3. Word of Mouth Marketing: The Stats,
Strategies & Trends You Need to Know
January 19, 2006
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. 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. 76% don’t believe that
companies tell the truth
in advertisements
--Yankelovich, 2005
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. #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. 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. 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. #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. “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. 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. 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. 73
%?
For product recommendations, what
sources do consumers most trust???
80%
65%
60%
40%
27%
20% 8%
0%
Friends Experts Celebrities
Source: Yankelovich
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. 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. 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.
20. NEW LINE CINEMA
New Line Cinema tripled the number
of viewings of its trailer to 3.3 million
because of the viral activity
21. eMail provides an efficient way for
consumers to spread the word to others…
22. 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
23. 80% of moms tell their friends about
promotional e-mails they find valuable
2 6%
24. 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.”
25. 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
26. • 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
27. • 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%
28. 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…
29. 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
30. 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.
31. 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
32. 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
36. 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
37. 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
39. 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
41. 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
42. “Why are
Could 2006 be the Tipping Point?
my
television
ratings in
the
toilet?!”
43. 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
44. 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
45. 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
