jackmyers.com
Free ContentFor Members Only
HOME MEDIAVILLAGE.com WOMEN ADVANCING HOOKED UP MEMBERSHIP INFO MEMBER COMPANIES MEDIA BUSINESS REPORT ECONOMIC FORECASTS RESEARCH
Home > JackMyersThinkTank > Finally, Proof that Word of Mouth Isn't Just "Nice to Have," But Drives Measurable ROI - Ed Keller

Finally, Proof that Word of Mouth Isn't Just "Nice to Have," But Drives Measurable ROI - Ed Keller

December 6, 2012
Ed Keller

Published: December 6, 2012 at 10:21 PM GMT
Last Updated: December 5, 2012 at 10:21 PM GMT

For a number of years now, we have had strong evidence that word of mouth is highly valued by consumers and that it is ubiquitous. McKinsey has gone so far as to call word of mouth "the most disruptive force in marketing." CMO surveys by firms like IBM suggest that the overwhelming majority plan to increase their investment in social media, but ROI metrics have been hard to come by and CMOs say increasingly those will be the metrics by which they will measure success of their marketing efforts. According to IBM, "even among the most successful enterprises, half of all CMOs feel insufficiently prepared to provide hard numbers [for return on marketing investment]."

A new white paper by marketing analytics expert MarketShare and the Keller Fay Group, called "Quantifying the Role of Social Voice in Marketing Effectiveness" , provides new and compelling evidence that word of mouth (offline and online) drives sales to a considerable degree – providing both a direct and an indirect impact on sales, amplifying the impact of marketing as people talk about the marketing or share it via social media. And, it demonstrates that the impact can be measured. (For a free copy of the Executive Summary, contact me.)

The analysis looks at brands in four categories – beverages, auto, investments and brokerage – and seeks to determine how much impact "Social Voice" (defined as both online and offline word of mouth) has on marketing and on sales when compared with a range of other variables that might drive marketing effectiveness. (See below for more detail on what else was measured in this study.)

Among the key findings from the modeling are:

  • Social Voice has a measurable direct impact on sales. It's not just a nice to have, but it directly moves the needle on sales. More specifically, a 10% increase in Social Voice resulted in sales lift of 0.2% - 1.5% directly in the cases that were studied. Further, offline WOM was seen to have a more significant impact on outcomes than online social media, suggesting that, "even in a highly connected world, old-fashioned word of mouth contributes more than social media in certain categories."

Ed+Keller

  • Social Voice drives marketing effectiveness. A significant percentage of marketing's impact is delivered through Social Voice – in the cases examined, this ranged between 10% and 54%. According to MarketShare, this suggests "that Social Voice is a key element of the consumer decision journey. Social Voice helps bridge the distance between awareness, interest (driven by media), consideration, and, ultimately, sales."

Ed+Keller

  • Social Voice is a driver of online search activities. Analysis has shown that search activity is closely correlated with sales, as people engage in search as they get closer to a purchase activity. The MarketShare study observed "both Online and Offline Social Voice driving organic online search activity, and that combined Online and Offline Social Voice can drive nearly as much organic search as traditional marketing activities on their own, when marketing activities are also present." Once again, the analysis finds that offline WOM drives more search activity than online social media.

How the model was built: Once the four product categories were selected (see above), MarketShare incorporated Social Voice data into several multi-year modeling data sets that incorporated a large number of potential drivers of sales, including:

  • Media ad spend

· Non-media marketing spend (e.g., event sponsorships, PR, etc.)

· Offline WOM mentions (from Keller Fay's TalkTrack® solution)

  • Online WOM mentions and sentiment
  • Facebook metrics
  • Google Search query volume
  • Website traffic

MarketShare analyzed the data and developed multivariate and multi-equation econometric models to estimate short-and long-term advertising effectiveness through a series of interrelated equations.

