The Word of Mouth Marketing Association (WOMMA) is currently conducting a landmark study, “Return on Word of Mouth,” led by House Party SVP of Research & Analytics (and WOMMA Research Council Chairman) Peter Storck, to quantify the value of online and offline word of mouth. We sat down with Peter to find out what the study might reveal and what it means for brands and marketers.
In a nutshell, what is the Return on Word of Mouth Study?
Return on Word of Mouth (WOM) is a large-scale research project, wherein industry-leading analysts will use the most advanced analytic techniques to measure WOM’s effect on several top brands across a variety of categories. The study will:
- Quantify the value of WOM, online and off, relative to other media
- Inform the evolution of best practices for executing word-of-mouth marketing (WOMM) campaigns
- Reveal best practices for measuring WOM in marketing mix models
And for the brands being studied, the research will provide a confidential, detailed analysis of how WOM works for them, relative to other marketing, benchmarked against the other brands.
Why is this study so important right now?
Most marketers at this point know that WOM is the most effective advertising, but we don’t know by how much. There’s no definitive, industry-wide study everyone believes in that establishes its true value. And marketing mix models, which so many top brands (particularly CPGs) rely on to determine the effectiveness of the elements in their marketing mix, traditionally have failed to read and therefore reveal much of WOM’s true power.
Consequently, marketers aren’t using WOMM nearly as much as they should be. In a survey conducted last year with the American Marketing Association (AMA), WOMMA found that marketers’ top three reasons for holding back their WOMM spending all relate to their belief that it’s hard to measure and show high ROI from such efforts. Return on Word of Mouth will give marketers the proof they need to spend the appropriate amount on WOMM with confidence. Trade groups for all emerging media — internet advertising, mobile, etc. — have undertaken such research in order to move from “experimental” to “proven.” It’s time for WOMM to follow suit and take its rightful place in the media mix.
What findings do you expect to see?
We WOMM practitioners expect that they’ll finally prove our channel superior. Maybe a consumer recommendation will prove twice as likely to lead to a purchase as the viewing of a TV commercial, and three times as likely as a banner impression. Whatever the actual numbers, they’ll replace marketers’ current cautious guessing with hard evidence.
The study brings together an all-star cast of brands, agencies and platforms, data providers, and researchers.
Participating brands include AT&T, Discovery Network, Intuit, NBCUniversal, PepsiCo, Weight Watchers and a leading CPG wishing to remain anonymous. To be studied and modeled, brands must provide data on all of their marketing efforts and sales over the past two to three years. Having brands of this stature involved speaks well to both their commitment and the credibility the study will have.
Supporting sponsors include Brains on Fire, House Party, Ogilvy and Zócalo Group, and The Keller Fay Group and others are providing data.
To help manage the project, WOMMA retained Sequent Partners, whose principals, Jim Spaeth and Alice Sylvester, former president and chairman (respectively) of the Advertising Research Foundation (ARF), are well known for their expertise in brand and media metrics.
Analytic Partners, recently named by Forrester Research as one of the top three market-mix-modeling firms in the industry, are conducting the modeling. We selected Analytic Partners after an exhaustive RFP process that produced a number of impressive proposals. We picked them, among other reasons, for demonstrating that they have already made great strides in reading and revealing the true value of WOM, online and off.
When will we see findings?
Having kicked off the project in mid-June, we’ll be modeling through the summer and previewing the findings at a symposium for participants in October. We’ll be unveiling the public findings at the annual WOMMA Summit, taking place November 17-19 in Hollywood.