BSI Word of Mouth Marketing: The Stats, Strategies & Trends You Need to Know

Marketing 2.0 Conference, Barcelona 2006
Join the conversation
MARKETING 2.0 CONFERENCE
      www.marketing2conference.com
Word of Mouth Marketing: The Stats,
Strategies & Trends You Need to Know
January 19, 2006
What we’ll cover:
I.    Five Mega Consumer Marketing Trends
                         “We love
II.   Why Word of Mouth is H...
I. Five Consumer Marketing Trends that
are Turning the World Upside Down
1. Consumer skepticism and resistance to advertis...
76% don’t believe that
companies tell the truth
in advertisements

  --Yankelovich, 2005
“Successful marketersLee Smith
Beware of eroding TRUST!   don’t talk
       directly about features or even
              ...
#2
                         24.7
                     re t e %
   In the world of media, increasingly the
   consumer is i...
The new marketing mantra:
ENGAGEMENT


“Interruption or disruption as the
fundamental premise of marketing no
longer works...
Media fragmentation is leading
 to total disintermediation…
  …Any time
 “Fragmented media and
                …Any where
...
#4
 “Mass reach” is giving way
 to a world of niches
 • Harte Hanks: 21% of firms spend 45%+ of their
     “Mass marketing...
“I confess I’m still trying to
Online ad spending growth in 2005?
 understand the Internet.”
     eMarketer               ...
Rishad: is Hot
 II. Why Word of Mouth
      Max
                Right Now…



     “Wordis trending is the
“Marketing   of...
Consumer DISTRUST level in The American Journal of
                            advertising

      -- Intelliseek/Forrester...
73
                           %?
For product recommendations, what
sources do consumers most trust???
80%
        65%
60%
...
The American Journal of

What increases your level of trust when
purchasing a product or service?
  100.0%                ...
What increases your level of trust when
purchasing a product or service?
  100.0%
              80.6%
   80.0%            ...
Morgan Stanley….…32%
  Deeper broadbandPwC……………….…32%
                      penetration allows more
  consumers to access,...
NEW LINE CINEMA




   New Line Cinema tripled the number
   of viewings of its trailer to 3.3 million
       because of t...
eMail provides an efficient way for
consumers to spread the word to others…
At Procter & Gamble…the tide is turning



              “The customer is
                    Used viral marketing to
    ...
80% of moms tell their friends about
promotional e-mails they find valuable



               2 6%
Word of mouth, particularly viral
campaigns, can be relatively cheap

   Versus       $600,000+
“[With WOM] you can reach
...
Word of mouth fits nicely into the new
digital social networking trend
• Forrester: 15% of online North American consumers...
• 47 million members
• 32 million monthly visitors
• Site will soon allow teens to
Watch and share videos
  post Out for T...
• CMO Magazine: 22% are
  The rise of blogs provides consumers
using or planning to use
  with further ways to share infor...
Today more than ever, consumers own
your brand…
I’ve been drinking Barq’s for
over 15 years…It just
happens to be my beer…...
III. Why is Word of Mouth the
      Hidden Statistic?

• Since WOM has not been seen as
  something marketers could contro...
IV. Quantifying the
           Peer-to-Peer
         Influence Factor
          McKinsey:
    Northeastern University:
   ...
According to RoperASW:



• Fully 92% of Americans cite word of mouth
  as one of the best sources of ideas and
 “Forget R...
To what degree would your decision to
  purchase a product be influenced by:
                                0.0      2.0 ...
Some
categories lend
themselves to
WOM more
than others…
Financial
services
Travel

         44%
Expected use of information
sources for buying a new car,
according to consumers

                       Internet         ...
Promotional media likely to be
    influential when choosing a
    new or used vehicle

         Word of Mouth            ...
Retail &
Consumer
Electronics

        Pay special attention to
      today’s younger generation!
Among 18 – 30-year olds…
Which marketing tactics most influence your
purchasing decisions?
   80%
         What about B2B?...
51.5%



