Word of Mouth - A Prescription for a Bad Economy
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Transcript of Word of Mouth - A Prescription for a Bad Economy
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Word of Mouth – A Prescription for a Bad Economy
A Presentation by Agent Wildfire – Canada’s Word of Mouth Experts
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This economy is bad…like really bad…
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It looks like we’re in the big R…
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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
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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
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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
The Long Slow Decline into Irrelevance
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Smart Marketers are Now Rethinking Traditionally Held Views...
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Crisis requires radical shifts in thinking
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AnotherChange
You Can Believe
In Is Coming
…
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Here Comes the Next Wave of Marketing & Media…
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The Fastest Growing Marketing/Media Segments
Expected 5 year Compound Annual Growth Rate
Word of Mouth 27%Internet/Mobile 14%Branded Entertainment 13%Custom Publishing 11%Out of Home 10%
Source: Veronis Suhler Stevenson
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Word of Mouth is Catching On…in All Its Forms
Buzz Marketing Social MediaCustomer Collaboration Brand Communities
Influencer Marketing
User Generated Content
Influencer Marketing Social Networks Referral Programs
Grassroots/CauseMarketing
ExperientialMarketing
Viral Marketing
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Fact - Most Traditional Media is an Inefficient Cost…
…Word of Mouth is a Wise Investment
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12 Reasons Why Word of MouthDeserves Your Consideration
In This Economy
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Advertising Attention Deficit Hurdles
3,000 ads get pushed at us each day - 6 times the volume vs. 40 years ago…the tougher it is to
breakthrough, the more we do and invest
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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 isthe most reliable way to find out information about products and services (up +26 pts. Vs. 25 years ago)
Source: NOP World
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One-Way Communication Hurdles
Customers demand interaction and customization,Marketers require it
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Reason #2 – Word of Mouth Taps The Values of New, Customer Participation Culture
Mass Media Word of Mouth
Customers Now Want:FreedomCustomization ScrutinyIntegrityCollaborationEntertainmentSpeedInnovation
Participation Values Grade2/102/103/102/101/108/105/102/10
Participation Values Grade9/108/109/109/10
10/108/108/109/10
Evaluation Score 25/80 70/80
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In a bad economy, marketing has to punch harder and create action…
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Reason #3 – Word of Mouth Stimulates Action
- 90% - proportion of people who canskip ads, do skip ads
- 69% - percentage of people who are interested in skipping ads completely Source: Yankelovich
- 70% - percentage of people affected byword of mouth conversations
- 37% buy it/try it- 24% consider it- 9% avoid it
Source: Keller Fay
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Lifetime customer value trumps short term lift
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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
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Ad inflation is running wild
In a down economy, advertising is a tougher discretionary expense to justify
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Reason #5 – Word of Mouth Costs Less Per Impact
- Cost to Produce a National TV Ad- $360,000
- Min. Media Cost to Air a National Campaign in Canada
- $1,200,000
- Typical Research Cost Associated with TV-Campaign
- $25,000 - $100,000
Choose Your Flavour:- Year Round Community - $100-500k
- 26 week Word of Mouth Campaign - $40-150k
- Blog/Social Media Outreach $30-100k
- Advisory Panel - $15-75k
- Buzz Marketing Tactic $5-100k
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In a bad economy, few markets increase, it’s a battle for share growth
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Reason #6 – Word of Mouth is a Competitive Advantage
- Canadian advertisers spend $19 billionon media - $674 per adult
- Advertising is spent on very similar formats: TV – 30 second ad
Print – Full page, ½ pageWeb – Banner, SearchRadio – 30, 60 seconds
- 10% - Percentage of CFOs who believe marketers can assess impact of budget on sales
Source: Canadian Marketing Association, MMA
- Only 1-2% of marketing budgets arecurrently 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%
- A 7% increase in positive word of mouth equates to 1% business growth
Sources: VSS, Agent Wildfire, London School of Economics
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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?!
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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 brand-involved than the mainstream consumer
Sources: Agent Wildfire, Keller Fay
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Need for ROI for marketers in a bad economy is a mantra
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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
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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
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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
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: Yankelovich/Henley Centre Sources: Keller Fay/Yankelovich/Henley Centre
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Who do you trust?
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The Customer is the New Battleground
Word of Mouth gets you closer to your customer frontlines
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%
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Reason #10 – Word of Mouth is More Customer Centric
Entertainment Value Information Value
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)
Mass Media Provides: WOM Provides:
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CEOs are Expecting More From their Marketers – Marketers need to be Leaner and Keener
Word of Mouth accommodates those needs
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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
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Marketers want WOM for a variety or reasons
Internal External
HardMeasure
SoftMeasure
Awareness/Buzz 35%
Referrals/Leads/Members 32%
Participate in a conversation 26%
Drive brand loyalty 32%
Seed influencers 32%
Launch a product 22%
Build a better customer experience 21%
Accelerate sales 19%
Target tough to reach audience 19%
Generate user generated content 19%
Support a cause 6%
Support a cause 6%
Deliver visitors/traffic 17%
Enhance credibility 14%
Get Insight /solutions 10%
Provide learning 6%
Source: Agent Wildfire Question - What are the top 3 objectives for launching a word of mouth based initiative?
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Don’t skate to where the puck is , skate to where it is going to be
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Reason #12 – Word of Mouth is the Now & the Future
Canadian Marketers plan on spending more/less in 2009:
More LessNewspaper 5% 32%Radio 5% 33%TV 4% 37%Magazines 3% 39%Social Media 23% 16%
58% of marketers agree thatword 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: Veritas Source: Agent Wildfire
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A Palette of New Strategies & Tactics Await
Source: Agent Wildfire
What forms of word of mouth will experience the most growth in the next few years ? (top 3 choices)
Social media marketing 37%Social network marketing 35%Mobile marketing 34%User-generated Content 31%Influencer marketing 28%Brand communities 20%Customer forums 17%Branded entertainment 16%Cause-related marketing 14%Brand microblogging 14%Buzz marketing 13%Corporate/brand blogging 11%
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Recap – The 12 Reasons Why Word of Mouth (WOM) is Primed for this Economy
1 ) WOM Gets Noticed2) WOM Taps Participation Values3) WOM Stimulates Action4) WOM has Longevity5) WOM has Less Cost/More Value6) WOM is a Competitive Advantage7) WOM Targets Influence8) WOM is More Measurable9) WOM is More Trusted10) WOM is More Customer Centric11) WOM Provides More12) WOM is the Future
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…Don’t Despair
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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
We plan, seed, incubate execute, measure, live and breathe the spectrum of word of mouth
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Let’s Start Your Next Brand Conversation…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/ Explore: The Buzz Report (e-newsletter)
Signup at www.AgentWildfire.com
Learn: Executive, WOM Seminars