Cracking the DNA of Word-of-Mouth

Aug 26, 2013, 10:07 ET from American Marketing Association

CHICAGO, Aug. 26, 2013 /PRNewswire-USNewswire/ -- A new study shows that each brand is "born" with a specific word-of-mouth potential that is closely related to twelve of its characteristics.


Brands and word-of-mouth are cornerstones of marketing. A new study demonstrates, for the first time, that the two are closely and systematically related and that word-of-mouth is more predictable than might seem. The researchers, Mitch Lovett from the University of Rochester, Simon School of Business, Renana Peres, from the Hebrew University in Jerusalem, and Ron Shachar from the Arison School of Business at the Interdisciplinary center in Herzliya, provide insight into the DNA of "talkable" brands.

The research is based on a combination of data from the Keller-Fay Group, Nielsen-McKinsey Incite, Young and Rubicam, Interbrand, the ACSI, and a large scale original survey. This dataset contains for each of the 697 most talked-about national US brands information on its online (i.e., blogs, user forums, and Twitter messages) and offline (i.e., face-to-face and phone conversations) word-of-mouth for three years as well as on its characteristics (e.g. level of differentiation, degree of complexity).

The analysis that appears in the August 2013 issue of the American Marketing Association's Journal of Marketing Research shows that the nature of word-of-mouth is fundamentally different between offline conversations and online discussions. While the main motivation of consumers to spread the word on brands in offline conversations is to share emotions such as excitement and dissatisfaction, in online discussions, which usually involves "broadcasting" to many people (e.g. twitter), their main driver is to express their uniqueness and status.

Consider, for example, the role of product differentiation – an attribute that received much attention in marketing and economics due to its strategic role in competition. This study suggests that by mentioning a highly differentiated brand in a conversation the consumers can express her uniqueness. Thus, it is expected that (1) the higher level of differentiation, the higher is the word-of-mouth, and (2) that this relationship is stronger in an online setting.

The empirical findings support these expectations and the other implications of the theory introduced in this study. Other brand characteristics that are related to word-of-mouth are perceived quality, premium versus value brands, relevance to many consumers, visibility, excitement, satisfaction, years since the brand was "born", complexity, familiarity, and perceived risk.

Using these brand characteristics it is possible to predict the word-of-mouth potential of each brand quite well. Indeed, the authors created a simple and free tool that can be used by any brand in the country to predict its word-of-mouth potential. Furthermore, given the sharp differences in the nature of word-of-mouth between offline conversations and online discussions, the predicted potential are specific for each environment (i.e., offline and online).

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