Why Marketers Are Still Struggling with Social Media (and what to do about it)

November 5, 2012

As the one-time CMO of a large global wealth management business with severe reputational issues during the 2007 financial crisis, I struggled mightily with how to engage with and use social media to help my brand.

Why Marketers Are Struggling with Social Media

Five years later, you’d think things would be better. But almost all of the CMO’s and Marketing leaders I talk with are still struggling with Social. Everyone knows it’s important, they know they need to engage with it, yet they are still trying to answer fundamental questions that are relevant to any Marketing activity:

1)      How do I engage and use social media to benefit my brand and drive sales ?

2)      How do I measure social media and the impact it’s having on my brand—positive or otherwise?

These are challenging questions that almost all Marketers, no matter their sophistication, are struggling with. The question is, why?

Social Media as a Business Driver

In most Marketing activities, Marketers design marketing programs that they believe will increase basic Marketing measures like awareness, trial and consideration, and ultimately result in higher sales.

To do so, Marketers have created predictive tools that increase their confidence that these programs will ultimately work. Examples include:

  • Copy testing to predict likely advertising success in building sales
  • Purchase intent scores, which measure the likelihood of consumers buying your product
  • Market mix modeling norms, which indicate how much sales $1 of investment will yield
  • Etc.

A key issue with social marketing programs is that there are few of these measures, and even where they exist, they are highly suspect. Here’s why.

The Impact of Social – An Experiment

In his book “Everything is Obvious Once You Know the Answer,” Duncan J. Watts describes a web-based experiment designed to emulate a “market” for music, as a means of measuring the impact of social media. He designed the experiment for consumers to listen to, rate, and potentially download songs.

First, he created two groups. Both groups were given the same set of songs to listen to and rate. Each group was further divided into sub-groups so it would be possible to see how multiple groups responded to the same environmental conditions.

But, there was one key difference between the two groups. Group A consumers were not able to see how many of their compatriots were downloading the songs they were listening to. Group B, in contrast, was able to see the downloads and rank order popularity of the music based on other participants behavior. Said differently, group B had a “social layer” of potential influence while Group A did not. The experiment was “repeated” multiple times given that each of the sub-groups had different participants.

Group A results with different participant groups were remarkably consistent–the rank order of songs was similar across groups. If song A was number one in the first group, it was also number 1 in the 2nd group, 3rd group, etc.

This tells us not only that consumer music popularity without a “social layer” is consistent and relatively unchanged across groups, but that it is highly predictable.

Group B results were quite different. The most popular songs, and the less popular ones, were typically  even more popular or less popular in Group B than Group A—e.g. the “social layer” of seeing how other participants downloaded songs sharply accentuated the way the degree to which consumers in Group B rated and downloaded songs.

But, equally important, results across different participant groups showed large variations in popularity. So, if song A was most popular in the first group, it might only have middle popularity in the 2nd group, and so forth.

Social Makes Results More Extreme and Unpredictable

Duncan Watts had this to say about the results:

“In all the ‘social influence’ worlds…popular songs were more popular (and unpopular songs were less popular) than in the independent condition. At the same time, however, which particular songs turned out to be the most popular—the “hits”—were different in different worlds. Introducing social influence…increased not just inequality but unpredictability as well.”

Said differently, the “social layer” not only caused the ratings to be different, but also made the results much less predictable. This is the challenge that Marketers face with social media:  social interaction and the impact it has on your brand is highly unpredictable.

In a world where CMO’s want to be sure that every dollar they are investing—in time, people and resources—is money that delivers a good return, a fundamental challenge with social is that it’s much less predictable than traditional Marketing programs in how it impacts your brand.

What to Do?  Measure & React

What’s a CMO to do? Well, I believe that real time measurement of social—how well its reaching your consumers, how its changing their attitudes toward your brand (for better or worse), and what impact its having on your sales—is the right way to mitigate and take advantage of the unpredictable nature of social.

Watt addresses unpredictability as follows:

“Rather than predicting how people will behave and attempting to design ways to make consumers respond in a particular way…we can instead measure directly how they respond to a whole range of possibilities, and react accordingly.”

