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Word-of-Mouth Marketing 101

Peter Storck
SVP, Business Intelligence, House Party
WOMMA/MRA Webinar Series
January, 2011

WOMM 101

• Definition
• Types (Best Practices)
• Worst Practices
• Measurement
• Effectiveness
• Adoption

WOM & WOMM
• WOM:
– Consumers providing info to
each other

– Intuitively, the best advertising

– Only recently harnessed

• WOMM:
– Giving people a reason to talk
– Making it easier for them

WOM & WOMM
• Can‟t
– Create or script WOM

• Can
– Make consumers happier
– Listen to them
– Leverage their desire to be first
– Facilitate sharing
– Inform influentials
– Activate advocates
– Recognize the power of both good
and bad WOM

WOM Can’t Be Faked
• Fake WOMM
– Unethical
– Backfires
• Legitimate WOMM
– Respects consumers‟ intelligence
– Authentic, transparent, honest
• WOM
– Self-policing
– Pushes marketers to satisfy

Only honest marketers with confidence in
their products should practice WOMM

Elements of WOMM

• Educating people
• Studying how/where/when opinions are shared
• Indentifying influencers
• Harnessing peoples‟ desire to be insiders
• Providing tools for easy sharing
• Listening and responding to supporters,
detractors, neutrals

Digital Social Media …

• A subset of WOMM
– less than 2%

• 90% of consumer
conversations about
brands occur offline
(Keller Fay)

Types of WOMM

• Buzz • Influencer
• Viral • Cause
• Community • Conversation Creation
• Grassroots • Brand Blogging
• Evangelist • Referral Programs
• Product • Co-Creation

Product Seeding
Providing samples to influential consumers

FORD FIESTA MOVEMENT

 Managed by Undercurrent
 Gave 100 social media enthusiasts
a Fiesta for 6 months prior to release
 Asked to create a mission each month, and
share in social media
 Meals on Wheels, alligator adventures,
elope
 Generated:
 6.5 million YouTube views
 500,000+ Flickr views
 3 million+ Twitter impressions
 50,000 opt-ins, 97% non Ford-owners
 Seeded, and Sold 10,000 Fiestas in first six
days

11

Referral Programs
Creating tools that enable satisfied customers to refer their friends

CHILI’S BAR AND GRILL

 Managed by Zuberance
 Identified biggest brand advocates by email,
Facebook, Twitter and site surveys
 Engaged 125,000 advocates, who:
 Posted 75,000 reviews, 40,000 on Yelp
 Generated 9 million influence impressions
 Shared 110,000 free appetizer offers, yielding
50,000 new opt-ins
 Chili‟s was able to:
 Energize and reward loyalists
 Get referrals to their friends

12

Viral Marketing
Creating messages designed to be passed along, often electronically

OLD SPICE

 Managed by Wieden + Kennedy
 Ran funny commercial with “Old Spice Guy”
that then went viral on YouTube (over 28
million views)
 Followed-up with hundreds of Old Spice Guy
videos in just 2-3 days, responding to fans‟
Twitter questions in near real-time
 Generated 135,000,000 views
 Sales of Old Spice body wash increased
107% the following month
 Went viral, multiplying their reach at little cost
 This is not easy

13

Grassroots Marketing
Organizing volunteers to engage in personal or local outreach

OBAMA PRESIDENTIAL CAMPAIGN  Site generated:
 2 million profiles
 Led by Chris Hughes, a co-founder of
Facebook  200,000 offline events
 Created the highly interactive,  400,000 blog posts
my.barackobama.com:  35,000 volunteer groups
 User Dashboard  Campaign generated:
 Social network  120,000,000 YouTube views
 Event listings  5,000,000 Facebook fans
 Blogs & Forums  1,000,000 text subscribers
 Calls to action  Brought organizing volunteers to a
whole new level

14

Conversation Creation
Initiating catchy ads, emails, promotions, etc. designed to start WOM

BURGER KING’S WHOPPER SACRIFICE

 Managed by Crispin Porter + Bogusky
 Offered a free Whopper coupon to
customers willing to de-friend 10 people
on Facebook
 23,000 coupons distributed
 Generated redemptions, but little
engagement/conversation, questionable
loyalty
 Did catch attention, and appeal to some

