Word of Mouth Marketing

Word of Mouth Marketing Nicole Siegel

Winter Quarter 2010 UW MCDM

Professor Kenneth Rufo COM 546

  2  

INTRODUCTION In the age of Web 2.0, the social media phenomenon has hit revolutionary levels. Each

site has its differentiating nuances, however, at the core, their objectives and values are

the same. Their success is directly correlated to the engagement and loyalty of their users

who in theory will serve as advocates and evangelists to their own network. Whether it

be Facebook, Twitter, Foursquare or Chatroulette, none would be what they are today

without the help of word of mouth.

Word of mouth – otherwise known as WOM. It’s the reason why Susan tried her new

neighborhood salon. It’s why John goes to Dr. Smith over Dr. Roth. It’s the motive for

Charlie giving Jet Blue Airlines a chance. It’s a powerful tool that dates back many

centuries. Individuals tend to trust what they hear from their network of family and

friends over a company or marketing campaign.

Andy Sernovitz, CEO of GasPedal, a word of mouth marketing firm, defines WOM as:

Giving people a reason to talk about your stuff and making it easier for that conversation to take place. Word of mouth marketing is more than just marketing. It’s about making your stuff and your company worth talking about – becoming more buzz worthy (Sernovitz, 2009, p. 1).

  3  

He goes further to say, “Word of mouth is a natural, genuine conversation between real

people. Word of mouth marketing is joining that conversation and engaging/participating

with your consumer” (Sernovitz, 2009, p. 2).

Word of mouth marketing (also known as social media marketing, viral marketing, buzz,

and guerilla marketing) is conceptualized as a naturally occurring phenomenon with

intentional influencing of consumer-to-consumer communications. It is increasingly

becoming an important technique to any marketing campaign (Kozinets, Valck,

Wojnicki, & Wilner, 2010, p. 71). Though word of mouth campaigns are becoming more

prevalent on the web, “only about 20 percent of word of mouth happens online. When it

does play a role, it usually sparks 80 percent of word of mouth conversations that actually

take place face-to-face” (Sernovitz, 2009).

HISTORY OF WOM Word of mouth is not a new concept, nor is it limited to the dot com world. “The word

‘viral’ comes from biology and was retrofitted to cover the phenomenon of word of

mouth—or on the Web, so-called ‘word-of-mouse’—dissemination of ideas” (Penenberg,

2009). Marketers and sociologists have recognized the importance of the phenomenon of

word of mouth for more than half a century, proposing, for example, that WOM affects

the majority of all purchase decisions (Kozinets et al., 2010, p. 71). It became clear that

individuals put more weight into the recommendations of their peers than advertising.

Early scholarship established word of mouth as a significant social force, influencing

early marketing thought and practice. For example, in 1943, researchers Bryce Ryan and

Neal Gross conducted a diffusion study suggesting that conversations among buyers were

  4  

more important than marketing communications in influencing adoption. The earliest

and simplest understanding of consumer WOM is referred to as organic interconsumer

influence; referred to as “organic” because it occurs between one consumer and another

without direct prompting, influence, or measurement by marketers. Organic WOM is

motivated by a desire to help others, to warn others about poor service, and/or to

communicate status (Kozinets et al., 2010, p. 72).

In their 1955 publication, Personal Influences, Elihu Katz and Paul Lazarsfeld discuss the

impact of word of mouth on consumers’ actions, preferences and choices and the

importance of interpersonal influence. Researchers have since examined the conditions

under which consumers are likely to rely on others’ opinions to make a purchase

decision, the motivations for different people to spread the word about a product, and the

variation in strength of people’s influence on their peers in WOM communications.

Results showed that consumers acquired through WOM added more long-term value than

consumers acquired through traditional marketing channels (Trusov, Bucklin, & Pauwels,

2009, p. 91).

