Such is the power of word-of-mouth marketing that if a friend endorsed a product or service, you are more likely to be influenced by this than by an advertisement.
While the concept itself is nothing new, the way it is delivered has evolved rapidly over the past year. Word-of-mouth marketing - both positive and negative - is spreading through social networks, blogs, websites, forums, message boards and viral videos.
The rise in internet chatter is prompting brands to focus on what consumers are saying about their brands online. Dave Smith, managing director of online marketing agency New Media Maze, says: "The internet has increased an individual's sphere of influence, and a brand conversation that might previously have been limited to a few mates in a pub is now happening worldwide between several anonymous strangers."
Many brands are looking to use consumer-generated media to reach a network of influencers and to create a buzz around a particular event or product. For example, candidates in the London mayoral election whipped up online buzz to generate votes, while Appletiser has used samples to spread the word about its products, encouraging users to give feedback on social networking sites. And Infiniti, the luxury car division of Nissan, is using word of mouth around consumer-generated media to create an online buzz ahead of its launch later this year (see case study, page 26).
Blake Chandlee, UK commercial director, Facebook, says: "Online tools are enabling brands to listen to consumers and engage with them. Brands have the ability to create forums where consumers can display their loyalty, express an opinion and generally engage with the brand."
To date, word-of-mouth marketing campaigns have been the preserve of specialist agencies such as Wildfire and BzzAgent, which use a network of consumers to check out new products and share opinions. However, a growing number of traditional media agencies are also getting in on the act. Last year, GroupM formed a partnership with BzzAgent to offer word-of-mouth marketing campaigns to clients, and two of its agencies, MediaCom and Mediaedge:cia, have been notably active in this area - although clients and media agencies are still on a learning curve.
David Jowett, managing partner of word-of-mouth services at MediaCom, says: "When we began offering word-of-mouth media services last year, a significant amount of education was required in the sales process. Brand managers were familiar with the term but didn't know exactly what it entailed. Over the past few months, our clients are entering into discussions about word of mouth with a more sophisticated understanding."
Many word-of-mouth campaigns are still in the experimental stage, but the benefits are simple to grasp - the technique can change the way a brand is perceived by increasing its value in the eyes of consumers, thereby boosting sales or encouraging product trials. Steve Barton, consultant and president of trade body Word of Mouth UK, says: "The main reason why consumers switch brands or find out about new products is through a recommendation. Word-of-mouth marketing improves customer loyalty and increases revenue growth."
Customer loyalty
Brands can also use the medium to identify negative comments around a product and turn this to their advantage. When computer giant Dell was the target of a blog criticising its levels of customer service, it responded by launching the IdeaStorm website, which gives consumers the chance to air their views on how Dell can improve its products and services. Not only has Dell used this information in its product development, it has also built a community of loyal supporters.
Marcus Siddons, media and mobile director at digital agency Graphico, says: "Understanding how to manage negative trends is vital, for example by inviting a blogger who is posting negative things about your brand to communicate with you directly. You may be able to resolve issues, and the same blogger can often turn into a brand advocate."
Successful word-of-mouth marketing also relies on engaging the user through stand-out content - a principle that underlines Bebo's approach. Sarah Gavin, Bebo's global director of communications, says engagement is built in a number of ways, including establishing a dialogue with consumers on their profile pages, setting up communities through online dramas such as Kate Modern and Sofia's Diary where brands can highlight their products, and enabling consumers to download and share applications.
STA Travel has also been looking to engage further with its user base and to generate independent conversation about travel to reflect its brand values. In April, the company launched statravelbuzz.co.uk, where writers create content by highlighting the best travel tools, blogs, tips and advice from around the web, and two "explorers" blog about their adventures abroad.
Marketing director Celia Pronto says: "Word-of-mouth marketing is a key initiative for us. We use social media environments such as Facebook and Bebo, but we have also created our own space where conversations can be brought together."
Pronto adds that it is critical for brands to be honest about their presence and purpose, not only from a legal perspective, but also to avoid backlash or rejection from communities. Failing to use word-of-mouth marketing correctly - as in the case of McDonald's and American Express, both of which were publicly denounced for setting up fake blogs to promote products - can damage a brand's reputation in the long term.
Dave Balter, founder and chief executive of BzzAgent, says: "The consumer's opinion is rooted in an actual product experience, which is what word of mouth is based on. This type of marketing only works when it is honest and unscripted."