15

Buzz Marketing
Using high-profile entertainment or news to get people talking

RED BULL STASH

 Managed by Archrival
 Hid thousands of Red Bull Energy Shot
stashes across the US; posted clues on
Facebook
 Encouraged stories and photo uploads to the
site
 Invited finders into the “Final Stash,” a virtual
scavenger hunt offering a trip to NYC
 Generated a surge in Facebook activity,
widespread sampling, online and offline buzz
 Created high profile event, got people talking

16

Influencer Marketing
Engaging opinion leaders and communities with your brand

THE TRAVEL CHANNEL

 Managed by Room 214
 Indentified and monitored key advocates and
influencers in the blogosphere
 Established active presences Facebook, Twitter,
Digg, StumbleUpon, more
 Encouraged key influencers to start and join
conversations
 Generated and tracked over 15,000 conversations 6
months, 80% favorable
 Reached over 200,000 online community members
 Engaged influencers, built community

17

Evangelist Marketing
Cultivating advocates to spread the word on your behalf

DELL

 Managed by Mr. Youth
 Identified 2 brand advocates each on
college campuses across the US
 Provided a Dell computer
and $1-2,000 to execute a marketing plan
 Approved but self-designed
 Campus-specific
 Indigenous
 Purchase-consideration rose from 14% to
27% on activated campuses
 Non-activated flat
 Harnessed evangelists, drove toward
purchase

18

Brand Blogging
Blogging and participating in the blogosphere

PHILOSOPHY

 Managed by Bazaarvoice
 Launched a blog in advance of Mother‟s Day
for consumers to upload and vote on stories
of their mothers‟ philosophies
 Drove engagement with a $1,200 shopping
spree to the story with most votes
 “Stories” blog made up 39% of traffic that
month
 Its visitors generated:
 81% more page-views
 20% higher average order value
 19% more items per order
 Built blog, and they came

19

Community Marketing
Forming or supporting communities; providing tools and content

RANDOM HOUSE

 Managed by Affinitive
 Launched Random Buzzers, an online book
community for teens:
 Connect with one another
 Co-create projects
 Engage with Random House authors
 Write and share reviews
 Read exclusive book excerpts
 Over 60,000 members, with:
 17,500 photos
 4,000 reviews
 5,600 comments
 50,200 forum posts
 Built community, and they came

20

Cause Marketing
Supporting social causes to earn respect and support

PEPSI REFRESH

 In lieu of Super Bowl spending in 2010, invited
consumers to suggest causes for funding
 Funded causes with most votes
 Donated at least $1 million a month
 Gave another $1.3 million for ideas to clean Gulf oil
 As of December 2010
 Over 61 million votes cast
 $14.6 million donated for 352 ideas, including
improvements to parks, playgrounds and schools
 Returning to Super Bowl
 Continuing „Refresh‟
 Did good, rose in esteem

21

Co-Creation Marketing
Involving consumers in marketing and creative

DORITOS CRASH THE SUPER BOWL CONTEST

 Ran contest for consumers to create 2010
Super Bowl commercials
 Third year in a row
 Drove 4000 entries with prizes for top (4) vote-
getters:
 Trip to Super Bowl
 $25,000
 Airing of spot
 Up to $2 million if spot ranks in top 3
 One placed first in 2009
 Invited creative, multiplied attention to ads

22

In reality, most
WOMM combines
program-types

23

In-Home Marketing
Evangelist, Co-Creation, Influencer, Product Seeding, Referral, Buzz ...

FEBREZE SET & REFRESH HOUSE PARTIES

 Managed by House Party
 Recruited target hosts for 6,000 parties, one with
Sandra Lee
 Gave hosts microsites for piloting parties
 Sent party packs with samples and branded favors
 Generated over 500,000 hours of brand exposure ($9
eCPM-30‟s), among 7 million conversation partners
 Drove large lifts:
 Familiarity: 34 points
 Favorability: 60 points
 Purchase-Intent: 57 points
 Recommendation-Intent: 58 points
 Harnessed influencers & evangelists, co-created, etc.