The importance of this analysis is that it helps to move word of mouth from a nice to have activity – who wouldn't want people to say nice things about their brands? – to one that is understood to be a central driver of marketing effectiveness and sales. It acts as an amplifier of all types of marketing. Only when the role of offline and online word of mouth is understood and treated as a vital strategic asset can brands in today's consumer marketplace expect to achieve industry-leading return on investment from their marketing investment. Further, the analysis supports the notion – frequently proffered by Keller Fay, including in our recent book The Face-to-Face Book – that when it comes to social influence, offline WOM can play a bigger and more impactful role than online social media. The central importance of offline, face-to-face conversations and the forces that drive them must be understood and planned for by every marketer interested in maximizing their return on marketing investment.

Ed Keller, CEO of the Keller Fay Group, has been called "one of the most recognized names in word of mouth." His new book, The Face-to-Face Book: Why Real Relationships Rule in a Digital Marketplace, was recently published by Free Press/Simon & Schuster. You can follow Ed Keller on Twitter, Facebook and Google+, or contact him directly at ekeller@kellerfay.com.

Read all Ed’s MediaBizBloggers commentaries at WOM Matters.

Check us out on Facebook at MediaBizBloggers.com
Follow our Twitter updates @MediaBizBlogger

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggers.com management or associated bloggers. MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries.

add this social bookmark link

0 Comments
Post a Comment










Commentary Archives

July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014

See all Archived Material

MediaVillage.com

Video of the Week: Fuse Brings Transcendent to TCA
As ever, one never really knows what’s coming next during a typical day at a Television Critics Association tour – especially during the cable portion. Case in point: The grand finale to the many presentations on Friday was a party thrown by Fuse that proved once again that a smallish network largely off the radar of most critics can break right through and be noticed at this twice-annual event. The Fuse bash topped off a day of memorable panels for such well-received offerings as BBC America’s new adventure series “The Last Kingdom” (from “Downton Abbey” producer Gareth Neame); Starz’ upcoming horror action series “Ash vs. Evil Dead” (instantly one of the most talked about new series of the tour) and dramatic limited series “Flesh and Bone” (about a young woman who joins a prestigious ballet company in New York City); the IFC comedies “Gigi Does It” (starring David Krumholtz of “Numb3rs” as a 70-year-old widow and grandmother) and “Documentary Now!” (a series created by Fred Armisen, Bill Hader and Seth Meyers starring Armisen and Hader that will consist of parodies of well-known documentaries), and AMC’s breathlessly anticipated “Fear the Walking Dead.”

What Might Replace the Set-Top Box?
As Cisco punts legacy SA boxes to Technicolor, I thought I'd look around my home at the existing set-top boxes and the like. We've got a whole-home DirecTV set up so that's two boxes and two remotes (though a DirecTV app can replace the remotes). At the set in the living room are two more boxes with remotes: Apple TV and Amazon's Fire make it four so far. In my office is a Comcast box; that's five. And a router makes six. We've also got three TVs, a couple of laptops, a couple of iPads and a couple of iPhones … not to mention an iPod somewhere. And, oh yeah, an Amazon Echo ("Alexa, did I miss anything?" "You missed Chromecast.")

TCA Stand-Outs Large (Hallmark, Nat Geo) and Small (WGN, Up, El Rey)
One of the most interesting things about covering the cable days of the twice-yearly Television Critics Association tours is observing which networks or network groups most successfully grab the attention of the hundreds of reporters and critics attending their press conferences and which ones don't make much of an impression at all. The results can be very surprising.

The CFO/CMO Union
Will the CFO and CMO ever form a more perfect union? I recently saw a study produced by Ernst & Young and reported in the Wall Street Journal that claims collaboration between CFOs and CMOs is increasing. The survey also acknowledges that there is still a long way to go to establish a real partnership between their responsibilities, particularly as it pertains to "common practices and cultural differences." In my opinion a perfect union is unlikely but a better working relationship is not only necessary but critical to the success of a business. Let's explore.

Multi-Sensory Experiences for Brands
This week on Mindshare's Culture Vulture Live, Mark Potts explores multi-sensory opportunities for brands.

