Media economy
Psst! What's hot? Word of mouth.
By Toni Fitzgerald
Aug 10, 2009 - 1:12:29 AM

At a time when a number of media categories are struggling to avoid double-digit declines, there’s one that’s forecast to grow by 10.2 percent this year.

It’s word of mouth marketing, and it encompasses a wide range of different media, from blogs to street teams to traditional grassroots campaigns, that aim to get people talking about a product or service.

WoM spending will increase at a compound annual growth rate of 14.5 percent from 2008 to 2013, including a 14.2 percent increase last year, to $1.54 billion, according to a new forecast from PQ Media, a Stamford, Conn., research outfit.

This year spending will reach $1.7 billion.

Word of mouth has always been considered the most effective form of advertising. The challenge was always how to build word of mouth on a cost-effective basis. The internet made that possible.

The growth of word of mouth is being driven by a number of factors. Chief among them is an increased receptiveness to WoM from top brands, but also a factor is the growth of social media.

“When we were talking to brands putting this together, we kept hearing two things,” says Leo Kivijarv, vice president of research at PQ.

“You have to be in social media, which is part of listening to the conversation. But they’re not limiting it to just being in social media because so much of word of mouth happens offline. They need to have campaigns that incorporate both online and offline strategies and tactics.”

For example, when staging an alternative media event, such as one where street teams hand out samples, an advertiser should be able to support the event with some sort of supporting element on the web, such as an online community, which gives the advertiser a chance to monitor what’s later said about the product.

Many brands have already been experimenting with WoM. The segment saw a compound annual growth rate of 37.6 percent between 2003 and 2008 as the growth of social networks, blogs and online communities prompted many brands to invest in WoM.

One advantage, of course, is that WoM doesn't necessarily cost a lot. Yet there are some brands that remain wary of committing money to word of mouth because it's still seen as experimental, and advertisers are often wary of trying new things during bad economic times.

“There are some companies that might be saying, ‘We can’t experiment right now,’ but it’s not just WoM,” Kivijarv says.

“They’re not putting ads in video games, not trying product placement or digital out of home or the other ones that seem to be put into the nomenclature of being experiential advertising and marketing.”

The report does not include guerilla, viral or spam marketing in its estimates, nor does it measure in-store sampling, couponing or event marketing, other common ambient advertising tactics.



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