1. Word of Mouth – A Prescription for a Bad
Economy

2. This economy is bad…like really bad…
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3. It looks like we’re in the big R…
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4. Yikes, Advertising is taking it on the chin...
- Group M forecasts media spending down 3 2% in 2009
3.2%
- Zenith Optimedia forecasts 5.7% down in 2009
- Morgan Stanley could envision a +10% drop in spending depending on the economy

5. How will we carve up the media pie?...
Well, we’ll be eating less media:
- 93% of CMOs believe the economy will have a significant/moderate impact on their budgets
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Source: Epsilon
- 70% of CMOs plan on reducing their marketing spending

6. The Long Slow Decline into Irrelevance
Perhaps a premature
announcement, but why
wait.
2009 Anticipated Declines:
- 15% Newspapers
- 13% Consumer Magazines
- 10% T
Terrestrial R di
t i l Radio
- 4% Network TV
Source: Jack Myers Media Report

7. Smart Marketers are Now Rethinking Traditionally
Held Views...
H ld Vi

8. Crisis requires radical shifts in thinking
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9. Another
Change
You Can
Believe
In Is
Coming
Ci
…

10. Here Comes the Next Wave of Marketing & Media
Media…

11. The Fastest Growing Marketing/Media
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Segments
Expected 5 year
Compound Annual Growth Rate
Word of Mouth 27%
Internet/Mobile
It t/M bil 14%
Branded Entertainment 13%
Custom Publishing 11%
Out of Home
Out of Home 10%
Source: Veronis Suhler Stevenson

12. Word of Mouth is Catching On…in All Its Forms
Buzz Marketing Customer Collaboration Social Media Brand Communities
Influencer Marketing Influencer Marketing Referral Programs
Social Networks
Grassroots/Cause Experiential Viral
User Generated
Marketing Marketing Marketing
Content

13. Fact - Most Traditional Media is an Inefficient Cost…
…Word of Mouth is a Wise Investment

15. Advertising Attention Deficit Hurdles
3,000 ads get pushed at us each day - 6 times the
volume vs. 40 years ago…the tougher it is to
breakthrough, the more we do and invest

16. Reason #1 – Word of Mouth Gets Noticed
‐ 4% any ad recall from last TV show ‐ 93% of people believe word of mouth is
watched(down from 34% in 1965)
watched(down from 34% in 1965) the most reliable way to find out
the most reliable way to find out
Source: NBA information about products and services
(up +26 pts. Vs. 25 years ago)
‐70% of people frequently consume
Source: NOP World
Source: NOP World
multiple media simultaneously
Source: eMarketer

17. One Way
One-Way Communication Hurdles
Customers demand interaction and customization,
Marketers require it

18. Reason #2 – Word of Mouth Taps The Values of
New,
New Customer Participation Culture
Word of Mouth
Mass Media
Customers Now Want: Participation Values Grade Participation Values Grade
Freedom 2/10 9/10
Customization 2/10 8/10
Scrutiny 3/10
/ 9/10
/
Integrity 2/10 9/10
Collaboration 1/10 10/10
Entertainment
Et ti t 8/10 8/10
Speed 5/10 8/10
Innovation 2/10 9/10
Evaluation Score 25/80 70/80

19. In a bad economy, marketing has to punch harder
and create action…

20. Reason #3 – Word of Mouth Stimulates Action
‐ 70% ‐ percentage of people affected by
‐ 90% ‐ proportion of people who can
word of mouth conversations
skip ads, do skip ads
‐ 37% buy it/try it
‐ 24% consider it
‐ 69% ‐ percentage of people who
‐ 9% avoid it
are interested in skipping ads
Source: Keller Fay
completely Source: Yankelovich
p y

21. Lifetime customer value trumps short term lift

22. Reason #4 – Word of Mouth Has Longevity
‐ Average people have 17 word of mouth
‐ Over 30% of the broadcast content we see
conversations each day
conversations each day
in mass media is advertising or promotion
‐ How much is interactive? High
‐ How much is conscious? Low
‐ How much is spoken? High
‐ How much is attentive/lean
‐ How much is internalized? High
How much is internalized? High
forward? Low
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‐ How much is retained? High
‐ How much is well‐received? Low
‐ How much is behaviour altering?
‐ How much is retained? Low
High
‐ How much is banked in
How much is banked in
memory? Virtually nil ‐Brand Communities don’t reach full maturity
to 18 months
‐ 82% of community members refer more
people to a brand after joining

