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The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix

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The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix

  1. 1. THE POWER OFe-WORD OF MOUTH.Adding Social Media tothe Marketing Mix.Fernando Barrenechea / @fbarrenecheaf
  2. 2. We are witnessing a revolution that willchange the way we do marketing; thatsocial network marketing has madetraditional advertising obsolete.
  3. 3. In a very short time,social media havecaptured marketshare and attentionamong all kinds ofc o n s u m e r s a n dcompanies.
  4. 4. Given this change inconsumption habitsand the fact thatsocial media aremore interactive,there is a danger thatmessages sent usingtraditional advertisingwill fall flat.
  5. 5. Quite simply, many viewers preferred to interactthrough social media, sharing their thoughts,opinions, criticisms and suggestions. They wanteddialogue, not a monologue delivered from thestage.
  6. 6. Redefining the Mix
  7. 7. Given this reality, many companies have started to redefine key aspectsof their marketing mix to include social media, adjusting their budgets.79 percent of the top 100 Fortune companies already use Twitter,Facebook, YouTube or corporate blogs to communicate with theircustomers. 2/3 have at least one account on Twitter, which is theplatform most used by companies and 54 percent have a Facebook.
  8. 8. Maintaining anactive SM presence iscommonlyconsidered analternative totraditional advertisingas a means ofachieving brandawareness.THIS IS A MISTAKE!!!!!
  9. 9. Social media obey very differentrules from traditional advertising. Acompany can use social media tostart conversations or build brandrecognition, but the results aremuch more difficult to predict ormeasure.
  10. 10. Mainsimilarities anddifferencesbetweentraditionaladvertising andWOM.
  11. 11. Advertising in conventional media has high and potentially massivereach, while traditional WOM based on one-to-one communication islimited by nature.However, the rise of SM is radically transforming the pattern of socialinteractions, including personal recommendations. Now, hundreds ofthousands of people can conspire to put a company’s reputation,brand or product on a pedestal or drag it through the dirt.REACH.
  12. 12. Not even the best advertisement can match a personalrecommendation in credibility. WOM is almost unbeatable in its power toinfluence and persuade.Obviously, an anonymous advertising message does not have the samecredibility as a recommendation from someone we know and trust. 38percent of SMM users pointed to other consumers as the most reliablesource of information about a brand or product. The next most popularoption, 32 percent of respondents, was the brand itself.CREDIBILITY.
  13. 13. In conventional advertising, advertisers always have full control over themessage they want to convey. WOM is different in that it cannot becontrolled.CONTROL.
  14. 14. e-WOM has one major advantage over advertising: It is immediate andinteractive, and that makes it easier to intervene. If a campaign goesoff the rails, you can adjust it as you go along. You can try to deflectnegative feedback by joining in the conversations or making amends.INTERACTIVITY.
  15. 15. From a consumer’s point of view, a fundamental advantage of WOMover advertising is that it is voluntary and consensual, whereasadvertising can be annoying and intrusive. There is always the risk ofsaturation or causing a nuisance if the messages sent through socialnetworks are not carefully measured.INTRUSIVENESS.
  16. 16. In a cost comparison, we might expect WOM to win hands down overadvertising. But it’s not that simple. Traditional WOM may be relativelyinexpensive, but if a company wants to use social networks to getpeople talking about a brand or product, it will have to put up thenecessary resources.COST.
  17. 17. The fact that mostsocial mediaplatforms are freedoes not mean thatyour communicationstrategy will be free.In fact, e-WOMrequires a sustainedcommitment of timeand staff.
  18. 18. Advertising has shown that it can increase the value of a brand byenhancing the brand’s image, reputation and recognition. At its best,WOM can do the same. Positive WOM enhances brand value, butnegative WOM can cause serious, even irreversible, damage to abrand’s reputation and sales.Advertising plays a key role in achieving brand recognition, whereas, asthings stand today, WOM has very little to contribute in that respect.BRANDS.