As marketing scholarship and practice advanced, theories of WOM began to emphasize

the importance of particularly influential consumers in the WOM process. Accordingly,

it was in marketers’ interests to identify and attempt to influence these influential,

respected, credible, WOM-spreading consumers. This understanding now incorporates

an active attempt by the marketer to influence consumer WOM through the use of

traditional means, such as advertising and promotions. Occurring during the “cultural

engineering” marketing practices of the post–World War II era, which were formed to

  5  

overcome increasingly resistant buyers, some consumers were viewed as potential

“opinion leaders” who smart marketers could target and influence. Marketers would now

be able to work through “the friend who recommends a tried and trusted product” rather

than the “salesman who tries to get rid of merchandise” (Kozinets et al., 2010, p. 72).

Up until the 1990s, observations and insights about informal, unsolicited word of mouth

were mostly gleaned from the offline marketing landscape. The Internet’s accessibility,

reach, and transparency have empowered marketers to leverage word of mouth like never

before (Kozinets et al., 2010, p. 71).

TRADITIONAL ADVERTISING VS. WOM Each year, brands spend billions of dollars on TV commercials, radio spots, billboards,

online impressions and other various forms of traditional and online advertising. These

same brands are now starting to understand the value of WOM, not only as a powerful

form of communication and persuasion, but as a cost effective way to reach and influence

the masses. The Internet provides numerous outlets for consumers to share their views,

preferences, or experiences with others. Marketers now have the opportunity to create

two-way conversations in a landscape where traditionally, consumers have not had a

voice. Marketers are particularly interested in better understanding WOM because

traditional forms of communication appear to be losing effectiveness. “Instead of tossing

away millions of dollars on Super Bowl advertisements, fledgling dot com companies are

trying to catch attention through much cheaper marketing strategies such as blogging and

word of mouth campaigns” (Trusov et al., 2009, p. 90).

  6  

Word of mouth has become a more common method of communication and research as a

result of dissatisfaction and distrust with more traditional forms of advertising, as well as

the emergence of communication technologies that facilitate consumer-to-consumer

interaction (Carl & Noland, 2008, p. 184). Word of mouth communication strategies are

also more appealing than traditional advertising because they combine the prospect of

overcoming consumer resistance to advertisements with significantly lower costs and fast

delivery—especially through technology, such as the Internet (Trusov et al., 2009, p. 90).

According to the 2007 eMarketer study 78% of their respondents trusted

recommendations from consumers over all other forms of advertising (eMarketer, 2007):

  7  

WHERE WOM TAKES PLACE Traditionally, WOM has been characterized as face-to-face communication about brands,

products, and services between people who do not have a commercial affiliation.

However, WOM can also take place online and include talk about organizations and

brands. As marketers are getting involved in the conversation, WOM is increasingly

prone to corporate influence (Carl & Noland, 2008, p. 185). Word of mouth can be as

basic as calling a girlfriend for advice, or as complex as a viral media campaign. There

are several ways in which word of mouth commonly takes place:

Blogger Outreach:

It may not be possible or even necessary to reach an entire audience when there

are select individuals who can (and want to) help spread a message to the masses.

By finding and targeting their top influencers and evangelists, marketers can

significantly increase their reach while exerting less effort and money. Reaching

out to influential bloggers who already have a following in their niche is an

effective way to deliver a message. Author Malcolm Gladwell describes this

method as the Law of the Few. The Law of the Few looks at the kinds of people

who are critical to spreading information, weighing greatly on the nature of the

messenger. “The success of any kind of social epidemic is heavily dependent on

the involvement of people with a particular and rare set of social gifts” (Gladwell,

2002, p. 33).

The Law of the Few also states that before a trend can tip, a few key types of

people are usually involved. Gladwell describes these players as Connectors,

  8  

Mavens, and Salesmen, “In a social epidemic, Mavens are data banks who

provide the message; Connectors are social glue who spread the message;

Salesmen persuade us when we are unconvinced” (Gladwell, 2002, p. 70).

