I was lucky enough to meet Ted Wright, founding partner of Fizz Word of Mouth Marketing, last night in my Integrated Brand Communications class. He was charming, funny, and had incredible word of mouth marketing tips drawn from a decade of experience declaring that broadcast advertising is dead and word of mouth is the new way to go.

Ted’s experience includes creating 8% growth per year for Pabst Blue Ribbon (as the rest of the category declines by 5%) and launching the insanely popular Crocs brand. He claims that a word of mouth marketing strategy can produce 8 times the profits that an advertising strategy produces.

I’m a huge fan of word of mouth marketing, so much so that I when I wrote my book (Social Pollination, December 2009) I wrote quite a bit about how companies should do word of mouth marketing online. I’m publishing all my notes from the talk for those people who want to better understand how word of mouth marketing happens. Please note that all of this information came from my interpretation of what Ted answered in response to questions from about 30 MBA students.

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Why is broadcast dead?

People in the US are blind to advertising. We are hit with thousands of advertisements every day, almost all of which we block out. There is no ROI for advertising. It’s wasted dollars. Anytime a company tries to interrupt or intercept a consumer, it loses.

If broadcast is dead, why do companies still do it?

Two reasons –

  • Fear – it’s hard to cut a budget when others in the company attribute sales to advertising
  • Inertia – Advertising worked in the ’90s so it still works. This is true in places like India and China who have only recently been introduced to heavy advertising through broadcast, but not in mature media markets like the US.

How do companies generate organic word of mouth?

By telling good stories that influentials feel are worth sharing.

Who are influentials?

Only one person out of 10 is a true influential. Influentials have three traits:

  • They try things just because they are new
  • They tell stories to friends
  • They get intrinsic value from sharing their stories

Note #1: Influentials are not people who like free stuff simply because it’s free! True influentials are happy to buy the things they are interested in.

Note #2: Bloggers are not necessarily influentials and influentials are not necessarily bloggers, though many influentials use blogs as an outlet for sharing.

Note #3: Influentials self-identify, because they are proactive about finding new things and sharing stories with their friends.

What types of stories get shared?

Anything that gets passed along organically about a brand has to be interesting, relevant, and authentic. Without each of these three elements, your brand story is dead.

  • Interesting – something unique, that no one in the industry or brand category has ever done before.
  • Relevant – the audience has to care. The example given was if you don’t have kids you don’t care if I tell you about the best baby wipes on the planet.
  • Authentic – pretty self-explanatory. You can’t pay people, bribe people, or even ask people to share the story – they have to do it because they want to, on their own timelines.

Why does word of mouth marketing work?

  • 76% of Americans talk about at least one brand a day, and the average is 10 brands a day (TalkTrack, Keller Fay Group, 2008)
  • 15% of conversations in the US include something about a product or service (Northeastern University)
  • The average person has 112 conversations a day, with 56 of those conversations including brands – that’s 50%
  • For influentials, the numbers are higher – 177 conversations with 116 about brands – 65.5%

How does social media work with word of mouth?

10% of word of mouth happens on the internet. This is substantial market share, so having an online presence matters. However, “Twitter is not a different animal, it’s a faster animal.”

71% of word of mouth happens face-to-face, so even with an internet presence, companies still must find a way to facilitate face-to-face conversation.

Monica’s Note: This does NOT mean that only 10% of WOM about your company is generated BY the internet. Someone can see what your company is doing online and talk about it in regular conversation, and vice-versa.

What about negative word of mouth?

People will share a negative story 7 times and a positive story 21 times. So if you are focusing on a sharing strategy, the positive will far outweigh the negative.

Plus, research shows that true influentials get no intrinsic value in sharing negative stories. Tim also points out, “Even if there is no online, you can’t control the message.” So essentially, don’t worry about it!

When does advertising work?

Advertising comes AFTER a good experience, when you already have strong word of mouth. Then, the influentials who see the advertisement are prompted to tell the story AGAIN, generating more word of mouth.

Brand stories have a shelf life of about 6-7 months, at which point you must create a new story to talk about.

