On Innovation

If you’re not already using word of mouth campaigns for new product/service launches because of uncertain ROI, you need to read this! Research recently released by word of mouth companies BzzAgent and ChatThreads suggests that word of mouth may be measurably more effective than one of the current gold standards for online sales conversion: search engine advertising.  Furthermore, word of mouth campaigns may be 20-60% more cost-effective for branding than other media. Read on for details.

Intent to Purchase / Sales Findings

BzzAgent’s research shows that intent to purchase among participants in word of mouth campaign conversations ranges from 10-15% depending on the sector (people apparently love talking about food & candy):

Social media and buzz monitoring tools are growing up.  Here are a range of tools that can be used to monitor / track, analyze and engage in conversations about products and brands online.

These tools vary substantially in sophistication and focus; different tools will be appropriate for different size organizations and different marketing objectives.

Some of the considerations in selecting among these tools include:

Today, over 1 billion people in the world lack access to clean water - that’s about 1/6 of the world’s population.

The non-profit charity: water (among others, including Water for People, Healing Hands International, Concern and Water 1st) is working with local organizations in Bangladesh (where I’m from originally!), Ethiopia and other countries to help fund and build wells, improve sanitation and educate people on hygiene.  In under 2 years, charity: water has already raised over $3 million and funded over 600 water projects.

charity: water has actively involved social networks and interactive media in building awareness of its mission.  Here I’ve listed some of the ways it has creatively and artistically brought the issue of water (and the charity: water brand) to life using conversation-inspiring profiles, video and images.

Word of mouth campaigns have occasionally played an important role in the marketing of new entertainment and media (movies, music, books and games), but research to establish the major drivers of success has produced mixed results.  As a result, social media spend and monitoring is still a relatively small portion of the overall entertainment media spend.

However, a new research paper by Dellarocas, Zhang and Awad, has used different analytical techniques to demonstrate that – among other factors like box office revenue, marketing budget and star power – a movie’s early word of mouth (quantified as volume of online movie reviews, tone of review and the gender mix of online reviewers over the first few days of a movie’s release) has a significant impact on forecast movie revenues.

Tom Sawyer (Mark Twain’s The Adventures of Tom Sawyer) was not just adventurous, but pretty smart too. As many of us know, Tom convinced a few friends to take on the job of painting a fence by making it seem fun.

Fast forward to the 21st century, and we see the same basic idea being used creatively by Gwap, FoldIt , Brandtags and some similarly entertaining (and secretly useful) little games on the Internet.

In the face of uncertainty in new media spending – What’s the ROI for blog outreach? Do widgets produce measurable returns? Is spending on word of mouth scalable? - it’s tempting to retreat to the familiar.

One rough rule-of-thumb for media/ad spend is the 70/20/10 rule (see What Sticks by Rex Briggs and Greg Stuart).  The rule suggests something along these lines: spend 70% of time/resources on proven techniques and media, 20% of time/resources on slight variants of proven techniques and media; and 10% on tests of brand new media and techniques.

In the aggregate, this model might make sense.  But, as always, the devil is in details: what’s proven media and technique for one product stage may in fact be unproven at another product stage; high-ROI media for one product stage may be low-ROI when deployed at a different product evolution stage.