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Word of Mouth – A Prescription for a Bad Economy

A Presentation by Agent Wildfire – Canada’s Word of Mouth Experts


This economy is bad‌like really bad‌


It looks like we’re in the big R…


Yikes, Advertising is taking it on the chin...

- Group M forecasts media spending down 3.2% in 2009 - Zenith Optimedia forecasts 5.7% down in 2009 - Morgan Stanley could envision a +10% drop in spending depending on the economy


How will we carve up the media pie?...

Well, we’ll be eating less media: - 93% of CMOs believe the economy will have a significant/moderate impact on their budgets - 70% of CMOs plan on reducing their marketing spending Source: Epsilon


The Long Slow Decline into Irrelevance Perhaps a premature announcement, but why wait. 2009 Anticipated Declines: - 15% Newspapers - 13% Consumer Magazines - 10% Terrestrial Radio - 4% Network TV Source: Jack Myers Media Report


Smart Marketers are Now Rethinking Traditionally Held Views...


Crisis requires radical shifts in thinking


Another Change You Can Believe In Is Coming ‌


Here Comes the Next Wave of Marketing & Media‌


The Fastest Growing Marketing/Media Segments Expected 5 year Compound Annual Growth Rate

Word of Mouth Internet/Mobile Branded Entertainment Custom Publishing Out of Home Source: Veronis Suhler Stevenson

27% 14% 13% 11% 10%


Word of Mouth is Catching On‌in All Its Forms

Buzz Marketing

Influencer Marketing

User Generated Content

Customer Collaboration

Social Media

Brand Communities

Influencer Marketing

Social Networks

Referral Programs

Grassroots/Cause Marketing

Experiential Marketing

Viral Marketing


Fact - Most Traditional Media is an Inefficient Cost…

…Word of Mouth is a Wise Investment


12

Reasons Why Word of Mouth Deserves Your Consideration In This Economy


Advertising Attention Deficit Hurdles

3,000 ads get pushed at us each day - 6 times the volume vs. 40 years ago‌the tougher it is to breakthrough, the more we do and invest


Reason #1 – Word of Mouth Gets Noticed

- 4% any ad recall from last TV show watched(down from 34% in 1965) Source: NBA -70% of people frequently consume multiple media simultaneously Source: eMarketer

- 93% of people believe word of mouth is the most reliable way to find out information about products and services (up +26 pts. Vs. 25 years ago) Source: NOP World


One-Way Communication Hurdles

Customers demand interaction and customization, Marketers require it


Reason #2 – Word of Mouth Taps The Values of New, Customer Participation Culture

Mass Media Customers Now Want: Freedom Customization Scrutiny Integrity Collaboration Entertainment Speed Innovation Evaluation Score

Word of Mouth

Participation Values Grade 2/10 2/10 3/10 2/10 1/10 8/10 5/10 2/10

Participation Values Grade 9/10 8/10 9/10 9/10 10/10 8/10 8/10 9/10

25/80

70/80


In a bad economy, marketing has to punch harder and create action‌


Reason #3 – Word of Mouth Stimulates Action

- 90% - proportion of people who can skip ads, do skip ads - 69% - percentage of people who are interested in skipping ads completely Source: Yankelovich

- 70% - percentage of people affected by word of mouth conversations - 37% buy it/try it - 24% consider it - 9% avoid it Source: Keller Fay


Lifetime customer value trumps short term lift


Reason #4 – Word of Mouth Has Longevity

- Over 30% of the broadcast content we see in mass media is advertising or promotion - How much is conscious? Low - How much is attentive/lean forward? Low - How much is well-received? Low - How much is retained? Low - How much is banked in memory? Virtually nil

- Average people have 17 word of mouth conversations each day - How much is interactive? High - How much is spoken? High - How much is internalized? High - How much is retained? High - How much is behaviour altering? High -Brand Communities don’t reach full maturity to 18 months - 82% of community members refer more people to a brand after joining


Ad inflation is running wild

In a down economy, advertising is a tougher discretionary expense to justify


Reason #5 – Word of Mouth Costs Less Per Impact

- Cost to Produce a National TV Ad - $360,000

Choose Your Flavour: - Year Round Community - $100-500k

- Min. Media Cost to Air a National Campaign in Canada - $1,200,000

- 26 week Word of Mouth Campaign $40-150k

- Typical Research Cost Associated with TV -Campaign - $25,000 - $100,000

- Blog/Social Media Outreach $30-100k - Advisory Panel - $15-75k - Buzz Marketing Tactic $5-100k


In a bad economy, few markets increase, it’s a battle for share growth


Reason #6 – Word of Mouth is a Competitive Advantage

- Canadian advertisers spend $19 billion on media - $674 per adult - Advertising is spent on very similar formats: TV – 30 second ad Print – Full page, ½ page Web – Banner, Search Radio – 30, 60 seconds

- Only 1-2% of marketing budgets are currently spent directly on creating word of mouth - Marketers are just beginning to activate word of mouth variants, but still low

- Influencer programs - 22% of marketers executing - Buzz/Stunts - 15% - Branded Entertainment 14%

- 10% - Percentage of CFOs who believe marketers can assess impact of budget on sales

- A 7% increase in positive word of mouth equates to 1% business growth

Source: Canadian Marketing Association, MMA

Sources: VSS, Agent Wildfire, London School of Economics


In today’s connected economy, grassroots influence is key

Less than 10% of your customer base controls a big chunk of what the rest of us buy, think and do‌ why not target them?!