Ted also shared the four-step process his company uses to create word of mouth:

  1. Focus – create the a story that meets the IRA criteria, and test using WGAF (Who gives a F*ck?)
  2. Design – create opportunities for the brand to interact with its true fans (the influentials) and if needed, create opportunities for the influentials to tell their friends
  3. Delivery – sticking to your mission, and not letting anyone steer you off your message
  4. Report – WOM works slower than advertising because it spreads organically, so show momentum before the cash starts coming in

How can I get my company to buy into this idea?

Start with one market and prove that the results are better than advertising. Keep adding markets at the company’s comfort level. Cities to target include New York, LA, Dallas, Chicago, Atlanta, San Francisco, and Miami.

Good reporting is also essential for this. At one point, Fizz used epidemiologists (people who study viruses) to map out where word-of-mouth about a brand started.

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So, what do you think of word of mouth marketing? Should companies “go dark” (cut out all advertising) and focus on a word of mouth campaign? What other questions do you have about word of mouth marketing?

24 thoughts on “Word of Mouth Marketing Tips from Fizz

  1. Great article…I think getting insights from people who specialize in WOM marketing is really useful because they spend so much time quantifying something that seems 'natural' or 'organic'.

    I had never thought about the fact that 'influentials' self-identify…but they definitely do. They have no real doubts about their role in that space, and typically there's really no arrogance about that self-realization. No competitive edge…it's just a fact, and it's fueled by instinctual behavior.

    Although, I can only imagine who'd show up to a party for Influentials, were someone to put out a public invitation:)

  2. DShan,

    The idea about using epidemiologists to track WOM was killer. Tim actually had a ton of great facts (way more than I presented here) about why WOM works. I might see if he can send me some slides.

    About the influentials: After the presentation I was left with a question, “Am I really an influential?” I think that's something all bloggers should think about. I also wonder how companies would feel about paid product reviews or even free samples. I know when I read someone's review over something they received for free, I don't put much stock in it. But if someone actually bought something and then talked about it online? I am definitely listening.

    To your point about arrogance, I think influentials can't be arrogant because they truly just want to find amazing stuff and share it with others. It's hard for me to quantify that intrinsic value – is the value an ego boost or having your opinion valued by others?

    Thanks for the comment!

  3. Wow, “76% of Americans talk about at least one brand a day.”

    What a staggering statistic. In a sense we are all influentials if we're talking about brands that much. Our networks that we are communicating to are just smaller. Should we encourage the “little guys” to expand their networks, by making a blog, setting up a Twitter, etc? Do we need more true influentials?

  4. Jennie,

    I'm still a little confused about Tim's stats on influentials. One of the distinctions he made was that people are influentials in specific areas. For example, you could be a HUGE fan of the Smashing Pumpkins and that would make you a great vessel for the band's “brand message.” But if you aren't a fan of Garrett's Popcorn, you can't be a influential for the brand.

    To answer your question, I don't think you can “create” influentials, only find them. I also don't think it matters whether the conversation is online or offline – I think the point about how online is simply faster and more traceable is pretty important.

    Just my thoughts. Thanks for the comment!

  5. Good insights, but I feel that the claim about advertising being already dead is wrong. Even in “mature markets” there must be at least niches where it still works, since advertising does produce a VERY visible difference where I work (but not all kinds of advertising work equally).

  6. Tim mentioned very few niche industries. He was mostly saying broadcast is dead (as in commercials). He implied that in industries where it was hard for people to share (like Viagra) that advertising can work really well since there's shock value and shock advertising is about the only thing that still breaks through in a mature media market.

    I'm guessing the reason advertising that is highly niche works still is because it's interesting and relevant to the people in that niche, and because the authenticity is somehow there – ie: the advertising is bolstered by a great reputation and heavy WOM within the niche. Given your experience, what do you think?

  7. Not sure if I'd say broadcast advertising is “dead” necessarily, but more that it's at its best when used in conjunction with word of mouth techniques.

    The statistic about 71% taking place face to face is one that stuck out. It's easy to get caught up in WOM taking place in social media, but the secret is being able to use social to drive WOM away from the computer in the other areas of the consumer's life.