23. Ad inflation is running wild
In a down economy, advertising is a tougher
discretionary expense to justify

24. Reason #5 – Word of Mouth Costs Less Per Impact
Choose Your Flavour:
Choose Your Flavour:
‐ Cost to Prod ce a National TV Ad
Cost to Produce a National TV Ad
‐ Year Round Community ‐ $100‐500k
‐ $360,000
‐ 26 week Word of Mouth Campaign ‐
pg
‐ Min Media Cost to Air a National
Min. Media Cost to Air a National
$40‐150k
Campaign in Canada
‐ $1,200,000
‐ Blog/Social Media Outreach $30‐100k
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‐ Typical Research Cost Associated with TV
‐ Advisory Panel ‐ $15‐75k
‐Campaign
‐ $25,000 ‐ $100,000
$25,000
‐ Buzz Marketing Tactic $5‐100k

25. In a bad economy, few markets increase, it’s a
battle for share growth

26. Reason #6 – Word of Mouth is a Competitive Advantage
‐ Only 1‐2% of marketing budgets are
‐ Canadian advertisers spend $19 billion
p $
currently spent directly on creating word of
on media ‐ $674 per adult
mouth
‐ Advertising is spent on very similar
formats: TV 30
f TV – 30 second ad
dd ‐ Marketers are just beginning to activate
Print – Full page, ½ page word of mouth variants, but still low
Web – Banner, Search ‐ Influencer programs ‐ 22% of marketers executing
‐ Buzz/Stunts 15%
Buzz/Stunts ‐
Radio – 30, 60 seconds
R di 30 60 d
‐ Branded Entertainment 14%
‐ 10% ‐ Percentage of CFOs who believe
‐ A 7% increase in positive word of mouth
marketers can assess impact of budget on
marketers can assess impact of budget on
equates to 1% business growth
sales
Sources: VSS, Agent Wildfire, London School of Economics
Source: Canadian Marketing Association, MMA

27. In today’s connected economy, grassroots
influence is key
Less than 10% of your customer base controls a
big chunk of what the rest of us buy, think and do…
why not target them?!

28. Reason #7 – Word of Mouth Targets Influence
‐ With rare e ception (i e maga ines)
With rare exception (i.e. magazines), ‐ 70% of Wikipedia’s content is prod ced
70% of Wikipedia’s content is produced
mainstream media has a tough time by 1.7% of its audience
targeting audiences and specifically
influencers ‐ Top ranked Influencer belief “I love
Top ranked Influencer belief – I love
talking to others about things I’ve just
discovered”
‐ Influencers are 2x more active, more
conversational and/or more brand‐
involved than the mainstream consumer
involved than the mainstream consumer
Sources: Agent Wildfire, Keller Fay

29. Need for ROI for marketers in a bad economy is a
mantra

30. Reason #8 – Word of Mouth is More Measurable and
Linked to Growth
‐Word of mouth activities have much
better measurement ability because of
‐ Mass media has challenges auditing its
their digital nature and opportunity to
own traffic
mine relationship with customer/member
l h h / b
‐ Mass media weight cannot be linked to
‐ The #1 factor linked to business growth
sales
is word of mouth referral
i df th f l
‐ When measured, it only measures
‐ Word of mouth measures the key
presumed eyeballs not real engagement
business drivers of engagement and
business drivers of engagement and
advocacy
Sources: Agent Wildfire, Bain

31. Trust has eroded in our institutions, a bad
economy will accelerate this contempt
…but we still trust our friends and “people like me”
but
Source: Edelman Trust Barometer

32. Reason #9 – Word of Mouth is More Trusted
⌧60% of people have a much more Word of mouth is the #1 trusted
negative view of marketing and source, up 50% vs. a generation ago
advertising than a few years ago
advertising than a few years ago
61% of people claim to buy the same
⌧27% trust manufacturers brands as their friends (+28 pts. Vs. 4
years ago)
years ago)
⌧ 14% trust ads
90% trust their spouse
⌧ 8% trust celebrities
8% trust celebrities
82% trust their friends
Sources: Yankelovich/Henley Centre Sources: Keller Fay/Yankelovich/Henley Centre