Real time “measure and react” is the best way that you can engage and respond to consumers in a social world when it’s so difficult to predict in advance how social engagement will play out.

That’s why CMO’s need to focus less on creating highly compelling (and perfect) social content and programs, and invest more in quickly understanding how consumers are responding to the various elements of their plan and then adjusting accordingly.

It’s obvious, CMO’s just need to continuously “measure and react,” because when they do so, they already know the answer–and how to respond.

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Addressing the Trust Deficit in Advertising

September 17, 2012

Consumers increasing lack of trust doesn’t begin and end with government and other large public and private institutions. It applies to advertising as well. This should hardly be a surprise to anyone. Who trusts ads anyway?

What’s surprising is that advertising continues to work as well as it does when the majority of consumers say they “don’t trust (advertising) much or at all.” This is, no doubt, due to the creative power of great advertising—its ability to entertain as well as sell. Advertising works despite itself.

Trust in Advertising – Paid, Owned and Earned

In a recent Nielsen global study (disclosure: I work at Nielsen), all forms of paid advertising—TV, Print, Digital, Radio, etc., fared poorly on the trust factor. Conversely, and not surprisingly, “recommendations from people I know” scored highest on trust, with 92% of consumers trusting this source completely or somewhat. Owned media, such as brand websites, scored higher than paid advertising, but lower than social recommendations.

Trust In Advertising

Now What ? The Convergence of Paid, Owned and Earned

Now that we’ve demonstrated what many of us already knew, what should we do about it? Does trust in advertising even matter? If so, can we even do anything about it?  After all, the only advertising that most CMO’s control is their own (and some Ad Agency people would even debate that).

Since trust is a continuum , moving from earned (highest) to owned and then paid (lowest), it stands to reason that brands should want more earned and owned media. But giving up paid media? For most brands, this isn’t really feasible given both the broad reach and historical success associated with paid media.

Instead, we need to start thinking of how Paid, Owned and Earned media can work together to improve trust and deliver better results. Marketers continue to discuss them as if they are separate and discreet media. They’re increasingly not.

Technology is blurring the lines of paid, owned and earned media.  Paid media can now also be social. Social is often about paid. Owned media can have paid embedded in it. And sometimes, all three can exist in one consumer touchpoint. What’s a CMO to make of this trend?

3 Examples of Paid, Owned, Earned Convergence

1.       Paid Ads Work Harder with Social

What actually happens when you combine social and paid advertising? Research on Facebook ads with and without a social layer (Jimmy, Billy and 8 other friends are fans of Brand X), shows that social ads generate much stronger breakthrough and purchase intent than ads without a social layer. Why? Knowing that the advertised brand is liked by our friends builds trust.

Paid Advertising Works Harder with a Social Layer

2.       Paid Digital Advertising Drives “Owned Media” Usage

Digital advertising can drive consumers to a Brand’s owned media. In the example below, we look at the effectiveness of four different brands digital advertising in driving consumers to their respective web sites. Brands A & B were far more successful in doing so than Brands C & D.

Brand A

   Brand B

   Brand C

Brand D

% of those exposedto the online display campaign that went on to visit a brand’s site post-exposure 

4.7

       5.2

      1.0

1.2

% of those not exposedto the online display advertising who visited a brand’s site 

    0.5

       0.4

0.2

0.3

3.       Owned Can Work Harder Than “Paid Media”

What about owned media? Does it work once consumers arrive? One way of understanding this is to measure the off-line sales impact of those consumers exposed versus not exposed to your brand’s website. In the example below, we can see that exposure to Brand X’s owned digital media drove almost 3x the sales lift of paid digital ads alone.

Owned Media Can Work Harder than Paid

The Opportunity – Putting it All Together

Addressing the truth deficit in advertising is more than just making ads that are, well, true. It’s also about how to use paid, owned and earned media to your brand’s advantage.

Using the example above, why not build social into your paid advertising (where possible), use your paid ads to drive consumers to your website, and optimize your site to drive maximum on or off-line purchase? Why not experiment with the myriad of ways to engage your consumers across the paid, owned and earned continuum?

Because I’m betting that overcoming the trust deficit in advertising isn’t about making ads that aren’t misleading or exaggerated. It’s about adding in social and owned media experiences in ways that gives paid media more legitimacy and enables it to work harder for your brand.

