Sleeping dogs lie; numbers don't

It’s always wonderful, as a marketer, when intuition and statistics line up, when what you feel in your gut turns out to match the data. Here at House Party, we’ve known for years that consumer advocacy can be more powerful than any traditional form of marketing — known it so confidently, in fact, that we started the company with this as the foundational tenet.

Fortunately, in the years since, rigorous research has verified what we’ve always believed: that consumers listen to other consumers far more than they listen to advertisers, and that the most effective marketing plans encourage and guide this authentic word of mouth (WOM), or earned media.

By now, you’ve probably heard over and over the Nielsen statistic that 84% of consumers trust product recommendations from people they know, a far higher figure than for any other form of advertising. This nugget is so ubiquitous because it’s an important stat — a really important one — but there’s a lot of other compelling research out there, too. The Keller Fay Group, for instance, has been collecting and analyzing data on word of mouth (online and off) for years; they conduct over 36,000 interviews each year to see which brands people are talking about, and where, and why. They’ve repeatedly found that consumers are most influenced by other consumers, and that if you provide good experiences with your brand, you’ll spark WOM that’s highly:

  • Positive. Overall, WOM is positive eight times as often as it is negative, and when consumers have had first-hand experience with your brand, that figure is even higher.
  • Credible. People are far more willing to believe their friends and family than billboards or banner ads, because their suggestions are personalized and without agenda.
  • Impactful. After hearing a personal recommendation, consumers are likely to seek out more information, pass that recommendation on to others, and, of course, purchase.

And in partnership with firms like Nielsen and Datalogix, the House Party analytics team has been working to prove the holy grail of social marketing: ROI. In a series of matched-panel analyses — in which we find pairs of markets with similar profiles and marketing plans, then throw House Parties in some but not others to the resulting difference in sales — we’ve confirmed that social marketing is not just a fun nice-to-have: it’s a powerful driver of sales. A recent House Party campaign for MorningStar Farms, for instance, drove a 6% sales lift in test markets; in general, we’ve seen that even a moderately sized campaign can drive an ROI of $3.00 after six months, while a larger campaign can drive twice that much.

Last week, at Huge Inc’s “Media Earned is Money Saved” event, our SVP of research & analytics, Peter Storck, was asked what the biggest myth surrounding earned media is. His answer: that the impact of earned media and social marketing can’t be measured, and that if it could, the results wouldn’t be promising. This may have been true once, but today there’s a plethora of research showing that consumers are better marketers than any of us; it’s our job to encourage and empower them.

To further the cause, the Word of Mouth Marketing Association (WOMMA) is currently conducting a landmark study to establish best practices and set measurement standards for WOM campaigns. You can learn more about that study, and see how you could take part, here. Working together, marketers and researchers can prove — not merely with logic and good sense, but with data — that advocacy marketing is here to stay, and with good reason.