• by Shankar Gupta , December 6, 2005

Whether marketers that engage in word-of-mouth campaigns and buzz-building by hiring people to talk up products should fully disclose their methods remains a subject of debate. Some industry watchdogs say that anything less than complete disclosure is deceptive, but advertisers often respond that a buzz campaign won't be effective if consumers realize that the people promoting a product are being paid for their efforts.

But now, a new report by BzzAgent suggests that the watchdogs and marketers need not remain at odds. The report, released Monday, says that letting consumers know where their message is actually coming from increases the trustworthiness of a campaign.

BzzAgent, which based its conclusion on 270,000 reports filed by word-of-mouth campaign volunteers over the last three years, found that "disclosure increases the validity of WOM interactions without reducing the breadth of campaign reach."

According to the report, the act of disclosing can increase their credibility, and combats the stigma of so-called "stealth" marketing. "Active WOM marketers who disclose their campaign affiliation quickly earn the confidence of their social network," the report states. "Because these individuals are commonly offered access to products in advance of their general release, they become a reliable source for 'inside information.' In many cases, the opinions of WOM volunteers are overtly solicited by family and friends."

The BzzAgent report also cited preliminary research conducted at Northeastern University by Walter Carl, a professor in the communications department and advisory board member of the Word of Mouth Marketing Association, which found that less than 2 percent of people said that they had a negative perception of a company when a word-of-mouth volunteer disclosed his affiliation.

Pete Blackshaw, chief marketing officer at buzz-measurement firm Intelliseek, added that a new Intelliseek survey of 660 consumers showed that many people would feel betrayed if they learned that someone who talked up a product turned out to be on the marketer's payroll. One in three respondents--33.3 percent--said they'd be disappointed if they found that a recommendation had been in some way solicited but not disclosed, while 26.6 percent said they would be unlikely to ever trust a recommendation from that source again, 30 percent said they'd be less likely to buy, and 10.7 percent said they'd encourage others not to buy.

But that's not to say that there's no downside to disclosure. "This is a broader dilemma for advertisers," Blackshaw said. "If a TV show 'discloses' that a half-a-dozen scenes prominently feature products from 'paid' advertising, will the viewer be less receptive to the message? The network certainly will receive points for disclosure, but it's not 100 percent clear that the show will be as impactful."