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“Paid, Owned and Earned Media” Interview Part 2 with Market Edge’s Glenn Engler

May 8, 2012

The following post first appeared as “Paid, Owned and Earned Media with Randall Beard” on Market Edge on Webmaster Radio FM. This is Part 2 of a 3 part series. Part 1 covered Advertisers biggest pain points, end-to-end advertising measurement, and real time optimization.

Host Glenn Engler is a Fortune 500 industry figure and has worked in the marketing and communications world for more than 25 years. He focuses on perspectives on social media and digital marketing, that will help you gain insight into the unique opportunities and challenges facing marketers and thought leaders today.

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Glenn:  Hi and welcome to Market Edge. I’m your host Glenn Engler, CEO of Digital Influence Group. A full service digital market agency that helps companies unlock the social potential of their brands and amplify its impact to drive results. 

Today I’ll be talking about paid, owned and earned media with Randall Beard, the Global Head of Advertiser Solutions for the Nielsen company – a Global leader in media, marketing and consumer information.

Randall is an award winning marketing executive, speaker and author with more than 25 years of global experience across consumer package goods, financial services and high-touch service brands, including Procter and Gamble, American Express and UBS.  

It’s great to have you on Market Edge Randall, welcome.

Randall:  Thanks, Glenn.

Glen: So it’s early February, I know you’re a Giants fan and I’m a Pat’s fan so we won’t talk about the game, but advertisers spent an average of $3.5 million or so for 30 second spots, and I know many this year there were 60 or more spots during the Super Bowl.

More and more the ads are integrating social in, whether it’s a twitter hashtag , an online channel or some drive to. How do you see that integration of social media impact the way brands are thinking about using traditional television spots?  

Randall:  Yeah, it’s a great question and there are a lot of interesting things happening in that space. First of all, let me just comment on the Super Bowl because we do measure a lot of things in the Super Bowl and I’ll share three things with you that I think are pretty interesting.

Number one, If you look at the audience at the Super Bowl, it starts out at the beginning of the game and the audience just grows gradually across the first, second quarter, half-time, third and fourth quarter and then peaks pretty much right at the end of the game. That’s when the audience is largest.

If you look at TV ad effectiveness, it actually declines throughout the game. The TV ads in the first quarter, on average are the most effective and they become less effective in the second quarter, less effective in the third quarter and they’re least effective in the fourth quarter.

I was on MSNBC and they asked me about this and I said, I think part of it is people are very hyped up and looking for the new ads because people watch the Super Bowl just as much for the ads as they do for the football. The other thing is the Super Bowl is a social event and people are standing around drinking so it’s harder to remember things later.

The third point, and it relates to social, is if you look at buzz, if you look at online buzz it’s fairly flat in the first couple of quarters and then there is this huge spike during half-time and then it comes back down again in the third and fourth quarter.

So one of the very simply things we said to our clients is, look, if you’re going to build a program around both paid advertising in the Super Bowl plus social, you want to be advertising in the first two quarters and driving people to talk about your brand at half-time. Because naturally when we look at the dynamics in the game that’s when ads work the best in the first half of the game and people do a lot of the online conversation, socially during half-time.

And yet we had clients that had been traditionally been advertising in the third or fourth quarter and tried to drive conversations. So that’s a really simple example. I have some other examples but I’ll stop and see if you have any thoughts.

Glen:  No, share them all. This is great stuff. People love hearing these.

Randall: So another example is, we have a partnership with Facebook and we’ve done a lot of work with Facebook to understand the impact of social on paid advertising.

One very simple example is when brands advertise on Facebook they can just run a standard ad, so when you’re on Facebook, over on the side you might see an ad for Virgin America. You can also buy a version of that same ad, which is Virgin America, but below it, it might say, Alex K, Randall Beard, and three other of your friends like Virgin America.

If you just look at the performance of those two ads, side by side, where the only difference is one ad underneath says these friends of yours like this brand we can see that the ad with the social layer to it performs significantly better than the one without social. Which makes sense, right, because we all trust our friends and family and people we know.

So, I think what you’re going to start to see is more and more examples of where social and paid come together in that way.

