AT&T Mobility and Keller Fay presented new research on the topic of “ROI and Results: How to Quantify Word of Mouth’s Sales Impact” at a recent WOMMA conference. The results could not be clearer: “Word of Mouth is a powerful and statistically significant sales driver” for AT&T Mobility.

1. ROI and Results:
How to Quantify Word of Mouth's Sales Impact
and Uncover Actionable Insights
Greg Pharo| AT&T| Director, Market Research & Analysis, @greg_pharo
Ed Keller| Keller Fay Group| CEO|@kellerfay

2. Word of Mouth Matters!
“It’s the most disruptive factor
in marketing”
2.1 Billion brand impressions via
word of mouth each day in
America
“The revenue growth of brands with the
highest advocacy levels is far above the
industry average. Over time, the difference
separates the leaders from the laggards.”

3. WOM > Social Media
What % of WOM happens on social
media, blogs or chatrooms
IM/Text: 4%
Email: 3%
Social Media: 2%
Offline
88%
Online
9%
Note: Percentages will not add to 100% because Other is not shown,
© 2014 Keller Fay Group, Source: TalkTrack® 2013

4. Marketing Plays Role in Driving WOM
© 2014 Keller Fay Group, Source: TalkTrack® 2013
…led by advertising (26%)
editorial (17%)
point of sale (11%)
websites (11%)
promotion (10%)
direct mail & email (5%)
58%
of consumer brand conversations
refer to marketing or media

5. AT&T is a Highly Talked About Brand
© 2014 Keller Fay Group, Source: TalkTrack® 2013
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5.
Top 10 most talked about brands in 2013
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7.
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9.
10.
AT&T earns
6.5 Billion
annual WOM
impressions!

6. AT&T Earns A Lot of WOM…
• Does WOM directly influence sales
volume, and to what extent?
• Where does word of mouth fit into the
“owned-earned-paid” media model?
• Is it really a metric of interest to
companies?
But, do these conversations drive sales?

7. Background- AT&T Marketing ROI
• AT&T is a leading Wireless services company
• Well-developed Marketing ROI program
• Uses Market Mix Modeling and other methods
to track & optimize media and messaging
• AT&T wanted to know if WOM impacts its sales
Does Word of Mouth Really Drive Sales?

8. We used a two step approach
1. Structural Equation Model
(“Purchase Funnel”)
2. Market Mix Model
(Regression)

9. First: Model Consumer
Behavior
AT&T created both a “Purchase
Funnel” model which identifies
which attitudinal and behavioral
metrics impact sales (gross adds),
both directly and indirectly
The model also shows what other
upstream metrics indirectly
impact key drivers of sales

10. Method- Create a Structural Equation Model
First: Analytical techniques are used to winnow the myriad of earned media &
behavioral metrics
– Highly-related metrics were grouped together using a cluster analysis
– A short-list of metrics that are most correlated with their group are selected
Second: These representative metrics are then input into SEM models
– Reduces the burden of incorporating potentially hundreds of metrics
– Ensures the earned media impact is not “diluted” by having related metrics in model
Used a one-two combo of clustering and SEM

11. Structural Equation Models:
Traditional regression assumes no
interactions among sales drivers
The SEM structure allows multiple
interaction among sales drivers
Gross
Adds
Paid Media
Brand Health
Word of Mouth
Gross
Adds
Paid Media
Brand Health
Word of Mouth
They uncover complex relationships

12. TalkTrack: Source of WOM data
• Keller Fay Group’s TalkTrack®, a national syndicated program
measuring WOM in all forms
– Over 3 in 4 conversations occur face-to-face
• The study involves 36,000 online consumers surveyed annually,
– Yielding about 1,000 weekly mentions of brands
• Respondents are representative of the US population
– use a diary to keep track of their brand conversations, then
complete an online survey to gather detailed information
about these conversations
Mode of Conversations
Across All Categories
Face-
to-Face
77%
Phone
13%
Online
8%
Other
2%
It measures WOM in all forms

13. Attitudinal Metric #1:
Awareness
Attitudinal Metric #2:
Network
AT&T Gross Adds
(Sales)
WORD OF MOUTH:
POSITIVE
MENTIONS
STRONG
Relationship
Advertising Message
Metric #2
STRONG
Relationship
Advertising
Message Metric #1
Moderate
Relationship
STRONG
Relationship
AT&T Media Weight
Moderate
Relationship
STRONG
Relationship
Competitor
Perception Metric
STRONG
Relationship
Structural Equation “Purchase Funnel” Model
Concluded that WOM is a strong and direct sales driver

14. The model also identified metrics which influence WOM
Word of Mouth-
Positive Mentions
Strong
Moderate
Weak
Strength of
Relationship
Customer Service
Perception #1
Network
Perception #3
Network
Perception #2
AT&T Gross Adds
(Sales)
Willingness to
Recommend
Additional Insights:

15. Finding from Structural Equation Model:
 The number of positive WOM “mentions” in TalkTrack® proved to be
one of the more powerful metrics directly influencing “Gross Adds”
(sales)
 Unaided Advertising Awareness, a top-of-funnel metric, was also a
strong driver of Gross Adds
 In turn, the Structural Equation Model identified which metrics
influence Word of Mouth and Unaided Advertising Awareness
 Paid media drivers are also included, as they directly impact Gross
Adds, Word of Mouth and brand health metrics
Word of Mouth is a major sales driver

16. In contrast, online/social buzz
and NPS are weaker signals
We’ve tried other metrics
besides Word of Mouth:
• Online Buzz (social media)
• NPS
While they provide some
insights, they aren’t as strong or
reliable for explaining sales as
Word of Mouth

17. And it gets even better
We also constructed a
structural Equation Model for
AT&T Disconnects
It shows what causes customers
to leave AT&T
Guess what we found …

18. Structural Equation Model for Disconnects:
Negative sentiment WOM is a factor
Network Metric
#2
Word of Mouth,
NEGATIVE
MENTIONS
Disconnects
Network Metric
#1
Value / Pricing
Factor #4
AT&T &
Competitive
Media
Customer Service
Metric #3
STRONG
Relationship
STRONG
Relationship
Moderate
Relationship
STRONG
Relationship
Moderate
Relationship
STRONG
Relationship

19. The Second Step
Introduce Word of Mouth into a
Market Mix Model
It provides a more precise
quantification of the sales
impact

20. Market Mix Models
TV
Radio
Cinema
Online Display
Outdoor
Content Search
Base Plan
Optimized
• AT&T constructed market mix
models for itself and key
competitors
• Each model uses Gross Adds as
dependent variable
• Media, pricing, product innovation,
messaging performance,
competitive, other relevant
marketing/ environmental factors
incorporated as ind. variables

21. Market Mix Model resultsWord of Mouth is a powerful and
statistically significant sales driver in
Market Mix Models
• Word of Mouth explained over
10% of sales volume through
positive comments, and over
10% of lost/unrealized sales
volume due to negative
comments
• Paid Media remains #1 sales
driver, contributing ~30% of sales
– but WOM is a close second
WOM: Positive &
Negative Impact

22. AT&T Conclusions
Word of Mouth is an impactful, relevant variable for
influencing sales in the Wireless category
WOM metrics belong on a CMO dashboard as a key
performance indicator
WOM drives sales and its impact can be measured

23. Keller Fay Observations
• Today, Over Half of WOM is influenced
by marketing, including 26% by paid
advertising
• These numbers ought to grow as
marketers adopt WOM as an objective
“Conversation” should be a marketing objective
© 2014 Keller Fay Group, Source: TalkTrack® 2013

24. Think about
providing
“triggers”
Keller Fay Observations
Ways to stimulate WOM
• Focus on messages that are “talkworthy”
• Target consumers who are able to carry the message
• Favor marketing & media channels
that will maximize WOM
Opportunity for marketers to
think of all media as “social”
Seek out
“influencers”

25. 17.2
18.2
18.4
18.7
21.6
The Blacklist
America's Got Talent
Dancing with the Stars
60 Minutes
The Voice
Current Media Focus: “Impressions”
Most watched program by demographic target
IMPRESSIONS
Monthly Audience Size In Millions, Ages 18-49
Source: Nielsen TV/TalkTrack® Fusion, September 2013

26. 17.2
18.2
18.4
18.7
21.6
The Blacklist
America's Got Talent
Dancing with the Stars
60 Minutes
The Voice
New Opportunity: Also Focus on “Expressions”
Target consumers talking about category/brand
IMPRESSIONS
Monthly Audience Size In Millions, Ages 18-49
Source: Nielsen TV/TalkTrack® Fusion, September 2013
Sleepy Hollow 16.8
EXPRESSIONS
Projected Weekly Auto Conversations in Millions
79.3
81.8
81.8
82.1
92.3
The Blacklist
America's Got…
60 Minutes
Sleepy Hollow
The Voice
Sleepy Hollow #7 in terms of
“impressions,” but #2 in terms
of auto WOM “expressions”!

27. Depicts programs that
do not surface on top
10 indexing list among
“affluent men”
Top Programs Among „Affluent Men Who Are Engaged in Consumer Electronics WOM‟
Shown: Top indexing shows among the top 100 programs reached across broadcast & cable.
Bring “Social” Audiences to the Forefront
Source: Nielsen TV/TalkTrack® Fusion, November 2013
174 160 159 157 154 154 147 145 145 144

28. Plan for “Expressions”
”
Awareness is fine,
but advocacy will
take your business
to the next level.
Joe Tripodi, CMO, Coca-Cola

29. Concluding Thoughts
• Word of Mouth is an impactful, relevant variable for
influencing sales in the Wireless category
– And, it’s impact can be quantified
• WOM should be a key objective for all marketing
• Use messaging, targeting and channels to stimulate WOM
• Plan for “expressions” in addition to “impressions”
PAY-OFF: CONVERSATION, ADVOCACY, SALES

30. Thank you!
Greg Pharo, @greg_pharo
Ed Keller, ekeller@kellerfay.com, @kellerfay