33. Who do you trust?

34. The Customer is the New Battleground
Percentage of
executives who
believe the Customer
Experience is the
new battleground
‐ 95%
Percentage that
believe they are
b li h
delivering a positive
customer experience
‐ 80%
Percentage of their
customers who agree
customers who agree
‐ 8%
Word of Mouth gets you closer to your customer
frontlines

35. Reason #10 – Word of Mouth is More Customer
Centric
Mass Media Provides: WOM Provides:
Entertainment Value
Entertainment Value
Informational Value
Information Value
Information Value
Explicit value (rewards)
Intrinsic value (feeling of belonging)
Extrinsic value (ego/reputation)
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Experiential value (immersion)
Social value (making connections)
Talent value (expressing skills/creativity)
Service value (adds to the product)
Collaborative value (1+1=3)

36. CEOs are Expecting More From their Marketers –
Marketers need to be Leaner and Keener
Word of Mouth accommodates those needs

37. Reason #11 – Word of Mouth Simply Provides More
Communication
Comm nication Communication
Advocacy
Ambassadorship
Buzz
Insight
Real world feedback
Solutions
S l ti
Innovation
Support
Operational Improvements
Operational Improvements
User Generated Content

38. Marketers want WOM for a variety or reasons
Accelerate sales 19%
Alt l 19%
Deliver visitors/traffic 17%
Hard
Referrals/Leads/Members 32%
Measure
Provide learning 6%
Drive brand loyalty 32%
Generate user generated content 19%
Get Insight /solutions 10% Awareness/Buzz 35%
Seed influencers 32%
Soft Target tough to reach audience 19%
T h h di 19%
Measure Launch a product 22%
Build a better customer experience 21%
Support a cause 6%
S t 6% Enhance credibility 14%
Participate in a conversation 26% Support a cause 6%
External
Internal
Source: Agent Wildfire Question ‐ What are the top 3 objectives for launching a word of mouth based initiative?

39. Don’t skate to where the puck is , skate to where it
is going to be

40. Reason #12 – Word of Mouth is the Now & the Future
⌧ Canadian Marketers plan on spending 58% of marketers agree that
more/less in 2009:
/l i 2009 word of mouth influence will overtake
df h i fl ill k
More Less traditional media influence within a
Newspaper 5% 32% generation
Radio
Radio 5% 33%
5% 33%
TV 4% 37% 73% of marketers believe marketers will
Magazines 3% 39% become much more important in an
Social Media 23% 16%
Social Media 23% 16% organization by leveraging word of mouth
organization by leveraging word of mouth
strategies and tactics
Source: Veritas Source: Agent Wildfire

41. A Palette of New Strategies & Tactics Await
What forms of word of mouth will experience the
hf f df h ill i h
most growth in the next few years ? (top 3 choices)
Social media marketing
S il di k ti 37%
Social network marketing 35%
Mobile marketing 34%
User‐generated Content
User generated Content 31%
Influencer marketing 28%
Brand communities 20%
Customer forums
Customer forums 17%
Branded entertainment 16%
Cause‐related marketing 14%
Brand microblogging
Brand microblogging 14%
Buzz marketing 13%
Corporate/brand blogging 11%
Source: Agent Wildfire

42. Recap – The 12 Reasons Why Word of Mouth (WOM)
is Primed for this Economy
1 ) WOM Gets Noticed
2) WOM Taps Participation Values
3) WOM Stimulates Action
4) WOM has Longevity
5) WOM has Less Cost/More Value
6) WOM is a Competitive Advantage
7) WOM Targets Influence
8) WOM is More Measurable
9) WOM is More Trusted
) d
10) WOM is More Customer Centric
11) WOM Provides More
12) WOM is the Future
12) WOM i th F t

43. …Don’t Despair

44. We plan, seed, incubate execute, measure, live and
breathe the spectrum of word of mouth
Integrated
Brand Community‐building
Advisory Panel
Influencer‐driven
Challenge/intervention
Referral‐driven
Grassroots sponsorship/cause‐driven
Offline
Experiential
Buzz/Guerrilla
Online
Social Media Production/Outreach
Social Network Production/Outreach
Viral
Affiliate/Referral ‐driven
User‐generated
User generated
Advergaming
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45. Let’s Start Your Next Brand Conversation…
Prakash Ranjan
prakash@id8labs.com
Phone: 09711990078
URL: www.id8labs.com
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