Metric challenge
Measuring the success of a campaign can be tricky. Appletiser recently rolled out a campaign involving product samples and money-off coupons in partnership with BzzAgent. Consumers were encouraged to post feedback via the brand's website and as part of a Facebook group.
However, Appletiser's brand manager Andy Thompson admits that measurement has been hard to quantify. "It is very difficult to measure the absolute success of a campaign, but detailed reports from agents provide brand teams with tangible evidence documenting who the message reached and what their feedback was," he explains. "Brand teams can also track how many coupons were redeemed, and so estimate the number of new people trialling the product."
Industry experts say there are a variety of ways to measure word of mouth and BzzAgent's Balter believes the industry will soon propose a standardised measurement. He feels the most popular metric is around the number of conversations triggered during a campaign.
For example, a participant tells, on average, 12 other people about the marketed product, each of whom tell about four others. This is then tied to sales data to prove the value of each conversation generated. Test and control studies are also popular ways of measuring the impact of word of mouth on sales, as is the tracking of coupon redemptions.
According to Ivan Palmer, strategist at specialist agency Wildfire, it is not yet possible to get an accurate impression of a word-of-mouth marketing campaign, because many brand conversations are carried out offline. It is therefore vital for a campaign to work seamlessly on and offline.
Legal issues could also prove a minefield. The Consumer Protection for Unfair Trading Regulations, which came into force at the end of May, have placed restrictions on commercial communication via the internet, social networking sites and word-of-mouth communications.
Using buzz marketing specialists to communicate with potential customers in social situations without disclosing that they are acting as brand ambassadors is now a criminal offence.
According to Marina Palomba, legal director at the Institute of Practitioners in Advertising, brands need to assess whether their word-of-mouth marketing activities comply with the new regulations or they risk facing hefty fines.
Such a prospect could make brands think twice about how they approach the medium, but with word-of-mouth advertising opportunities around consumer-generated media set to rise, such levels of transparency can only help to deliver better results in the long term.
10 TIPS FOR SUCCESSFUL WORD-OF-MOUTH MARKETING
ONE Be honest, transparent and authentic: state your involvement in the campaign and don't spin
TWO Try to create a story through word-of-mouth engagement
THREE Don't try to create word of mouth with something that isn't worthy of conversation~
FOUR Personalise all your messages. Successfully harnessing social media means thinking and acting more like a person than a company
FIVE If you use advocates as part of your word-of-mouth strategy, value them and respect their individuality, irrespective of whether they are paid or not
SIX Avoid using superlatives in your communications, or keep them to a minimum
SEVEN Expect the unexpected - results are sometimes far better or worse than anticipated. If the message has been correctly constructed, it will have an effect on the recipient, even if they don't get back to you
EIGHT Value all engagement - even if it doesn't create an obvious and immediate benefit
NINE Use video - every product you market should have a demonstration video
TEN Exploit your own website - consumers have high levels of trust in brand websites
Source: Simon Quance, head of buzz marketing, Hyperlaunch/Nielsen Online
INFINITI NISSAN'S LUXURY CAR DIVISION USES WORD OF MOUTH FOR LAUNCH CAMPAIGN
About 80% of consumers use the internet as their primary source of research when purchasing a new car and Infiniti, the luxury car division of Nissan, took advantage of this fact for an ongoing campaign that kicked off in March.
The aim was to create awareness and excitement around a launch scheduled for the end of this year and to increase traffic to the Infiniti website using a variety of channels such as social media, digital marketing and search. The brand is aiming to attract a younger demographic with high disposable incomes.
The campaign targets potential customers and advocates to build awareness through engagement with social media and user-generated content. The social media element involved agency TMW recruiting a network of moderators across five European markets to engage in conversations with key opinion formers using blogs, websites, social networks and forums.
These moderators reacted to online conversations about Infiniti, answered questions about the launch, and started conversations and discussion threads in places where Infiniti had not yet become a talking point.
Martin Jobin, interactive marketing manager at Infiniti Europe, says: "We are entering a hugely competitive marketplace, so we have to be smart and think more laterally about our marketing approach. This initiative is designed to harness interest shown at a recent motor show and to help sustain the buzz up to launch."
Within one month of the launch, TMW initiated more than 500 conversations in a wide range of online destinations, from comments in newspaper sites through to specialist automotive forums and discussion groups.
TMW also established a series of metrics at the start of the project to measure the success of the campaign, such as the number of comments and links, as well as traffic generated.