Review Sites: Especially in times of economic uncertainty, it is rare for consumers to make any

kind of purchase without getting the advice of someone in their network. More so

with big ticket items, but still common across price points, the advocacy of a

product through word of mouth often calms the nerves of the purchaser. A 2007

comScore survey found that 24% of Internet users accessed online reviews before

paying for a product or service delivered offline. “Consumers commonly seek

quality information when purchasing new products. With the Internet’s growing

popularity, online consumer reviews have become an important resource for

consumers seeking to discover product quality” (Zhu & Zhang, 2010, p. 133).

Online user reviews have become an important source of information to

consumers, substituting and complementing other forms of business-to-consumer

and offline word of mouth communication about product quality (Chevalier and

Mayzlin, 2006, p. 345). There are several sites that have changed the WOM

landscape through their access to user-generated reviews:

  9  

Yelp

Upon initially launching, Yelp’s goals were actually the same as they are today:

Connect people with great local businesses. The idea behind Yelp came from a

practical need – Cofounder, Jeremy Stoppelman needed a doctor, and wasn’t

satisfied with his options for finding one. Back in 2004, over lunch, he and

business partner Russ Simmons determined, “the best way to find local

recommendations is to ask friends. How can we capture that, bring it online, and

make it a useful tool where you can actually search by word of mouth”

(Stoppelman, 2009)? Fast forward 5 years - Yelp is a hit.

Like any start-up, Yelp faced its share of challenges. Back in 2004, the site

primarily focused on “asking friends for recommendations.” While the concept of

online WOM was well received, the site was viewed at as noisy/spam-filled.

“People didn't like it that much. The person looking for a business wasn't always

promised a response from their friends—and those friends were often annoyed by

questions to which they didn't have answers” (Stoppelman, 2009). After shortly

realizing that there was user interest in writing reviews (not just reading and

requesting them), Yelp’s focus shifted and thus became the platform it is today

(A. Rubin, personal communication, February, 2010).

  10  

Amazon

Amazon.com, the world’s largest online retailer, was founded in 1994 by New

Mexican native, Jeff Bezos. Bezos started the virtual bookstore, named after the

South American River, out of his garage with a handful of employees and sold the

site’s first book in July, 1995 (retrieved from biography.com). Bezos decided that

he had to create more than just a bookstore if he wanted people to come back as

customers. He added the option for buyers to write their own book reviews,

which is a huge credit to Amazon.com’s success. People began to look at Amazon

as more of an online community and not just a place to purchase things (Fair,

2002). Amazon’s ability to show product transparency and honesty through the

reviews of its customers is a revolutionary example of word of mouth marketing.

In their research, Judith Chevalier and Dina Mayzlin examined the effect of

consumer reviews on relative sales of books at Amazon.com and

Barnesandnoble.com. They found that reviews were overwhelmingly positive at

both sites, but there were more (longer and more detailed) reviews at

Amazon.com. They found that an improvement in a book’s reviews led to an

increase in relative sales at that site, and, for most samples in the study, the impact

of one-star reviews was greater than the impact of five-star reviews. Lastly,

  11  

evidence from review-length data suggested that customers read review text rather

than rely only on summary statistics. This evidence suggests that customer word

of mouth affects online consumer purchasing behavior (Chevalier and Mayzlin,

2006, p. 345).

Successful viral campaigns: Sometimes, the most successful WOM campaigns take the least amount of money

and effort to implement. In his book, Word of Mouth Marketing, Andy Sernovitz

references the following examples as simple yet unique and unexpected WOM

campaigns that flourished and spread buzz rapidly:

When the Wynn Hotel/Casino Las Vegas opened, it turned to its most

important talkers to promote their establishment: cab drivers. The hotel

recognized that cabbies are the ones who talk to tourists about where to

eat, where to gamble, and where to shop. Before the hotel officially

opened, it gave this influential, yet under appreciated group of talkers, free

rooms for a night. As a result, the cab drivers were likely to talk up the

Wynn to future passengers (Sernovitz, 2009, p. 69).

