• by Doug Brooks , March 17, 2008

Go to any marketing conference and you're likely to find topics such as buzz, word of mouth (WOM), and social networks on the agenda. We have all heard the stories of brands being impacted (positively and negatively) by consumer-generated content that is delivered through blogs, message boards, and photo and video sites. And you know it has reached critical mass when Time magazine awards "You" with the Person of the Year award, and Advertising Age awards "You" as the Agency of the Year.

WOM and peer recommendations have always been powerful drivers of sales. From bus stop discussions to college campus activities, to casual encounters at the water cooler, the person with the loudest voice or most forceful manner could rule the day. Today, however, the sheer pace and scale of WOM has changed, thanks to the Internet, cell phones and other technology that allows a person or group to quickly communicate with--and in turn, influence--a large number of people.

Consider a few examples:

• One consumer products company we work with found that nearly 7% of its 2007 sales growth was driven by WOM and buzz. The company was able to quantify the impact of WOM and buzz side by side with the impact of all their other marketing vehicles by using econometric models. This approach also allows marketers to identify opportunities to amplify WOM and buzz through various marketing communications.

• And then there is the amazing backstory to the movie "March of the Penguins." Two stay-at-home moms running a podcast on parenting called "Mommycast," www.mommycast.com, contributed to $25 million of the film's $100 million in revenues just by talking up the movie on their podcast.

The result is that WOM and buzz's effect has increased exponentially, while for some brands, traditional media may not be carrying its old weight. Any marketer worth his or her salt no longer has the option of avoiding their impact and applying the same analytical rigor to WOM and buzz as traditional media.

So how exactly do you measure consumer-generated media?

The good news is that the same technology that allows consumers to become influencers and promote--or, unfortunately, trash--your brand also provides a very rich data set that wasn't available when WOM and buzz were not enabled by technology. Companies like Cymfony and BuzzMetrics have sprung up to provide data from blogs, message boards, and other social networks, and allow marketers to understand the volume of positive, negative, and neutral conversations about their brands and competitor brands.

This data fuels analytics (such as econometric models) that allow marketers to do a few important things:

• Understand the impact of WOM/Buzz on their brands

  A few industry leaders are including this data in econometric models to inform their marketing strategy, and answer questions like: What is the impact of WOM/Buzz on the brand? How can marketing be used to amplify WOM/Buzz? That is, what are the synergies between the two? How do you distinguish the contributions of WOM from that of your other marketing?

• Track for leading indicators and trends

  WOM and buzz can help you spot trends by opening a window into what your consumers are discussing, their preferences and what's on the mind of influencers. This is especially important because typically, a lag occurs between consumer sentiment and behavior. The WOM and buzz data could reveal some early changes in sentiment toward the brand. That allows marketers to quickly address any problems before they lead to any negative impact, which could be costly and in some cases irreversible.

• Inform innovation and product development

  WOM and buzz used smartly can act as a quasi-product development research team. Starwood Hotels is a great example. The company is currently using social networks to capture consumer feedback on hotel designs, amenities, and features. That consumer intelligence, in turn, is impacting the look and feel of future hotels.

• Understand strength and weaknesses of a brand and competitor brands

  WOM conversations can provide marketers with timely and valuable information about the strengths, weaknesses, and opportunities for their brand and competitor brands. By including competitor WOM/buzz data in an econometric model, marketers are now able to understand the impact of a competitor's WOM and buzz on its brand. For example, a competitor may be stealing revenue from you because of positive consumer sentiment. This allows you to quantify that.

Today, research in the area of social networks is considered leading-edge, but in the very near future, it will become required research for many brands. As marketers continue to discover new sources of information that get them closer to their customers in a near real-time manner, the need for creative solutions that combine new data sources with advanced analytics becomes even more important. Getting ahead of the curve in this area will provide valuable insights and a competitive advantage to those who establish the capability early.

Douglas Brooks is VP/product marketing atMarketing Management Analytics. He joined MMA in 2004 as part of its initiative in continuous marketing planning. MMA works with clients to develop fact-driven marketing strategies, comprehensive brand plans, on-demand marketing effectiveness, and comprehensive analysis of brand plan execution results. Doug can be reached at douglas.brooks@mma.com, or visit the company's web site at www.mma.com.