New Research: Measuring the Precise Return on Word of Mouth Marketing

womma research

Earlier this year, the word of mouth marketing association (WOMMA) released new research that measures the precise return on word of mouth (WOM) marketing.

The research is based on detailed data compiled over a period of 2-3 years by a number of research partners including Analytic partners, Sequent partners, The Kellar Fay Group and Converseon.

This is the first independent study to quantify the impact of WOM across multiple categories using market mix modeling.

Key Findings

1. WOM drives a significant portion of sales across categories

Historically, the correlation between word of mouth and sales has always been a known fact – it has just been difficult to measure using traditional ATL metrics. We all know that a recommendation from a friend packs a serious punch, and we’ve all purchased a product or service based on just that. But how do we get specific in terms of how many sales come off the back of a word of mouth recommendation?

This new research has shown that across multiple categories (telecom, personal care, software, TV programming, FMCG), WOM is responsible for on average 13% of sales.

WOM drives sales

 

2. WOM impact channel comparison

Unsurprisingly, according to the research, a WOM impression has much more impact than a paid media impression. Dig deeper and it was found that an offline WOM impression drives at least 5 times more sales than a paid advertising impression and much more (as much as 200 times more) for higher-consideration categories.

This isn’t a surprise, it’s obvious that a personal recommendation form someone you know and trust is going to drive more sales than a piece of advertising that is clearly trying to sell you something. It is though interesting to get a solid metric that demonstrates how much more impact WOM has over other channels.

3. Offline Vs Online WOM

Offline conversations were measured by 3000 respondents who reported their daily conversations and the positive / negative sentiment of each conversation. Meanwhile, hundreds of millions of social sites (blogs, forums, boards, Facebook, twitter etc) were scraped for online conversations.

The research showed that two-thirds of WOM’s impact is from offline WOM, with just one-third coming from online (this is not an unusual finding from research agency Kellar Fay, who have been advocating this opinion for the last decade).

4. WOM plays a direct & indirect role

When it comes to business performance, the research found that WOM plays both a direct and indirect role. It’s interesting to note the amplification effect that WOM has on online & offline media, which then impacts business performance. Plus, it was noted that WOM also drives search and website traffic.

Furthermore it was found that two thirds of WOM’s impact is direct with one third acting as an amplifier of paid media. When you look a little closer, WOM was found to amplify the effect of paid media by 15%.

This highlights an opportunity to utilize advocacy & influencer programs to not only promote brands or products directly but to also leverage paid media campaigns.

5. The immediate impact of WOM

Interestingly, the research shows that WOM has a more immediate impact than traditional media. Approximately 90% of online WOM’s impact is in the first two weeks and approx 73% for offline WOM. Compared to TV, with only 30-60% impact, this demonstrates the immediate nature of conversations & recommendations.

You can download the research in full here>> http://www.womma.org/ReturnOnWOM

Access more research on WOM here>>:

2014 Influencer Research Proves Influencers Drive Purchases

Recommendations Have More Impact than Brand

McKinseys & Wharton University WOM Reserach (2010)

Zoe Boalch

About Zoe Boalch

Zoë Boalch is co-founder of Contagious Agency. Zoë likes: hot chili, yoga, learning new stuff, positive people, taking risks Zoë dislikes: naysayers, grumpy people, rather large egos
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