    Thanks for sharing your notes!

  8. Jackie,

    71% was a shocker for me too. But it actually reaffirmed something I told one of my clients. He's always like “Social media doesn't work for us boo hoooo” and I told him it's because the company can't generate WOM offline either.

    Something companies should think about – it's not that social media “doesn't work,” it might be that you have to go back and make your product more interesting, relevant, and authentic to compete in a mature media market. Especially if your product is heavily content or software-based, where the yummy goodness and virality really has to be baked in.

    Thanks for the comment!

  9. This is a good refresher on the finer points of word of mouth advertising… I think I will go tell some people about it 🙂

  10. This is timely. I'm just now editing a bunch of interviews with women about bad haircuts…I think there is a marketing correlation and I think it's interesting that not one of the women interviewed ever complained about the bad haircut, but instead told between 12-20 friends. Some wrote negative review on YELP which they considered “public service” to prevent others from suffering the same fate. But the service provider is clueless that they have an unhappy client. One because they never follow-up and ask, and two, because women avoid conflict. Consider this, though: The effect of negative word of mouth is twice as high as the effect of positive word of mouth for consumers influenced by word of mouth. We find these effects after controlling for unobserved heterogeneity, marketing activity, distance to retail and demographics. Source: SSRN

    Thanks for prompting such an interesting discussion.

  11. I'm interested in impact of negative vs. positive WOM. Am currently editing a series of interviews with women about bad haircuts. I think there's a marketing correlation and lesson. None of the women ever went back and told their hairdresser they were disappointed. But they did complain loudly to at least 12-25 friends. In addition, about half posted bad review on YELP. Consider this: The effect of negative word of mouth is twice as high as the effect of positive word of mouth for consumers influenced by word of mouth. We find these effects after controlling for unobserved heterogeneity, marketing activity, distance to retail and demographics. Source: SSRN

    Yet the service provider has no idea they have an unhappy customer. Because they NEVER follow up or ask. And that could actually make all the difference in turning a negative review to a positive one. And that's a lesson many brands need to learn.

  12. Shouldn't we generalize this a bit more than saying “women” avoid conflict? I feel that this is much more general, as in most people seem to want to avoid conflict. Or perhaps it's cultural? As in culturally speaking the Chinese (irrespective or whether you are a woman) also tend to avoid conflict?

  13. Hi everyone –

    Ted Wright here. I wanted to start off by thanking Monica for a world-class summary of the whys and hows of WOMM. I'd be lucky to work with Monica one day.

    Great conversation through out. I thought I'd chime in on two points.

    @Ashish Treat B2B just as you would B2C when it comes to WOMM. People who buy enterprise wide goods and services whether we are talking about paperclips or software systems are just as influenced by the Influencers in their field as they would be in their hobbies or other interests. Put another way, everyone is always looking for the shortest root to the best answer. One trusted and knowledgeable source sharing info with someone they know is very powerful and this power does not diminish by the size of the purchase or a B2B vs. B2C distinction.

    As for the @marydean comment about the efficacy of negative and positive WOMM, those data points are different than the way that I would have answered that question but I don’t have the data at my finger tips to support either way so I am going to reach out to Brad Fay who is the world's foremost expert on this question and I will post back his results.

    Thanks again everyone for such a robust conversation. I look forward to more in the future.

    Ted
    ted@fizzcorp.com
    twitter: fizz_womm

  14. Although I am a big supporter of WOM and subscribe to the church of the community. I do disagree that traditional advertising does not work. It all depends on your end goal. Where traditional broadcast works is in the area of awareness. Will broadcast move product off the shelf? Maybe not, but it will generate awareness of the product.

  15. The goal of Marketing is to “sell more stuff to more people, more often for more money” (from Sergio Zyman). Marketing ignoring the goals above is both inane and morally bankrupt.

  16. It seems like they would have to know they did a bad job, they just wouldn't know exactly what went wrong.

    Unless they went to Yelp and read the reviews – that would probably tip them off.