39.1%
39.0%
CMO Magazine:
   Resources that Small/Medium business
 Emergent marketing techniques that US
 marketersrely on most to use...
“Why are
Could 2006 be the Tipping Point?
                my
                television
                ratings in
       ...
Could 2006 be the Tipping Point?
                 You telling others
                   about WOM
                   marke...
Could 2006 be the Tipping Point?
                       Yo u
                            tellin
     > 50% of Online    ab...
Final Stats:
   Word of Mouth
To get this presentation,
             40me you”
 please provide  slides
          “Thank wi...
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Word of Mouth Marketing: The Stats, Strategies & Trends You Need to Know

  1. 1. BSI Word of Mouth Marketing: The Stats, Strategies & Trends You Need to Know Marketing 2.0 Conference, Barcelona 2006
  2. 2. Join the conversation MARKETING 2.0 CONFERENCE www.marketing2conference.com
  3. 3. Word of Mouth Marketing: The Stats, Strategies & Trends You Need to Know January 19, 2006
  4. 4. What we’ll cover: I. Five Mega Consumer Marketing Trends “We love II. Why Word of Mouth is Hot Right Now chaos.” --Anne Sweeney, III. Why is WOM the Hidden Stasistic? Disney IV. Quantifying the Peer-to-Peer Influence Factor
  5. 5. I. Five Consumer Marketing Trends that are Turning the World Upside Down 1. Consumer skepticism and resistance to advertising 2. Increasingly the consumer is in control 3. Media fragmentation is out of control 4. Given the above, the pressure is on to improve targeting – to achieve relevance and minimize waste 5. Marketers held to new levels of accountability
  6. 6. 76% don’t believe that companies tell the truth in advertisements --Yankelovich, 2005
  7. 7. “Successful marketersLee Smith Beware of eroding TRUST! don’t talk directly about features or even COO benefits of products and Express Insight services. They tell compelling Consumer trust in advertising has and stories that are then shared plungedretold over the past three years 41% among consumers.” Only 10% of consumers say they “trust” ads today “It’s just not good.”
  8. 8. #2 24.7 re t e % In the world of media, increasingly the consumer is in controln tion iPod Pop-up & Spam Blockers BLOGS INSTANT MESSAGING INSTANT MESSAGING
  9. 9. The new marketing mantra: ENGAGEMENT “Interruption or disruption as the fundamental premise of marketing no longer works. You have to create content that’s interesting, useful or entertaining enough to invite the consumer.” -- Jeff Hicks, CEO, Crispin Porter + Bogusky
  10. 10. Media fragmentation is leading to total disintermediation… …Any time “Fragmented media and …Any where fragmented consumers mean companies need a lot of arms and legs.” –Tom Murphy, Kmart …Any one
  11. 11. #4 “Mass reach” is giving way to a world of niches • Harte Hanks: 21% of firms spend 45%+ of their “Mass marketing today is entire marketing budget on “target marketing” • E.g., Ford just moved 30% of its $1 billion ad budget a mass mistake.” into targeted media, with 50% of that going online #5 • Forrester/ANA ‘05 Study: While 62% of marketing execs said accountability was very important, only 19% were satisfied with their ability to measure it”**
  12. 12. “I confess I’m still trying to Online ad spending growth in 2005? understand the Internet.” eMarketer 33.7% Veronis 31.0% Deutsche Bank --Bob Myers 30.0% Coen, McCann Erickson, UBS, 12/6/05 30.0% Kelsey 29.5% Piper Jaffray 28.8% Jupiter 28.0% Merrill Lynch 27.8% SG Cowen 26.2% Forrester 22.6% McCann 15.0% Nielsen Monitor-Plus TNS 7.0% 12.6% No Search! 0% 10% 20% 30% 40% Source: eMarketer, Sept. 2005
  13. 13. Rishad: is Hot II. Why Word of Mouth Max Right Now… “Wordis trending is the “Marketing of mouth towards ultimateabout listening, self-service. It’s form of consumer engaging and transforming, engagement.” navigating.” --Max Kalehoff, VP Marketing, BuzzMetrics