Reason #7 – Word of Mouth Targets Influence

- With rare exception (i.e. magazines), mainstream media has a tough time targeting audiences and specifically influencers

- 70% of Wikipedia’s content is produced by 1.7% of its audience - Top ranked Influencer belief – “I love talking to others about things I’ve just discovered” - Influencers are 2x more active, more conversational and/or more brandinvolved than the mainstream consumer Sources: Agent Wildfire, Keller Fay


Need for ROI for marketers in a bad economy is a mantra


Reason #8 – Word of Mouth is More Measurable and Linked to Growth

- Mass media has challenges auditing its own traffic - Mass media weight cannot be linked to sales - When measured, it only measures presumed eyeballs not real engagement

-Word of mouth activities have much better measurement ability because of their digital nature and opportunity to mine relationship with customer/member - The #1 factor linked to business growth is word of mouth referral - Word of mouth measures the key business drivers of engagement and advocacy Sources: Agent Wildfire, Bain


Trust has eroded in our institutions, a bad economy will accelerate this contempt

…but we still trust our friends and “people like me” Source: Edelman Trust Barometer


Reason #9 – Word of Mouth is More Trusted

60% of people have a much more negative view of marketing and advertising than a few years ago 27% trust manufacturers  14% trust ads  8% trust celebrities Sources: Yankelovich/Henley Centre

 Word of mouth is the #1 trusted source, up 50% vs. a generation ago  61% of people claim to buy the same brands as their friends (+28 pts. Vs. 4 years ago)  90% trust their spouse  82% trust their friends Sources: Keller Fay/Yankelovich/Henley Centre


Who do you trust?


The Customer is the New Battleground Percentage of executives who believe the Customer Experience is the new battleground - 95% Percentage that believe they are delivering a positive customer experience - 80% Percentage of their customers who agree - 8%

Word of Mouth gets you closer to your customer frontlines


Reason #10 – Word of Mouth is More Customer Centric

Mass Media Provides:  Entertainment Value  Information Value

         

WOM Provides: Entertainment Value Informational Value Explicit value (rewards) Intrinsic value (feeling of belonging) Extrinsic value (ego/reputation) Experiential value (immersion) Social value (making connections) Talent value (expressing skills/creativity) Service value (adds to the product) Collaborative value (1+1=3)


CEOs are Expecting More From their Marketers – Marketers need to be Leaner and Keener

Word of Mouth accommodates those needs


Reason #11 – Word of Mouth Simply Provides More

 Communication

          

Communication Advocacy Ambassadorship Buzz Insight Real world feedback Solutions Innovation Support Operational Improvements User Generated Content


Marketers want WOM for a variety or reasons Accelerate sales 19% Deliver visitors/traffic 17%

Hard Measure

Referrals/Leads/Members 32% Provide learning 6% Drive brand loyalty 32% Generate user generated content 19% Get Insight /solutions 10% Seed influencers 32%

Soft Measure

Awareness/Buzz 35% Target tough to reach audience 19%

Launch a product 22% Build a better customer experience 21% Support a cause 6%

Enhance credibility 14% Participate in a conversation 26% Support a cause 6%

Internal Source: Agent Wildfire

External Question - What are the top 3 objectives for launching a word of mouth based initiative?


Don’t skate to where the puck is , skate to where it is going to be


Reason #12 – Word of Mouth is the Now & the Future

 Canadian Marketers plan on spending more/less in 2009: More Less Newspaper 5% 32% Radio 5% 33% TV 4% 37% Magazines 3% 39% Social Media 23% 16% Source: Veritas

 58% of marketers agree that word of mouth influence will overtake traditional media influence within a generation  73% of marketers believe marketers will become much more important in an organization by leveraging word of mouth strategies and tactics Source: Agent Wildfire


A Palette of New Strategies & Tactics Await What forms of word of mouth will experience the most growth in the next few years ? (top 3 choices) Social media marketing Social network marketing Mobile marketing User-generated Content Influencer marketing Brand communities Customer forums Branded entertainment Cause-related marketing Brand microblogging Buzz marketing Corporate/brand blogging

Source: Agent Wildfire

37% 35% 34% 31% 28% 20% 17% 16% 14% 14% 13% 11%


Recap – The 12 Reasons Why Word of Mouth (WOM) is Primed for this Economy 1 ) WOM Gets Noticed 2) WOM Taps Participation Values 3) WOM Stimulates Action 4) WOM has Longevity 5) WOM has Less Cost/More Value 6) WOM is a Competitive Advantage 7) WOM Targets Influence 8) WOM is More Measurable 9) WOM is More Trusted 10) WOM is More Customer Centric 11) WOM Provides More 12) WOM is the Future


…Don’t Despair


We plan, seed, incubate execute, measure, live and breathe the spectrum of word of mouth Integrated  Brand Community-building  Advisory Panel  Influencer-driven  Challenge/intervention  Referral-driven  Grassroots sponsorship/cause-driven Offline  Experiential  Buzz/Guerrilla Online  Social Media Production/Outreach  Social Network Production/Outreach  Viral  Affiliate/Referral -driven  User-generated  Advergaming 44


Let’s Start Your Next Brand Conversation…

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Inquire:

info (at) agentwildfire.com

Phone:

416-255-4500

URL:

www.AgentWildfire.com

Join:

www.TheInfluencers.ca

Blog:

http://BuzzCanuck.typepad.com/ http://www.spreadslikewildfire.com/

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Learn:

Executive, WOM Seminars


Word of Mouth - A Prescription for a Bad Economy  

This is a fab presentation on word of mouth by a candadian WOM agency.

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