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What's the Buzz on Word-of-Mouth Marketing?

January 26, 2006
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Dr. Walter Carl, a Northeastern University professor and a leading scholar in word-of-mouth communication and "buzz" marketing practices, has released a new research report, "To Tell or Not to Tell?," a first-of-its-kind examination of the practical effects of disclosure for word-of-mouth marketing agents and their conversational partners.

As companies have increasingly sought to harness the power of word-of-mouth communication by enlisting consumers to talk about brands, products and services, ethical concerns have arisen, particularly in terms of whether or not the consumers should disclose their participation in the organized program/ campaign.

To test whether or not disclosing corporate affiliation has any practical business advantages, Carl partnered with BzzAgent, Inc., a leading word-of-mouth marketing organization, to better understand the role of disclosure in everyday and campaign-related word-of-mouth communication.

His study explores how many people affiliated with the marketing organization actually disclosed their affiliation; how they did so; what information about the marketing organization they shared; and whether or not the disclosure led to differences in key outcome measures, including the credibility effect of word-of-mouth.

Key conclusions drawn in the study include:

• Participation in an organized word-of-mouth marketing program does not undermine the effectiveness of word-of-mouth communication.

• Disclosure has practical business benefits. It does not interrupt the "natural" flow of conversation.

• Word-of-mouth marketing organizations should adopt a clear policy that requires disclosure. This policy should be implemented with a combination of both education about the practical business benefits of disclosure, as well as enforcement procedures.

• Word-of-mouth marketing organizations should pay special attention to interactions with strangers and acquaintances, as these relationship types were the least likely to know about agent affiliation and also more likely to have negative feelings when they did not know about agent affiliation.

• Policies regarding disclosure should go beyond requiring agents to disclose affiliation, and should have special considerations to make clear the market-research aspect of the business model.

Key findings include:

• For approximately 75 percent of the conversational partners (the people with whom the word-of-mouth marketing agents engaged in word-of-mouth communication), it did not matter that they were talking with someone affiliated with a marketing organization. Instead, what mattered was that they trusted the agent was providing an honest opinion, felt the agent had their best interests at heart, and were providing relevant and valuable information.

• None of the key outcome metrics (credibility, inquiry, use, purchase and pass-along/relay) were negatively affected by the agent disclosing their affiliation. In fact, the pass-along/relay rate (the number of people a person told after speaking with a word-of-mouth marketing agent) actually increased when the conversational partner was aware they were talking with a participant in an organized word-of-mouth marketing program.

• In more than 75 percent of the cases where a person learned about a brand or product from another source of information (such as a print, radio, television or Web advertisement), talking with the marketing agent increased the believability of that other source of information. This finding was also unaffected by agent disclosure.

• Prior to the enforcement of the word-of-mouth marketing organization's disclosure policy (where agents were required to disclose their affiliation in episodes involving an organized word-of mouth campaign), 37 percent of the conversational partners reported they did not know of the agent's affiliation.

• About 5 percent of the conversational partners were not aware of the agent's affiliation with the marketing group.

To access the summary report visit: www.waltercarl. neu.edu/downloads/.

 

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