  14. 14. Consumer DISTRUST level in The American Journal of advertising -- Intelliseek/Forrester survey, 2004 --Dysfuntion: Why 12% of Americans TV & Radio 53% Don’t Trust Search advertising 66% Each Other Newspapers 44% Informericals 79% Product placement 73% Opt-in e-mail 34% !? Banner ads 87% Word-of mouth 12% Text-based ads on Distrust-O-Meter Mobile phones 89% Pop-ups, Spam, Telemarketing 94% 0% 100%
  15. 15. 73 %? For product recommendations, what sources do consumers most trust??? 80% 65% 60% 40% 27% 20% 8% 0% Friends Experts Celebrities Source: Yankelovich
  16. 16. The American Journal of What increases your level of trust when purchasing a product or service? 100.0% Nearly 20% 80.6% of Americans 80.0% 64.0% Don’t Trust Their Own 60.0% 42.9%Experiences 40.0% 20.0% 0.0% Personal Recos from Reviews by 3rd Experience w/ Others Parties Product Source: Insight Express, 2005
  17. 17. What increases your level of trust when purchasing a product or service? 100.0% 80.6% 80.0% 64.0% 60.0% 42.9% 40.0% 20.0% 0.0% Personal Recos from Reviews by 3rd Experience w/ Others Parties Product Source: Insight Express, 2005
  18. 18. Morgan Stanley….…32% Deeper broadbandPwC……………….…32% penetration allows more consumers to access, create and share rich GartnerG2…………..33% content, including video Goldman Sachs...…..33% % of Households with Broadband in US Forrester Research…35% 2003 Sanford Bernstein…..36% 23.1% “ eMarketer………...….36% 2004The great thing about 29.9% Strategy Analytics…..37% 2005 36.2% broadband JupiterResearch…….39% 2006 is that 42.9% it turns the Internet into electricity.” 2007 Deutsche Bank….…..41% 49.8% 2008 --Patrick Keene, Google56.3% 0% 10% 20% 30% 40% 50% 60% 70% Source: eMarketer, 2005; OECD (baseline years of 2001-2003)
  19. 19. NEW LINE CINEMA New Line Cinema tripled the number of viewings of its trailer to 3.3 million because of the viral activity
  20. 20. eMail provides an efficient way for consumers to spread the word to others…
  21. 21. At Procter & Gamble…the tide is turning “The customer is Used viral marketing to now the marketer.” to encourage consumers spread the word about the • Email campaign increased traffic at the Coldwater new product via e-mail Web site by 900% in week one (up 3X in week two) • Brand achieved a 3.0% share within 6 months
  22. 22. 80% of moms tell their friends about promotional e-mails they find valuable 2 6%
  23. 23. Word of mouth, particularly viral campaigns, can be relatively cheap Versus $600,000+ “[With WOM] you can reach hundreds of thousands of people by tapping just one.”
  24. 24. Word of mouth fits nicely into the new digital social networking trend • Forrester: 15% of online North American consumers look at the reviews of others online in order to help them make decisions (Intelliseek: 60% of consumers trust other people’s posts) “Yahoo’s future is giving • Pew: 44% of online adults (50 million) create and share content online; but 57% of online teens are people the tools to generate “content creators” their own content.” online postings of all • Intelliseek: consumer generated types will rise by 33% to 2.0 billion in 2006
  25. 25. • 47 million members • 32 million monthly visitors • Site will soon allow teens to Watch and share videos post Out for Teens: • 87% are online* “Kids use IM* • 65% don’t buy stuff because they see amore than 50 ad. They • 29% have magazine “buddies” on their IM list* buy stuff hour and 22 mins kids tell • Spend 1 because other per themsocial networking** day to.” –Mike Ziemer, 20, “Buzzer” on MySpace.com *Pew Internet & American Life Project; **Kaiser Family Foundation
  26. 26. • CMO Magazine: 22% are The rise of blogs provides consumers using or planning to use with further ways to share information blogs as a marketing device about products and services What % of Internet Users Read Blogs??? Forrester…………. 10% Meet Michael Marks… eMarketer………… 14% Pew………………. 25% Princeton survey… 27% comScore………… 30%
  27. 27. Today more than ever, consumers own your brand… I’ve been drinking Barq’s for over 15 years…It just happens to be my beer… Blah, blah, blah…
  28. 28. III. Why is Word of Mouth the Hidden Statistic? • Since WOM has not been seen as something marketers could control, they’ve ignored it • No common definition or phrase is used to describe it • There’s been no easy way to measure it – “Out of measurement, out of mind” • WOM has been an orphan, usually placed outside of the marketing department