    I think the biggest mistake these small businesses are making is that they don't actively ask customers for a *good* review on Yelp when these customers express satisfaction in person. There should be a process where you find a way for people who love your service to talk about it on a public forum. If you are still in business, you probably have more people that like you than hate you, so this should combat the negative word of mouth influence you talk about.

    Thanks for the comment!

  17. I think people tune out commercials, to be honest, so I don't think this is necessarily true anymore (that traditional advertising generates brand awareness).

    The second part to this is, *if* the advertising did generate brand awareness, is it targeted? Is it memorable? Is there a follow-up, or is the brand hoping for a serendipitous meeting of customer and opportunity to purchase?

    My third question is – if all of these things are actually in place (a miracle IMO), why would someone need to use traditional advertising in the first place? At this time, most non-traditional forms of advertising are far cheaper because there are free tools to target consumers. The cost to reach a targeted consumer is much less.

    So I think traditional advertising can work for brand awareness in very rare cases – for example, that awesome Heineken commercial with the women screaming over the walk-in closet and the men screaming over the walk-in refrigerator. Though a) I still don't buy Heineken beer and b) it did take me at least 3 or 4 times of seeing the commercial to even remember which brand had actually produced it – and I'm in marketing for a living!

  18. I agree with you to a point. Being in advertising I also disagree to a point. Your point of fear and inertia are true. There are many people who continue doing advertising because they are scared not to, and there are many people who do advertising because it worked in the 90's…but I think the main reason why broadcast is “dead” is not necessarily because it doesn't work, but because those same people who were products of advertising in the 90's are controlling the dollars now and trying to do the same message they did in the 90's.

    Those same car spots where you have guys yelling about the best deal…yada yada bs.

    Another reason it doesn't work is because people are choosing wrong mediums. I don't know anyone who has cable that doesn't have DVR…therefore, TV advertising is a waste – unless you have a good $1.5 million or more for one super bowl commercial. Even those have been lame lately.

    Please do not think however, that I am disagreeing with word of mouth. I do not at all, I agree with you in the aspect that first a company needs to create genuine and authentic responses to their product (not paid actors). Then, on the right medium…like radio…share that response. All radio is, is word of mouth on steroids. I am in radio, so of course I lean that way…but I'm 26 and controlling my destiny so I CHOOSE to be in a medium that I believe really works.

    One frustration I do have, is when the “older generations” buck what input we do have. For instance, I proposed my station signing up and selling station tweets. My old school programming director decided that our 250 followers and start we have on facebook was a better use of our time! For god sakes, listen people! We aren't dumb asses! We have a voice, we have 1.1 million people listening and we only have 250 followers on facebook!! Anyways…thats a rant for another day.

  19. I agree with you to a point. Being in advertising I also disagree to a point. Your point of fear and inertia are true. There are many people who continue doing advertising because they are scared not to, and there are many people who do advertising because it worked in the 90's…but I think the main reason why broadcast is “dead” is not necessarily because it doesn't work, but because those same people who were products of advertising in the 90's are controlling the dollars now and trying to do the same message they did in the 90's.

    Those same car spots where you have guys yelling about the best deal…yada yada bs.

    Another reason it doesn't work is because people are choosing wrong mediums. I don't know anyone who has cable that doesn't have DVR…therefore, TV advertising is a waste – unless you have a good $1.5 million or more for one super bowl commercial. Even those have been lame lately.

    Please do not think however, that I am disagreeing with word of mouth. I do not at all, I agree with you in the aspect that first a company needs to create genuine and authentic responses to their product (not paid actors). Then, on the right medium…like radio…share that response. All radio is, is word of mouth on steroids. I am in radio, so of course I lean that way…but I'm 26 and controlling my destiny so I CHOOSE to be in a medium that I believe really works.

    One frustration I do have, is when the “older generations” buck what input we do have. For instance, I proposed my station signing up and selling station tweets. My old school programming director decided that our 250 followers and start we have on facebook was a better use of our time! For god sakes, listen people! We aren't dumb asses! We have a voice, we have 1.1 million people listening and we only have 250 followers on facebook!! Anyways…thats a rant for another day.

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