New report pegs word-of-mouth marketing spend at $1.5B in 2008

August 7, 2009 by George Eberstadt

PQ Media just released their Word-of-Mouth Marketing Forecast 2009-2013. It’s also available free to WOMMA members.

Highlights from the report: Spending on U.S. word-of-mouth (WoM) marketing increased 14.2% to $1.54 billion in 2008, as brands recognized the need to get involved in consumer and business conversations and allocate resources to WoM.

Spending increased at a compound annual growth rate (CAGR) of 37.6% from 2003 to 2008. Spending on WoM content and services increased 13.0% to $1.26 billion in 2008, as major marketers integrated WoM into the media mix and shifted to specialized WoM firms that help drive long-term campaigns.

Spending rose at a 37.3% CAGR of 37.3% from 2003 to 2008. Spending on WoM ancillary products increased 19.7% to $286 million in 2008, due to growing demand for return-on-investment (ROI) data and the impact of WoM campaigns on consumer purchasing behavior. Growth can also be attributed to the increasing sophistication of WoM tools that are being used to monitor online and offline conversations. Spending grew at a CAGR of 39.1% from 2003 to 2008.

Total spending on WoM marketing is expected to increase 10.2% to $1.70 billion in 2009 and grow at a CAGR of 14.5% during the 2008-2013 period, reaching $3.04 billion as more brands include WoM in their media mix and ROI metrics improve.

Customer reviews are great, and word-of-mouth is still better.

July 1, 2009 by George Eberstadt just announced some dramatic success with customer reviews — 74% increase in conversions within 5 months.  Congrats to them and to their review system provider, PowerReviews.

But I couldn’t help noticing this quote from Michael Brown, their IT Director: “User-generated comments and reviews are second only to word-of-mouth as a purchase driver for web users.” So, by all means, invest in a customer reviews system.

But don’t forget your word-of-mouth system, too!

eMarketer: People trust friends more than they do bloggers

June 22, 2009 by George Eberstadt

Word-of-mouth has a radically greater impact on purchase behavior when it comes from friends than from strangers (like bloggers), according to a Mintel survey of buying behavior, just cited in eMarketer,

eMarketer says: “While bloggers may bring buzz to a product, converting the buzz to sales is another matter.”

“It’s interesting to find that as much time as we spend online, we still prefer a personal recommendation from someone we know and trust,” said Chris Haack of Mintel.

Here’s their data:

TurnTo presentation at OnMedia – Part 1

February 3, 2009 by George Eberstadt

Here’s the TurnTo presentation from the OnMedia conference today.  This talk focuses on the whole idea of “Trusted References”.  The TurnTo part goes from roughly minute 1 to minute 10.  (I’m hoping the conference will provide a version of this without the side-bar.  I’ll upgrade if we get one…)

Presentation from the Social Networking Conference

January 23, 2009 by George Eberstadt

I just got back from the Social Networking Conference in Miami.  Here’s the presentation I gave, titled “Ecommerce Meets Social Networks: A Different Approach to Driving Online Referrals”.  The usual caveats about slides-without-accompanying-commentary apply.

View more presentations or upload your own. (tags: trusted references)

Person-to-person product recommendations: most influential on buyers, prefered by recommenders

December 12, 2008 by George Eberstadt

A couple recent studies by BIGresearch that look at purchase influence factors across all media – traditional and online – shed further light on the importance of the personal advice network.  As a pair, they paint an interesting picture: person-to-person product recommendations are the #1 influence factor on buyers (at least for a number of product categories), and they are the preferred way for recommenders to deliver their advice.

One study, conducted for the Retail Advertising and Marketing Association,  shows that word-of-mouth is the top influence channel for electronics (44.4%) and apparel purchases (34.3%).  In electronics, product reviews came in second (36.8%) and retail advertising inserts came in third (29.2%).  In apparel, retail advertising inserts came in second (33.3%) and in-store promotions came in third (30.4%).

The other, reprinted in eMarketer, shows that across all age groups, the primary means through which people communicate product recommendations are the traditional ones – face-to-face, email, and phone – with blogs and communities far behind.  What’s significant here is that the leaders are primarily point-to-point channels, not mass communications channels, highlighting that people with advice to offer prefer to deliver it directly to the person who needs it.  (OK, people could be email blasting their product recommendations to their friends, but I suspect the dominant mode here is more targeted.)