“Word of Mouth” Marketing is Expensive!

Perhaps it’s just me, but I find it very ironic that the  “word of mouth” marketing spend will top $1 billion dollars in 2007. It’s the largest growth sector in marketing services. Silly me, I always thought me telling someone else about a great product, service, company or individual was free.

If you have the time and/or ambition, I would love your views.

If I like what you write, I will post it … and you can pay me!

 

Grant A. Johnson

Johnson Direct LLC

1-800-710-2750 

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About johnsondirect

A prominent measurable marketing strategist and nationally recognized thought leader, Grant serves as president and chief marketing officer for Johnson Direct, a measurable marketing communications and direct branding™ counseling firm that employs multi-channel marketing strategies that are testable and accountable. He is also a sought-after public speaker, marketing trainer, award-winning author, copywriter, and consultant.
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3 Responses to “Word of Mouth” Marketing is Expensive!

  1. Tim Tracey says:

    “Silly me, I always thought me telling someone else about a great product, service, company or individual was free.”

    I’ll take it one step further, Grant. It should be “Better than free.” ™

    If word of mouth is such a powerful and effective advertising force – and if WOM leads convert to sales at a much greater rate than conventional advertising leads – then what business owner would not be eager to …

    Oh – my lawyer would recommend that I stop there 🙂

    But please stay tuned.

    “If I like what you write, I will post it … and you can pay me!”

    Good turn. And actually I’d be glad to.

  2. I stumbled across your posting and felt I should respond. As a charter member of WOMMA (The word of mouth marketing association) and a chair or member of many of the committees, I have had an insider’s look into how the concept has grown into a discipline.

    I must say that your posting represents a position that speaks from a position of having a lack of insight into what drives WOMM. This might be due to a desire to defend a service offering position (ie. direct marketing or traditional advertising) or a lack of understanding as to what drives WOMM (word of mouth marketing).

    A good WOMM program can generate measurable returns that exceed 10:1 regularly.

    Even with such results, some are stuck on relying on the traditional alone. In a recent symposium, a marketer from a major pharma posed such an argument. This pharma spent almost a billion dollars on traditional advertising last year. In that meeting, my friend and colleague Barak Libai (MIT Sloan Scool) http://recanati.tau.ac.il/_Uploads/28libai.pdf defied this marketer to measure the value of a traditional advertising ‘impression’. He could not. However, in this debate, we were able to track back and measure-in net present value- the impact of a WOMM program.

    Recently, other similar results were presented at the WOMMA conference in Las Vegas (www.womma.org) by brands such as Microsoft, Dell, Southwest Airlines, Cranium and a host of others. The common theme was tremendous and measurable results.

    So, is WOMM expensive? If I am a brand and can deliver a program that yields 10 million (or more) for a million invested and know what happened and why, this makes sense. I’d hardly call such a program expensive as compared with a number of more traditional alternatives.

    FYI, at the WOMMA conference, we also saw in attendance every major PR firm and media firm there trying to learn and adopt.

    My parting comment is people fear what they do not understand. I’d invite you to learn more about WOMM by visiting a WOMMA event, read the reports on the topic written by the Keller Fay Group (www.kellerfaygroup.com), Sean O’Driscoll of Microsoft’s blog http://www.communitygrouptherapy.com or the London School of Economics (http://www.lse.ac.uk/collections/pressAndInformationOffice/PDF/AdvocacyDrivesGrowth_5-9-05.pdf) or even the recent article in the Harvard Business Review (http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=R0710J).

    Granted, these resources, articles and reports aren’t as exciting as the Ad Age story but they do prove out the facts that are in contradiction to your blog posting.

  3. Thanks for the response, Steve. I know WOM works, I just don’t think you should have to pay absurd amounts of money to practice it. Shouldn’t the ROI be 100%? My business is growing by 85% and a lot of it has to do with referrals that cost be nary a penny. Simply do great work and folks WANT to tell other folks.

    Grant A. Johnson

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