Much to the surprise of the brand Duck Tape, the company discovered that

kids were making prom dresses and tuxedos from duck tape. They

encouraged this fad by sponsoring an annual “Stuck at Prom” contest,

awarding college scholarships for creative costumes. Hundreds of couples

enter each year, representing hours of work and in turn, valuable word of

mouth (Sernovitz, 2009, p. 101).

  12  

MONITORING It can be difficult to measure the success of word of mouth since it is not as clear-cut as

traditional online campaigns that can be measured by metrics such as volume,

impressions and clicks. New, non-traditional metrics must be used when measuring

WOM success (friends obtained, lift in traffic, buzz volume/sentiment, etc). With all of

the chatter, it can be daunting to join in on the conversation, especially when the buzz

isn’t necessarily positive. However, as marketers, it is crucial to pay attention to the

talkers and take action accordingly since word of mouth can be as effective, if not more

so, than any expensive market research tool. When leveraged well, conversation

monitoring can help with many aspects of the marketing cycle such as customer relations

and retention, reputation management and product insight.

TOOLS Advanced tools make monitoring more manageable and allow marketers to engage and

build relationships with their consumers. “With the right technology tools, social media

marketing programs can be managed at scale and can help the entire organization find out

what customers are saying, sharing, even feeling about your brand or business”

(McDaniel, 2009). Some tools are more accessible and affordable than others, but

regardless, they help provide an extra set of eyes and ears to gain insight into the

marketplace. When thinking about the technology needed to measure and optimize word

of mouth marketing, Mashable contributor, Clay McDaniel (2009) advises:

  13  

It helps to organize your efforts into categories: listening and monitoring tools; editorial, publishing, and content syndication tools; and conversation measurement tools. The first step in any social media marketing campaign is listening. Find out what is being said about your brand, where, and by whom.

McDaniel also recommends the following tools which provide visibility into online WOM: 1. Monitter allows marketers to listen in on the Twitter conversations taking place about their brand in real time. Visit the Monitter home page and type in desired keywords, and all tweets with those keywords instantly appear. Free.

2. Google Alerts is one of the most comprehensive social media tools out there; it monitors millions of blogs and news sites. Set up alerts to easily target relevant keywords and receive streaming or batched reports. Free.

3. Visible Technologies TruCast and TruPulse are robust applications that allow licensees to monitor conversations about their brand or industry on blogs, forums, microblogs, comment threads, and anything else likely to be indexed by search engines. They include analytics features and integrated “engagement manager” workflow tools to assist in managing outreach/follow-up across the social web. Licensing fees apply.

4. Radian6 is one of the industry leaders in social media monitoring technology, and their application allows configurable monitoring dashboards, broad and narrow topic definitions to target and focus monitoring programs, and key features such as custom alerts and engagement workflow management. Licensing fees apply.

5. ScoutLabs offers a versatile listening and monitoring service and low per-month access pricing, as well as a 30-day free trial offer. Post volume, location, and even sentiment scoring are included in the service’s core monitoring feature set. Licensing fees apply.

  14  

FUTURE OF WOM MARKETING Word of mouth marketing isn’t going anywhere. As the landscape gets more saturated,

marketers will need to strategize more creative ways to reach out to and engage with their

audience. Fortunately, there are a plethora of ways to get involved in the WOM space.

Mobile and video reviews will become more popular means of spreading the word and

retrieving consumer advice. Simple and low cost campaigns can do the job as long as

transparency, honesty and respect are present. As WOM Andy Sernovitz preaches, “Earn

the respect and recommendation of your customers, and they will do the rest. Treat

people well; they will do you marketing for you, for free” (Sernovitz, 2009).