The last example I’ll give you is a lot of times when we’ve look at paid advertising metrics, historically, we might look at two ads and say they perform pretty much the same.

Now, what’s really interesting is at Nielsen we have a panel that can not only look at what people watch on TV, but with their permission, we can also look at what they do online. And so we’re able to look at people who have seen an ad and what percentage of those people talk about the brand online, search for the brand, and go to the (brands) Facebook fan page, those kinds of things.

Very interesting, in some cases you will see two ads that perform exactly the same on TV metrics and yet one of them will drive much more desirable social behavior online than the other ad. So I think what you’re going to start to see is more and more clients, more advertisers, figure out how do I use paid advertising to drive earned media and social, and how does earned media and social reinforce and also improve the performance of paid advertising?

Figuring out that dynamic I think is going to be a really important challenge for marketers over the next few years.

Glen:  And how do you start to see the whole concept of social search, if you will, impacting that customer process?

Randall:  I think first of all, all the research to the point we’ve just been talking about shows that people trust friends and family members recommendations about brands more than they trust any other kind of advertising or marketing for that matter.

So I have to believe as social comes to search you’re going to see the same thing. You’re going to see that search behavior is going to differ and change based on whether or not people see that social layer and how that influences what they do.

Glen: Yeah I think that’s right. So the phrase of the year seems to be “big data”. And if there is a place that has a point of view and experience with “big data” I’ve got to believe it’s your would at Nielsen.

You had a recent blog post called “driving higher ROIs without big data” and a really interesting point-of-view where you talked about how CMO’s now  have this explosion and wealth of data at their fingertips, yet because the explosion of data is so overwhelming they feel they can’t adequately, necessarily, measure ROI on their initiatives.

Talk a little bit about the three concepts you recommended using to simplify this assess the ROI. You mentioned the reach, resonance and reaction but talk a little about the forces that are facing the CMOs.

Randall:  So earlier on, as you said, I talked about having an end-to-end measurement framework across reach, resonance and reaction.

A really simple way I think about this is, reaction is the outcome but it’s a function of reach and resonance. It’s almost like reach times resonance gives you reaction, so you really have to understand all three.

I think one of the disservices the research and analytics industry has done is to create all these different metrics that are different across platforms because it just increases complexity and makes it really hard to do an apples to apples comparison.

What I hear again and again from CMOs and heads of media and heads of research is comparability, “I want comparability across platforms so I can do an apples to apples comparison.”

I’ll give you an example:  historically the way people have measured earned media or buzz online is just volume.  So there were 20 million impressions, buzz about your brand. You look at that and you say some may be positive and some may be negative. You look at that and you say, what does that mean? Is that twenty million people each saw one impression or is that one person saw twenty million impressions?

For me it’s a much more effective way to think about that buzz volume if you translate it in to reach. So we can look at TV reach and say “your TV reach among your target consumer group was 83%. Your digital media reach was 23%. If you look at the buzz reach and it’s 1%, then it’s probably not that important, right? Or if your buzz reach is 50%, it’s probably pretty important.”

And so bring the metrics in line across the platforms:  TV, digital print, mobile, earn media as well as owned media, right? Comparability of metrics is one of the best things we can do to simplify this kind of big data phenomenon. Because what’s happening is big data is overwhelming people, particularly, when you’ve got a multiplicity of different metrics by platform.

Glen:  And add to that, what’s the average tenure for a CMO? Are we down to 20 months or something like that? There’s even more stuff going on, so I love the concept of comparability, that’s huge.

Randall: Comparability doesn’t mean you can’t also have some unique measurements across platforms, because there are some differences. But I think at the core of it you need comparability.

Next in Part 3:   Retail, Mobile, QR Codes and more


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Innovate 1st Interview Part 3 – Social Media Myths and Truths

January 10, 2011

I was recently interviewed by Innovate 1st for an upcoming edition of Innovate eZine’s “Conversations on the Cutting Edge” series. Following are excerpts from the interview, which was conducted by Doug Berger, Managing Director, The INNOVATE Company.

To read the full interview series, start with my earlier blog post: “Challenges in Advertising & Media Effectiveness.” 

