• WSJ (paid subscription required), Friday, January 13, 2006 12 PM

Venture capitalists have discovered the power of buzz. Two such Boston-based firms are investing heavily in a marketing services company that specializes in what is commonly called buzz marketing, or word-of-mouth marketing, in which information about a product or service is spread through getting people to talk to others about it rather than through traditional advertising. The two VC companies, General Catalyst Partners and IDG Ventures Boston, are investing $14 million in BzzAgent. Often used in conjunction with television or Web advertising, word-of-mouth campaigns can be done through e-mail or in person. Some firms build community Web sites where consumers can chat about their product experiences. Venture capitalists are attracted by the potential of word-of-mouth to grow in the evolving ad landscape. "Because of audience fragmentation, behavior changes and the decline of TV, we have been focused on new areas that are interesting to brands and advertisers," says John Simon, the managing general partner at General Catalyst Partners.

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