Sernovitz also provides a manifesto for successful word of mouth marketing:

1. Happy customers are the best advertisements. Make people happy 2. Marketing is easy. Earn the respect and recommendation of customers. They will

do the marketing for free. 3. Ethics and good service come first. 4. Negative word of mouth is an opportunity. Listen and learn. 5. People are already talking. Whether positive or negative, join the conversation. 6. Be interesting, or be invisible. 7. If it’s not worth talking about, it’s not worth doing. 8. Use the power of word of mouth to make businesses treat people better. 9. Honest marketing makes more money.

CONCLUSION The power of word of mouth is often understated, yet as this paper points out, is a crucial

component to the reputation and success of a brand, company, product, person, show, etc.

The world is going digital, but at the end of the day, what really rings true for consumers

remains the same both online and offline. Relationships, communication, trust, honesty

  15  

and transparency – these fundamental values will never disappear and are at the root of

what makes word of mouth communication so unique.

  16  

References

Biography of Jeff Bezos. Retrieved 2/2010. http://www.biography.com/articles/Jeff-

Bezos-37251?print

Carl, W. J. (2008). The role of disclosure in organized word of mouth marketing

programs. Journal of Marketing Communications, 14(3), 225-241.

doi:10.1080/13527260701833839

Chevalier, J. & Mayzlin, D. (2006). The effect of word of mouth on sales: Online book

reviews. Journal of Marketing Research (JMR), 43(3), 345-354.

doi:10.1509/jmkr.43.3.345

Fair, M. (2002). A history of the worldwide media retailer amazon.com. Retrieved

3/2010. http://www.essortment.com/hobbies/historyamazonc_ttas.htm

Gladwell, M. (2002). The Tipping Point. New York: Time Warner Book Group.

Keller, E., & Fay, B. (2009). The role of advertising in word of mouth. Journal of

Advertising Research, 49(2), 154-158. Retrieved from

http://search.ebscohost.com/login.aspx?direct=true&db=ufh&AN=41569069&site=e

host-live

Kozinets, R. V., de Valck, K., Wojnicki, A. C., & Wilner, S. J. S. (2010). Networked

narratives: Understanding word of mouth marketing in online communities. Journal

of Marketing, 74(2), 71-89. doi:10.1509/jmkg.74.2.71

  17  

McDaniel, C. 18 essential tools for every word of mouth marketer. Retrieved 3/2010.

http://mashable.com/2009/10/13/word of mouth-marketing-tools/

Okazaki, S. (2009). Social influence model and electronic word of mouth. International

Journal of Advertising, 28(3), 439-472. Retrieved from

http://search.ebscohost.com/login.aspx?direct=true&db=ufh&AN=43598061&site=e

host-live

Penenberg, A. Let's kill "viral": It's time for a new word. Retrieved 2/2010.

http://techcrunch.com/2009/11/01/lets-kill-viral-its-time-for-a-new-word/

Sernovitz, A. The word of mouth marketing blog. Retrieved 2/2010.

http://gaspedal.com/blog/

Sernovitz, A., Godin, S., & Kawasaki, G. (2009). Word of mouth marketing - How smart

companies get people talking. New York: Kaplan Publishing.

Stoppelman, J. For Yelp, locals aren’t yokels. Retrieved 2/2010.

http://www.newsweek.com/id/218839

Trusov, M., Bucklin, R. E., & Pauwels, K. (2009). Effects of word of mouth versus

traditional marketing: Findings from an internet social networking site. Journal of

Marketing, 73(5), 90-102. doi:10.1509/jmkg.73.5.90

Types of advertising trusted by internet users (2007). eMarketer.

WOMMA webinars. Retrieved 3/2010. http://womma.org/main/

  18  

Zhu, F., & Zhang, X. (2010). Impact of online consumer reviews on sales: The

moderating role of product and consumer characteristics. Journal of Marketing,

74(2), 133-148. doi:10.1509/jmkg.74.2.133