******************************************************

Social Media Myths & Truths

Doug:        Let’s shift gears to social and digital media.  Why don’t you start with some basic facts and then move into some of the wide-spread fallacies.

Randall:     Globally, in 2007, there were about 210 million people using social media.  Today, it’s over 500 million people.  The time per person spent between 2007 and 2009 has gone up about 82 percent.

So more people are doing it, and they’re doing it a lot more.  Secondly, it is big everywhere.  When you look around the world at the percentage of people using social media, globally it’s 73 percent as of last year, from a low of 59 percent in Germany up to a high of 84 percent in Brazil, with the U.S. at the global average of 73 percent.

It started skewing a bit younger, but as the penetration of social media has grown, it’s become almost a truly representational population.

Social Media Myths & Truths

Doug:        What are the trends around social media in terms of brand building?

Randall:     We all know that a recommendation from a friend, or a family member, or an acquaintance is the most powerful form of marketing there is.  That is the underlying phenomena of social media.   Engaging people to ultimately have them speak positively on your behalf is the real opportunity of social media.

Let me just give you one example of this.  Nielsen (Disclosure: I work at Nielsen) has a partnership with Facebook, where they measure ad effectiveness on Facebook. They have looked at a basic ad for Virgin Atlantic and we can see the recall for the ad.  Facebook can serve up that same exact Virgin ad, except below its ad it says, “The following friends or people in your network are also fans of Virgin.”  These ads score much higher than just the regular ad without the social context.

Virgin Atlantic: Facebook Fan Page

One of the developments that advertisers need to be focused on are ways to leverage social context that validates having people seriously think about using or buying your brand.

A lot of our clients are moving to a media model that we like to call POEM – Paid, Owned, Earned Media.  Paid media is the traditional advertising.  Owned media is your own website, or you own your own content on a website.  Earned media is how consumers are talking about your brand.

This POEM framework is an interesting one to think about for reaching consumers.  Now advertisers can look at people who viewed an ad; the percentage who went online and searched for my brand; the percentage who went onto my Facebook page; the percentage who went to my corporate website.  You can measure all of that.  You can start to understand the interaction of paid and earned media in a way that hasn’t been possible before.

POEM Framework: Paid, Owned, Earned Media

Doug:        In the world of social media, there are myths that companies are acting on, but based on your statistics don’t have validity.  What are turning out to be some of the places where social media is not delivering marketing effectiveness?

Randall:     Social media is part of earned media messaging that’s carried out voluntarily by consumers on behalf of the brand. That voluntary messaging can be positive or negative.

The biggest myth is in viral marketing.  There is a belief that you can do a viral video and achieve much of what you would achieve, for example, with TV advertising at a fraction of the cost.

The reality is, first of all, that there are a rare few videos that ever go viral enough and get enough voluntary messaging by consumers to come anywhere close to the reach you can achieve on TV.  It really has to be earned through consumers giving you great ratings because your brand really worked; the product or service is a great one.

Old Spice & Viral Marketing

I remember a time when my wife and I went on vacation.  We came back to the Philadelphia Airport and her Lexus wouldn’t start.  I called customer service and I expected that they would send a tow truck. Instead, they walked me through a five-step process to get the car started and it all worked out.

That’s a fantastic example of where I could then go online and talk about my great experience with Lexus.  That is what advertisers need to be focused on … how do you drive voluntary positive messaging by consumers on behalf of your brand?

People have gotten hung up on going after something really cool and creative and different and having it go viral, as opposed to focusing on the real activities that build advocacy for your brand.

Doug:        What else have you found people to be really interested in?

Randall:     Let me come back to cross platform measurement.  You know that the cross platform exposure is driving much greater effectiveness among the people who see your ad in more places, and yet the media planning hasn’t caught up.

The media plans are still constructed in a way that drive more reach across each media instead of driving more overlap.  This area is going to get more attention.

Next:   Marketing in the B2B space

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Driving Desirable Digital Behaviors with TV Advertising

December 6, 2010

Things are not always what they seem. Two TV ads score the same—in copy testing or in market—so they’re equally effective, right? Not always.

TV: Driver of Consumer Digital Experiences

TV ads don’t just deliver awareness, message recall, etc. They drive behaviors—some of which are digital–and good for your brand.

