Social Media Word-of-Mouth vs. Traditional Marketing

There is a noteworthy study in the current issue of Journal of Marketing (Sept. 2009, Vol. 73, No. 5). Entitled, "Effects of Word-of-Mouth Versus Traditional Marketing: Findings from an Internet Social Networking Site," authors Trusov, Bucklin and Pauwels report the results from their research that find that word-of-mouth (WOM) marketing about online social media sites is more effective than traditional marketing actions. They also report that while the effectiveness of online word-of-mouth is higher than traditional marketing efforts initially it also grows over time.

In the long-term their research finds the elasticity of WOM is ~20 times higher than the elasticity for traditional marketing events and ~30 higher than traditional media appearances.

The impact for online marketers, of course, is that this study presents evidence that online word-of-mouth is more cost effective and less expensive than traditional marketing. Let's chock one more up to the power of social media marketing.

The authors, however, also point out that organic WOM online (that word-of-mouth that occurs naturally and without intervention) is probably different from WOM stimulated by the company or organization. They claim that the latter could be called "fertilized WOM."

Personally I hope the phrase "Fertilized Word-of-Mouth" catches on and I will do everything I can to spread it (pun intended.)

The authors did not study organic vs. fertilized WOM but we should assume that if marketers pay for word-of-mouth and are discovered that not only will their efforts be less effective than if the WOM occurred naturally but they might actually be punished for engaging in the practice.

Fertilized Word-of-Mouth. Help spread it!

Marketers adjusting plans due to recession

A new Dihedral Group (TDG) survey conducted on behalf of Aquent and the American Marketing Association shows that the current recession is fundamentally different from previous ones and reveals ways that marketers are finding pragmatic solutions to deal with the current environment in which they find themselves.

One of the main ways this recession is different from previous ones is the near ubiquitous presence of digital forms of communication due primarily to the widespread use and near total acceptance of the Internet as a valuable business communications channel when compared to previous recessions.

The study finds a few things that marketers may or may not find surprising such as:

40% of all participants in the survey are in a hiring freeze and 45% cited that year-over-year revenue has declined

Companies are relying more on their agencies to do more with less and companies are choosing to use outside marketing consultants rather than hire, train and retain in-house talent

More and more marketers are trying to better leverage social media in 2009

In general, marketing managers are looking to expand and grow their efforts in digital marketing and online initiatives as a cost savings measure rather than conduct traditional marketing events such as trade exhibits

Hiring managers are looking for marketers with specific skill sets rather than industry experience

In the study more than 68% of marketers indicated that their marketing initiatives have changed due to the current recession while almost half reported significant or very significant changes in their short-term plans. Many marketers did, thankfully, express their concern for long-term branding strategies and are being careful not to undermine them in exchange for short-term revenue capture.

Maybe professional marketers are indeed capable of learning from the past.

Here's a link to the study