  29. 29. IV. Quantifying the Peer-to-Peer Influence Factor McKinsey: Northeastern University: Roughly two-thirds (67%) of all 15% of every conversation in economic activity in the US is America includes something about influenced by shared opinions about a product or service. a product, service or brand.
  30. 30. According to RoperASW: • Fully 92% of Americans cite word of mouth as one of the best sources of ideas and “Forget Roper, Geoff. Check out information, up from 67% in 1977 these results from Intelliseek.” • They rate “word of mouth” as 2X as important as advertising or editorial content
  31. 31. To what degree would your decision to purchase a product be influenced by: 0.0 2.0 4.0 6.0 8.0 10.0 Positive word of mouth* 7.7 Yankelovich: Negative word of mouth* 7.0 33% of all consumers would prefer A negative news story on TV, radio, newsp or mag. 5.7 to receive product information from TV or radio spot 4.7 friends and specialists rather than from ads. 4.6 Ad in a nwspr or mag. *word of mouth from “someone you know” Source: Intelliseek, 2004
  32. 32. Some categories lend themselves to WOM more than others…
  33. 33. Financial services
  34. 34. Travel 44%
  35. 35. Expected use of information sources for buying a new car, according to consumers Internet 61% Family & Friends 47% M anufacturer - Specific Dealer 47% Specialist Press 35% Independent Car Evaluations 33% Print Advertising 32% Non-Specialist Press 26% Used Car Dealer 23% T V Ads 23% 0% 10% 20% 30% 40% 50% 60% 70% Source: Capgemini, June, 2005 N = 2,700 in-market consumers across five countries
  36. 36. Promotional media likely to be influential when choosing a new or used vehicle Word of Mouth 66% Auto Publications 55% Ads on Related Websites 49% Print Ads 45% Car in Auto Show 45% TV Ad 44% Offer from Dealer 39% Ads on Mnfr Site 39% Ads on E-tailer Site 34% 0% 10% 20% 30% 40% 50% 60% 70% Source: Capgemini, June, 2005 N = 2,700 in-market consumers across five countries
  37. 37. Retail & Consumer Electronics Pay special attention to today’s younger generation!
  38. 38. Among 18 – 30-year olds… Which marketing tactics most influence your purchasing decisions? 80% What about B2B? 68% 60% 48% 40% 38% 21% Forrester: 50% of 12 – 21 year olds get purchasing advice from friends 20% and family, and 65% let others know 0% what products they like Word-of- Sampling TV Spots Magazine mouth Ads Source: Harris Interactive and Allow Media & Marketing, 2005
  39. 39. 51.5% 39.1% 39.0%
  40. 40. CMO Magazine: Resources that Small/Medium business Emergent marketing techniques that US marketersrely on most to use within the leaders use or plan to make decisions next 6 months: "Always" or "Somewhat" % Saying Professional or personal contacts 72% • Influence via “Word of Mouth”…. 43% Search engines 65% • Blogs……………………………....22% • “ WordSites mouth is the 57% of Industry Web sites Stealth marketing……………..….15% Vendor 48% lifeblood for most, if46% all, Industry Newsletters not Business Magazines 40% small businesses.” 0% 20% 40% 60% 80% –Ben McConnell, Marketing Consultant, Source: Frank N. Magid & Associates for Wall Street AllBusiness.com, December, 2005 Journal, Dec. 27, 2005
  41. 41. “Why are Could 2006 be the Tipping Point? my television ratings in the toilet?!”
  42. 42. Could 2006 be the Tipping Point? You telling others about WOM marketing… WOM being includ ed as part of formal bud gets ~50% of online marketers used WOM in 2005
  43. 43. Could 2006 be the Tipping Point? Yo u tellin > 50% of Online abou g others t WO mark M e ti n g Marketers Will UseWOM b … part eing of for included WOM in 2006 mal bud as ~ 50% gets eMarketer rs of online mark ete used in 2 0 WOM 05
  44. 44. Final Stats: Word of Mouth To get this presentation, 40me you” please provide slides “Thank with your business card, or contact me at: 38,000 charts geoff@emarketer.com = 0.01% of info 212-763-6042

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