Cross Platform Ad Effectiveness

Marketers increasingly want to understand how advertising works across mediums—particularly TV and Digital. Some of the more frequent questions I hear from CMO’s are the following:

  • What’s the value of a Facebook fan?
  • What’s the role of search in the customer journey?
  • How I use the web to drive greater engagement with consumers?
  • How can I drive more word of mouth and buzz for my brand?

These are all great digital questions. And lots of people have tried to answer them with digitally focused analysis—some effectively, some not.

Building Brands & Online Buzz

Another Way to Think About TV Ad Effectiveness

Here’s a different tack:  what if we analyzed these questions, not from a digital only perspective, but from a TV advertising perspective? Or, to say it differently, what if we were to ask the question as follows:

“What role does TV advertising play in driving desirable digital behaviors?”

TV & Digital Viewing Behavior

This has been a tough question to answer. Who’s going to keep a diary of what they watch on TV and then the myriad of things they do on-line? The fact is that our understanding of TV and Digital viewing behavior has been mostly limited to knowing how many people did what.

Just as important is understanding not only what people are doing, but in what sequence. And after viewing what ads? New single source viewing data opens up new possibilities for understanding media behavior:  it’s now possible to observe (with viewers permission) both what they watch on TV and what they then do on-line.

Next Generation TV Ad Effectiveness

So, back to the opening question. Two TV ads score the same—in copy testing or in market—so they’re equally effective, right? The answer: not always. Why?

Here are 4 new ways that TV advertising can drive positive digital behaviors.

1.  Drive Consumers to Your Facebook Fan Page – Many brands have embraced Facebook and are building Fan pages as opposed to their own branded websites. They see the advantage of “social” currency and a key objective is building the number of Facebook fans.

TV advertising has a role to play here:  more effective ads can drive more consumers to your brands fan page than less effective (or no) ads. Seen in this light, TV can play an essential role in your digital plans–even when the messaging doesn’t explicitly have a call to web action.

Facebook Fan Pages & Brands

2.  Drive Consumers to Search for Your Brand – Companies across all industries have embraced search, even in CPG, and for good reason. It works. Of course, paid search costs real money. So, how to drive more organic search for your brand? Well, one way is with your TV advertising. What portion of consumers seeing your TV ad go on-line and search for your brand?

3.  Drive Consumers to Your Brand Web Site – Like Facebook Fan Pages, many brands have their own website to engage and deepen the relationship with consumers. Question: is your TV advertising driving consumers to your website? Which ads are more versus less effective in doing so?

4.  Drive Consumers to Talk About Your Brand – Research from Keller-Fay has shown that approximately 1/3 of word of mouth is about TV advertising. How effective is your TV ad at driving word of mouth? Are two TV ads which score equally well on traditional ad effectiveness metrics driving different conversation levels about your brand? If so, one is clearly more valuable than the other (assuming the conversations are positive).

Capital One Mascot Challenge: Driving Consumers to Website

Driving Desirable Digital Behaviors

All of the above represent new ways of thinking about TV ad effectiveness. Traditional measures of TV advertising performance around breakthrough and branding will continue to be important.

But increasingly, Marketers need to think about how TV advertising drives other behaviors—particularly digital ones—that benefit their brands.

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Guest Post: Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

October 18, 2010

This post is part of a continuing series of guest posts and was originally posted on MENG BLEND. Christopher S. Rollyson is founder of CSRA, Inc., Architect of The Social Network Roadmap(sm) & Managing Editor at the Global Human Capital Journal.

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Word of mouth marketing is seen by many marketers as the economic engine of social business (or media) because people recommend products and services to each other: all marketers have to do is give them the right information to share and make it easy for them to recommend things, right? Wrong.

Rude Awakening— Only 15% of Word of Mouth Marketing Campaigns Show Positive Results

Or, in popular parlance, “It’s complicated.”

Here, I’ll identify some of the flawed concepts that underlie word of mouth marketing (WOMM), so you can avoid being part of its 85% casualty rate. I’ll show in general how you can tweak the idea and succeed with social business initiatives more often.

