Landmark Study Shows Word of Mouth Drives 13% of Consumer Sales
Study Measures Impact of Brand Conversations that Happen Offline and in Social Media
Word of Mouth Amplifies the Effect of Paid Media by 15%
Nov 18, 2014, 09:00 ET
HOLLYWOOD, Calif., Nov. 18, 2014 /PRNewswire-USNewswire/ -- Researchers today announced the results of a landmark study that measured the impact of "consumer word of mouth" in six diverse categories, finding that online and offline consumer conversations and recommendations account for 13% of consumer sales, on average, which represents $6 trillion in annual consumer spending. In higher price-point categories, word of mouth's impact is almost 20% of sales.
The study was organized by the Word of Mouth Marketing Association (WOMMA), which is hosting its annual Summit conference here this week, and was paid for by agency and brand sponsors, including AT&T, Discovery Communications, Intuit, PepsiCo, and Weight Watchers. The study was based on sophisticated econometric modeling of sales and marketing data provided by participating brands on a confidential basis. Analysis was conducted by Analytic Partners, an independent analytics consultancy and recognized leader in marketing analytics.
The results contain good news for practitioners of both paid and earned marketing. About one-third of the sales impact is attributable to word of mouth acting as an "amplifier" to paid media, such as television, with consumers spreading advertised messages. But most of the impact of word of mouth works independently of advertising, whether stimulated by product or customer service experiences, public relations, owned and earned digital content, referral marketing, and so on.
Other key findings include:
- Offline and online word of mouth are both strong purchase drivers, with offline accounting for two-thirds of sales and online accounting for one-third.
- Researchers found that an offline word-of-mouth impression drives at least 5 times more sales than a paid advertising impression, and much more (as much as 100 times more) for higher-consideration categories. A similar finding for online word of mouth requires more comprehensive data on impressions and/or mentions, which are not yet publicly available.
- Word of mouth's impact happens closer to the time of purchase than traditional media — often within two weeks.
"Intuitively, we know that a consumer recommendation is going to be a powerful contributor to brand sales, but this is the first time a rigorous study has quantified that impact across a range of product and service categories," said WOMMA President Suzanne Fanning. "We hope this research will lead marketers to elevate the role of word of mouth, both online and offline, in their marketing plans."
"Having conducted thousands of marketing mix analyses, we were delighted to help WOMMA and the study participants quantify the impact of word of mouth," said Analytic Partners President, Nancy Smith. "Word of Mouth is an area that begs for more deliberate decisioning and planning from marketers, as it works hand-in-glove with paid media."
Alice K. Sylvester of Sequent Partners, WOMMA's consultants for the project, said: "This is the first public demonstration of the measurement of word of mouth sales effectiveness. The study has shown how WOM can be incorporated into marketers' econometric models and managed with the same level of knowledge as advertising and promotion."
In addition to the data contributed by the sponsors, social media data for participating brands was contributed by the analytics firm Converseon, and offline word of mouth data was contributed by the market research company Keller Fay Group. Agency sponsors of the study included Brains on Fire, House Party, Ogilvy, and Zocalo Group.
For more information on WOMMA's "Return on WOM" study, go to http://www.womma.org/ReturnOnWOM
About WOMMA
Now celebrating its 10th year, the Word of Mouth Marketing Association is the official trade association in the industry dedicated to word of mouth and social media marketing. WOMMA is committed to expanding the word of mouth marketing industry through advocacy, education and ethics. WOMMA.org.
About Analytic Partners
Analytic Partners is a leading global marketing consultancy, founded in 2000 to deliver customized analytics that improve business performance and marketing ROI. Analytic Partners provides both the technology and consulting to help marketers achieve a deeper understanding of their business through insights from marketing mix modeling, cross-media attribution, digital and social media analysis, customer loyalty analysis, predictive modeling and marketing optimization. AnalyticPartners.com.
About Sequent Partners
Sequent Partners is an entrepreneurial consulting firm specializing in brand and media metrics. Founded in 2003, they help clients link marketing, advertising and media activities to financial outcomes. Sequent Partners specializes in marketing accountability and ROI, innovative media metrics development and group facilitation and consensus building. Clients value our objective outside perspective and broad industry experience. SequentPartners.com.
CONTACTS:
Nancy Smith, Analytic Partners
[email protected]
212-599-7630
Brad Fay, WOMMA Chairman
[email protected]
732-846-6800
SOURCE Word of Mouth Marketing Association