation… Prakash Ranjan prakash@id8labs.com Phone: 09711990078 URL:  www.id8labs.com 45

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