Word of Mouth Marketing Is Flawed

At Alterian’s user conference, Don Peppers shared this arresting statistic in his keynote:  only 15% of WOMM initiatives show positive ROI. Shocking—at least until you start thinking about it. Loosely speaking, WOM (sans “marketing”) happens when a trusted and relatively unbiased “friend” shares her experience with a product/service with someone close to her. “Someone like me” who isn’t tainted by sales commissions or quarterly revenue targets.

Marketing, on the other hand, is generally about creating need or driving sales. Do you see the problem?

In this context, WOM and marketing are mutually exclusive: the latter’s purpose is to serve the company by moving product; the former serves the person first. It’s a conflict of interest, and it will rarely work. Ever.

93% of Word of Mouth Is Offline

In a second data point, Keller Fay Group’s latest TalkTrack study revealed that the overwhelming majority of WOM (as defined by them) takes place offline and face to face (via e-consultancy and @stefanw), not online through social business. This is not surprising when you stop to think about what traditional WOM is, largely a conversation between family or close friends. Tight ties. However, neither of these references dives into WOM or WOMM deeply enough to understand why and how they can work or not.

WOM among Loose Ties

Digital communications significantly reduce the cost of many kinds of interaction, so WOM among loose ties will continue to grow. However, marketers should recognize that loose ties and tight ties have important differences because the motivations and level of trust are different.

Loose ties are not just inferior tight ties; people form loose ties for many reasons, but the online many-to-many environment enables people to manage their reputations and influence by leveraging the network effect. Tight tie relationships are limited in number, multidimensional and high investment.

How Marketers Can Succeed with Word of Mouth

Having led marketing for several firms, I can appreciate why marketers would love the concept of word of mouth marketing. Given that they are in conflict, it’s important to focus on WOM while avoiding WOMM. I’ll wager that the majority of the 85% of failures result from not understanding and honoring their differences. The good news is, WOM drives sales—when companies honor and nurture it. Here’s how:

  • First—and this is a leap of faith—accept that WOM serves the customer, not you. Trust that, if you don’t interfere, positive results will often result. There is no halfway here, intent and honesty are WOM’s key differentiators. Don Peppers shared Staples’ “Speak Easy” fiasco as a warning (“sponsored” tweets and bloggers are other traps). All companies say that they put the customer first, but many aren’t being honest with themselves or their customers.
  • Second, the company must put itself first to be congruent with itself as a business. It shouldn’t try to do WOM. But the company, acting in its self-interest, can support WOM. Marketers must safeguard these boundaries if they want to succeed because they form the foundation of trust among the three principal actors: company, friend and customer.
  • Third, accept that your products and services are not a great fit for most people. In a pervasive transparent network, the market will figure out what works and what doesn’t. Don’t try to “make markets” by convincing people to buy unless you have a valid value proposition for them. Focus on serving people for whom you have a superior value proposition. This is the key to thriving in a transparent environment.
  • Fourth, trust customers’ friends to engage with WOM—for their own motivations. Remember, they are there to serve their friend, not to move your product. WOM is their role, not yours. Campaigns like Staples’ fail because marketers don’t understand their role and unknowingly turn WOM into shilling. Sorry.

Remember Miracle on 34th Street? It was breakthrough to send customers to other stores when they had a better value proposition for the customer. It increased WOM because it surprised people and exceeded expectations. But it was Kris Kringle (a “friend”) who started it based on his personal integrity. Later Macy’s turned it into a tactic, but Kris never did.

Accepting WOM transparency is difficult because it requires significant culture change. Firms that don’t accept this new reality will fight and lose. The market will expose them in the end.

On the other hand, those that take this road will be more successful because they will be aligned with customers and their friends. Moreover, focusing on valid value propositions and customers will tend to lead the company to innovate more successfully.

Do you agree? Disagree? Please share your thoughts and insights in the comments…

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Christopher S. Rollyson has been a marketing and technology pioneer for over twenty years. As a consultant and marketing executive, he has had a leading role in launching such game-changers as: Java with Sun Microsystems, e-business strategy with PricewaterhouseCoopers Management Consulting Services, and SOA, Web services and architecture solutions with nVISIA and IBM. He can be found on Twitter as @CSRollyson.

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