Ten Reasons Why Word-of-Mouth Marketing Works

The Internet provides so many ways for users to spread information in ways never before possible. E-mail, for example, can easily extend the reach of someone's brand by a factor of 10, 100, 1,000 or over 10,000. The Internet also serves as a vast digital repository of such information -- accessible at any time, from anywhere and by anyone. Millions of opinions about your company's brand are only a click away on search engines, blogs, product ratings sites, podcasts and other digital platforms.

The immediacy of the Internet is giving way to more word-of-mouth marketing and viral campaigns. Below are eMarketer's top ten reasons for the explosive growth of word-of mouth marketing, and why we feel it will continue to be a major factor in consumers' and companies' lives.

#1. The consumer is in control. It's hardly a news flash, but consumers today have unprecedented control over their media and content. Using everything from MP3 players to blogs, Blackberries, podcasts, digital video recorders and search, consumers are accessing information when they want it, where they want it and how they want it. According to Pew Internet & American Life Project, 44 percent of online U.S. adults, or over 50 million Americans, are "content creators," meaning that they contribute in some way to the Internet, such as via blogs, podcasts and product recommendations and reviews. Factor in the word-of-mouth effect through these communication channels and you see the cascading effect right across the top.

#2. Growing Distrust of Advertising Messages More and more Internet users are moving away from "manufactured" messages to instead trust the opinions of others, including friends, family, co-workers, etc. A recent Intelliseek study revealed that 88 percent of consumers trust "advertising" via word of mouth. In contrast, only 56 percent said newspapers were trustworthy, 47 percent said the same for television and radio, and even search was trusted by only 34 percent. Yankelovich also noted that only 27 percent of consumers polled trust experts and 8 percent trust celebrities, but a whopping 65 percent of consumers trust friends for product recommendations. Accordingly, for marketers looking to bolster the trust factor with their brands (and who isn't?), almost nothing beats word of mouth.

#3. Empowered consumers are fighting back! An astounding 87 million Americans have signed up for the national "Do-Not-Call" registry. About one-fifth of consumers use spam and online ad blockers. Next year, over 15 percent of households will be equipped with TiVos and other kinds of digital video recorders for the primary purpose of skipping over television ads. Faced with this emotional and mounting resistance, marketers must find news ways to connect with consumers, or, as some have put it, "join in the conversation." Word of mouth provides marketers with unique opportunities to do just that. Consumers will willingly share ad messages -- as long as they are entertaining, informative or otherwise compelling -- with others.

#4. Increased spending behind interactive advertising.eMarketer projects spending on online advertising in 2005 will rise 34 percent, far above the growth rate of any other single medium. A big reason for the growth in interactive advertising is the desire among marketers to exploit viral and other forms of word-of mouth-opportunities. With corporate marketing budgets increasingly opening up to interactive platforms, marketers are taking a fresh look at viral and word-of-mouth strategies, which typically involve the Internet and e-mail.

#5. Emphasis on targeting and relevance in ad campaigns. Marketers are finding that the secret to successful viral campaigns is to create advertising that is so interesting, entertaining or otherwise engaging that consumers will invite you in their front door, and invite all their friends and family as well. There is a shift underway in content models, from ad-supported mass channels to user-supported niche content. Marketers can participate in this evolution by creating valuable content of their own. In this world of fragmented media and consumer personalization, marketers are shifting their focus from mass to targeting efforts.

#6. E-mail and other platforms ease use of viral programs. Many examples abound for the successful use of e-mail in creating viral campaigns. Procter & Gamble used e-mail to create a viral campaign for its new Tide Coldwater launch, a product designed to help conserve the environment. According to data from Hitwise, the e-mail campaign increased traffic at the Tide Coldwater site by 900 percent in the first week, and then tripled that level in week two.

However, marketers trying to stimulate viral behavior should not restrict their focus entirely to e-mail and the Internet. Because e-mail viral campaigns are so inexpensive to deploy, it is critical that marketers invest a considerable amount of thought and creativity before shooting messages out to consumers. While Jupiter reports that 34 percent of marketers had tried viral campaigns as of October 2004, only 10 percent of consumers surveyed had forwarded an e-mail as a result of seeing an ad. The emphasis, therefore, should be on quality, not quantity.

#7. Word of mouth/viral marketing are relatively inexpensive to deploy.One fascinating aspect of word-of-mouth marketing is that consumers end up doing much of the heavy lifting -- communicating about your product or brand to others -- so that communication costs are in effect being 'subsidized.'

Borla, a manufacturer of exhaust systems, experimented with an e-mail-driven viral video campaign and achieved success. For about the same cost of a four-color, full-page print ad in a sports car magazine ($16,700), Borla was able to achieve significant, measurable and cost-effective results. The ads used risqué humor to spur people to view and pass the video along.

#8. Accountability and measurement. New companies and technologies have emerged to figure out how to measure and track word-of-mouth marketing campaigns. BuzzMetrics, for example, has software that can measure brand awareness among a large population of online consumers, as well as rank major topics of conversations in the blogosphere. Similarly, Intelliseek uses software that sifts through blogs to document and organize what consumers are saying to each other about various products and brands. Mazda used this service to find out how to structure a public relations campaign around the launch of its RX-8 model.

#9. The "Energizer Bunny" effect. One of the side benefits of word-of-mouth, and particularly viral, campaigns, is the opportunity for marketers to milk their campaigns over time, extending not only their reach but also their duration. A year and a half after the "Subservient Chicken" campaign was launched, it is still getting hits, and still being talked about.

#10. Word-of-mouth marketing has a ripple effect on other media. Word-of-mouth campaigns generate after-effects that can give your marketing programs more "spin" for the money. In many cases, viral campaigns can significantly extend your reach while reinforcing your message among a core group of target consumers. For example, a television spot on the Super Bowl will get relaye and talked about in thousands of blog conversations, with both positive and negative comments. An arresting or highly unusual ad campaign delivered on any medium is likely to be picked up by the blogosphere, providing it with more traction.

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