• by Lynn Russo , January 24, 2006

One could easily argue that word of mouth is the oldest form of media. But it wasn't until recently that advertisers began to see it as a tangible marketing strategy that could be budgeted for, planned, and measured. "About half of all online marketers are engaged in some form of word-of-mouth or viral campaign [today], and that number will continue to grow," says Geoff Ramsey, CEO of eMarketer and author of the report "Word of Mouth Marketing: The Stats, Surveys, and Substance Behind the Buzz."

The report notes that 34 percent of respondents to a JupiterResearch survey had conducted word-of-mouth campaigns in the 12 months ending October 2004. An April 2005 CMO Magazine study revealed that 43 percent of respondents cited customer influence via word-of-mouth as a marketing strategy they use or plan to use within the next six months.

Marketers across the retail, electronics, automotive, financial services, cellular, travel, and healthcare sectors are having success with word-of-mouth marketing strategies. A Nielsen/ Net-Ratings survey found it to be the third most important source of information for 2004 online holiday shoppers (26 percent), below search engines (38 percent) and Web sites (30 percent), but above catalogs (22 percent) and brick-and-mortar stores (20 percent).

Consumer-generated product reviews are one of the most powerful forms of word-of-mouth marketing. A recent report by the Yale Center for Customer Insights at the Yale School of Management reveals that consumer reviews on both Amazon.com and Barnes-andnoble.com had a profound effect on sales of the product being reviewed. In particular, professors Judith Chevalier and Dina Mayzlin, authors of the report, found that a new 1-star review depressed sales more than a new 5-star review raised sales.

Word-of-mouth is very powerful for pricey items like cars and consumer electronics. Consumer commentary on such blogs as Autoblog.com, Engadget.com, and Gizmodo can have a make or break new models and products. A March 2005 DoubleClick study shows that consumers, auto dealers, and manufacturers all ranked word-of-mouth highest out of a list of 12 types of advertising and marketing options, with 71, 93, and 86 percent respectively, maintaining that word-of-mouth influences auto purchases most, while TV ranked 11th and dealer sites ranked last.

Types of products and service most likely to be recommended by friends and family include restaurants (42.4 percent), movies/TV (24.9 percent), cell phones (16.2 percent), grocery/drugstore (15.7 percent), and music (15.6 percent). The lowest categories were durable baby care (1.9 percent), durable pet care (1.9 percent), daycare (1.8 percent), recreational vehicles (1.7 percent), and home security (1.6 percent).

Influencers among family and friends can have the most dramatic effect on word-of-mouth marketing, according to a study by Roperasw/Washingtonpost.com. The best media to reach them? The Internet and print newspapers (tied at 56 percent), TV (43 percent), radio (39 percent), and magazines (23 percent), according to Roper. Online survey takers and bloggers, of which there are now 14 million, are also highly influential, eMarketer notes.