24

Unethical WOMM
• Stealth
– Deceiving people about the involvement of marketers
• Shilling
– Paying people to advocate without disclosing it
• Infiltration
– Taking over a forum under false pretenses
• Comment Spam
– Using automation („bots) to post on blogs
• Defacement
– Vandalizing property to promote a product
• Spam
– Sending bulk messages without clear permission
• Falsification
– Knowingly disseminating false information

Botched WOM
A Food Brand
 Greenpeace criticized brand‟s
environmental practices in
YouTube video
 Brand forced YouTube to
remove it
 Consumers trashed the brand
on Facebook and Twitter
 Brand responded with anger,
sarcasm, de-friending
 Brand caused more damage
than video would have if left
alone

Spend Bringing Accountability
• Data collected online and off
• Generational reach
• Respected 3rd Parties
• Increasingly precise, reliable, standardized
– WOMMA‟s role
– Focused on ends, not means
• Enabling cross-media comparison
– Reach (CPM-Impressions)
– Engagement (CPM-30‟s)
– Awareness & Attitudes (Costs Per)
– Action (Costs Per)

Study After Study Builds the Case
• 90% of consumers trust product recommendations
from friends (Nielsen)
• 61% of conversations about products impact
likelihood to buy (Keller Fay Group)
• Customers acquired through WOM monetize 3-5
times more (Hill/Wharton, et al)
• WOM customers have nearly twice the long-term
value (Villanueva/ U of Navara, et al)
• Many more

WOM Drives Favorability
Favorability of a Software Product
Among House Party Participants vs. Control, at 6 and 12 Months After:
57% to 67% Higher
100% 92.7% 93.7%
89.3%
90% 89.2%

80%
70%
60% 55.5% 56.7%

50%
40%
30%
20%
10%
0%
6M 12M
G0 G1 Panel
G0 6M n=1270, Panel 6M n=661, G1 6M n=75, G0 12M n=965, Panel 12M n=319, G1 12M n=102.

Favorability: Please indicate how favorable or unfavorable your impression is of the following product
ChatThreads, Proprietary and Confidential

WOM Drives Media Receptivity
Aided Ad Recall among Participants and Control, at 6 and 12 months:
38% to 64% Higher
90%
82.0%
79.0% 78.0%
80%
69.0%
70%

60%
50.0% 49.0%
50%

40%

30%

20%

10%

0%
6M 12M
G0 G1 Panel


Which of the following features of [the product], if any, does [the brand] mention in its TV advertising?
Check all that apply.

WOM Drives Purchase
Purchase Rate among Participants vs. Control, at 6 and 12 months:
2-3 times higher
100%
90%
80%
68.2%
70%
62.4%
59.4%
60%
52.0%
50%
40%
27.9%
30%
20.1%
20%
10%
0%
6M 12M
G0 G1 Panel


In the past [six/twelve] months have you already purchased [the product]
ChatThreads, Proprietary and Confidential.

WOM Drives Recommendations
Recommendations among Participants vs. Control, at 6 and 12 months:
5-8 times Higher
80%
73.7%
71.5%
70%
60.0%
60%

50% 48.0%

40%

30%

20%
10.0% 9.1%
10%

0%
6M 12M
G0 G1 Panel


In the past 30 days, have you recommended [the product] to anybody?
ChatThreads, Proprietary and Confidential.

WOMM Is Taking Off

• Continuing fragmentation,
clutter, avoidability of traditional
• Rise of digital social media – tools
and usage
• Increasing evidence of WOMM‟s
viability and power

Despite Recession,
WOMM Growing Fast
Spending Growth ($M)
$3,500
18.3%
Growth
$3,000
16.7%
14.9% Growth
$2,500 Growth
12.8%
10.2% Growth
$2,000 Growth

$1,500

$1,000

$500

$0
2008 2009 2010 2011 2012 2013
COMBINED ANNUAL GROWTH RATE 14.5%
SOURCE: PQ MEDIA
Does not include in-store product sampling; coupons & loyalty programs; event marketing & sponsorships; public relations not
associated with WOM, such as crisis management; and social network and consumer-generated media advertising.

Brands WOMMing
Across Categories
Shares of WOM spending by category
5.8
3.2
17.4
CPG
3.3
Food & Drink
3.6
Finance & Business
4.1 Electronics & Telecom
Retail
6.2 Auto & Transportation
12.2
Entertainment & Media
Apparel & Accessories
7.5 Healthcare & Pharma
Sports & Gaming
9.5
Travel & Leisure
8.6 Home & Garden
9.4 Other
9.2

SOURCE: PQ MEDIA

Sample Suppliers
AGENCIES ONLINE COMMUNITIES

MEDIA MEASURERS

WOMM Over the Next Few Years
• More standardized measurement

• More proof of superior long-term ROI

• More precise targeting
– Though targeting is built-in

• Better fusing of online and off

• Less shilling

• A staple in the marketing mix

Thanks

peter.storck@houseparty.com

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