  19. 19. Empirical evidence suggests that the elasticity of sales in response toadvertising is rather low in the short run, but that advertising does affectbrand value and consumer price sensitivity in the long run.In contrast, the volume of conversations about a product is directly andimmediately correlated with sales – positively or negatively, as the casemay be. Furthermore, the duration of advertising’s “pull effect” isdisputed, whereas the effect of WOM appears to be more lasting.SALES.
  20. 20. The volume of conversations about a product isdirectly and immediately correlated with sales –positively or negatively, as the case may be.
  21. 21. Some products and services naturally generate conversations, whileothers simply are not talked about. People are more inclined to talkabout things they purchase rarely and use publicly, such as holidays orcars, whereas things they buy regularly and use privately, such astoothpaste brands, are barely mentioned. This is a key factor whendeciding whether or not an e-WOM initiative is appropriate.PRODUCTS AND SERVICES.
  22. 22. How much WOM is generated will also depend on the context in whichthe communication takes place. Whereas advertising has proveneffective in all kinds of cultural and social environments, WOM appearsto behave differently among different social and cultural groups.CONTEXT.
  23. 23. It is tempting to think that socialm e d i a a r e a l o w - c o s talternative to traditionaladvertising, for informing andp e r s u a d i n g c o n s u m e r s .However, even though theinvestment to establish apresence in social networks isrelatively small, the cost ofgenerating content is high, as itdemands creativity, time andqualified talent.
  24. 24. A l t h o u g h m o s tmarketing expertsconsider advertisingand e-WOM to becomplementary, thefact is that the twoare competing withone another for adiminishing budget.
  25. 25. E-WOM is part of anecosystem thatcomplements traditionalmarketing channels.
  26. 26. The lesson to be learned here is that social networks act asamplifiers of traditional advertising, which remainsindispensable in order to reach the point of sale.
  27. 27. Many questions remainunanswered.What combination ofadvertising and WOM isbest?How can WOM reinforcethe image of a brand thata l r e a d y h a s s o m erecognition in traditionalchannels?When, if ever, can WOMb e a s u b s t i t u t e f o radvertising?
  28. 28. Today, the ad may be the opening gambit in an ongoingconversation across platforms or, conversely, a continuationof what consumers have already heard in social media.As a generalrule, advertisingand e-WOMshould reinforceone another, asif through crossfertilization.
  29. 29. Now that we know what WOM is all about, wecan start to define a social media plan,following a series of recommendations.
  30. 30. Be aware. Whether you planned it or not, your brandor product is already being talked about in socialnetworks. So listen to what people are saying.Do a brand audit. Before you rush out to conquersocial networks, analyze your brand or product to seeif it is capable of attracting the target audience andwithstanding pressure. If, for some reason, you cannotact transparently, if your product is not the kind thatgenerates conversations or if there are reputationalrisks, such as a fair chance of generating hostileconversations, then perhaps you should hold back orkeep a low profile.Set targets. Decide exactly what you want to achievevia the Web. Possible goals might be: to attractcustomers; to gather feedback from existingcustomers; to build links and mentions, so as togenerate traffic to the corporate website; to becomean opinion leader or expert in a certain area; to usethe network as a benchmarking tool; to launchpromotions.
  31. 31. Choose the right mix. Specify exactly where youwant to be and how you want to get there.Decide on platforms, profile, message type andfrequency.Decide on content and tone. The content maybe generated by the company itself, by users oreven by employees. You will need to establish:the type of content; the user participationmodel; and, above all, the right balancebetween content (70 percent) and selling (30percent). First, you inform; second, you entertain;third, you interact; and last, you sell.Measure. What metrics will tell you whether youhave succeeded or failed? It will depend on yourgoals. On the Internet, you need a variety ofmetrics, but you have to appreciate that theyare likely to be more diffuse than in traditionalchannels.
  32. 32. Deciding   what   strategy   to   pursue   is   not   easy.  The   important   thing   is   to   remember   that,   in  social   media,   the   decision   does   not   always  depend   on   us.   O9en,   it   is   the   users   and  consumers   who   decide,   whether   we   like   it   or  not.  
  33. 33. Questions?
  34. 34. Thank You
  35. 35. ContactFernando BarrenecheaFernando.barrenechea@iese.net@fbarrenecheaf

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