TV is from Mars and Video is from Venus
In a spring 2015 trend report Business Insider stated that video ad revenue will double in just two years and reach nearly $5 billion in 2016, up from $2.8 billion in 2013. Consumers' engagement online, over multiple devices, increases daily. As the landscape for what exactly constitutes "TV" or "video" changes rapidly, advertisers are racing to keep up.

The Macro Forces Behind Slow GDP Growth
Ever since the end of the Great Recession a few years ago, there has been much written about the lack of both economic growth and inflation. Much of this coverage mentions that the post-recession recovery is much slower than the recovery of past recessions of the late 20th century.

Early AT&T/DirecTV Merger Questions
Now that the consummation of AT&T's merger with DirecTV is done, how will this $40 billion-plus deal impact consumers from both parties and the TV world at large? Chances are you haven't heard much over that question up to now, in part because of how this deal was completed last week -- Federal Communications Commission approval mid-Friday afternoon, and AT&T putting out a press release, and only a release, of the consummation less than two hours later. That's way late for much analysis on the part of the business news channels or journalism in general.

Trevor Noah Hits TCA; Nat Geo Honors Cecil
In performance on stage Tuesday night and again in a press conference Wednesday morning, members of the Television Critics Association got to know the man they will likely honor in the years ahead with multiple TCA Awards in the category of Outstanding News Program – controversial comedian Trevor Noah (pictured at top), who will take over Comedy Central's "The Daily Show" on September 28. Noah, a smart and engaging guy who joined "The Daily Show" last year as a contributor, quickly and efficiently charmed the group, setting the stage for years of admiration and handily putting behind him lingering memories about a series of sexist and anti-Semitic jokes he tweeted a couple of years ago.

Is TV Currency Dead? Predictions from AOL Open Series
There is a lot of talk these days about the changing TV landscape, from the advancement of programmatic to the demise of dayparts, the Upfront and even our current currency. All of this made for a lively discussion at the recent AOL Open Series on Programmatic TV. The event featured a panel of media executives from across the spectrum including Dermot McCormack, President AOL Video and Studios; Jaime Power, Senior Partner at MODI Media; Dana Hayes Jr, Group Vice President of Global Partner Development for Acxiom, and Dan Aversano, Senior Vice President, Client & Consumer Insights at Turner Broadcasting. The panel was moderated by Dan Ackerman, Senior Vice President, Programmatic TV at Adap.tv.

Is the ESPN Bubble About to Burst?
It’s episode 24 of Media Unplugged with branding authority Tom Asacker and media strategist Mark Ramsey.

At Summer TCA 2015, Netflix is Everything
Is Netflix everything? It certainly seemed that way yesterday at the Beverly Hilton Hotel during the historic opening day of the 2015 Summer Television Critics Tour. In a quantum leap of participation, and perhaps as a reflection of its current position in the home entertainment marketplace, Netflix impressively filled an entire day with panels for current and upcoming programs, along with a session with Chief Content Officer Ted Sarandos (pictured at top). And just like that, the scrappy streamer joined the ranks of CBS, NBC, ABC, Fox and FX – the only programmers who consistently present full days of panels during TCA tours, at least those in the summer.

Stuart Elliott: A 'Gawkward' Media Moment
It probably won't be long before the gatekeepers at the world's dictionaries are asked to approve a new word: "Gawkward," meaning an embarrassing or discomforting situation drenched in schadenfreude, as when a website known for anything-goes posts that upset and provoke others gets a turn in the barrel.

The Generation Gap(s) in Digital Media
One of the less appealing characteristics of the more strident members of the digital community is their habit of suggesting that the world of media planning, buying and selling was ill-informed, ill served by its measurements and entirely unaccountable until they came along.

Media Execs' Priorities for New Media Marketplace
The rapid proliferation of new digital, mobile and social (DMS) channels has completely changed the way that companies are connecting with their consumers. DMS channels are increasingly becoming a top priority for advertisers when developing strategies and campaigns to target and engage their consumers. The opportunities and challenges that this shifting landscape presents have been well documented.

Click Here for Membership Information