Thanks in part to the Internet and social networking applications like MySpace and Facebook, word-of-mouth marketing is emerging as a leading alternative marketing strategy. In fact, it’s one of the fastest growing advertising and marketing segments, according to a new study.
Spending on word-of-mouth marketing rose 35.9% to $981 million in 2006. While it is the smallest segment of the $254 billion marketing services sector of the media industry, word-of-mouth grew nearly five times faster than any other industry sector, according to the study, “Word-of-Mouth Marketing Forecast 2007-2011,” by PQ Media.
And for 2007, spending is projected to grow another 37.7% to 1.35 billion, PQ Media said.
“Brand marketers are looking for ways to break through the clutter,” said Patrick Quinn, president and CEO of research firm PQ Media. “Word-of-mouth has become one of those ways.”
Quinn is scheduled to present the findings today at the Word of Mouth Marketing Association’s Annual Summit in Las Vegas.
The study defines word-of-mouth marketing as an alternative marketing strategy supported by research and technology that encourages consumers to “dialogue” about products and services. It’s often deployed through online and offline tactics, including PR activities, promotion agencies and online communities.
The notion of word-of-mouth marketing isn’t new. It’s been around for centuries. But the high demand of traditional marketing, such as TV and print ads, are giving marketers more reason to consider word-of-mouth marketing, Quinn said.
The heaviest users of word-of-mouth marketing include food and beverage, media and entertainment marketers, the study found.
“Consumers trust recommendations from friends, family and so-called influentials far more than other forms of marketing,” Quinn said. “When consumer packaged goods companies and brand marketers are looking to target the youth market or soccer moms, they know recommendations from influential peers are important. That sets the ground for word-of-mouth marketing to be an important marketing tactic.”
For example, GlaxoSmithKline worked with Communispace to build an online community promoting its new weight loss drug, Ali, before its full-scale release of the product. Members received a six-month supply of the medicine and each logged in to the community to discuss the challenges of weight loss and factors leading to success. The company used the feedback it gained from the community to allay the fears of potential users in their marketing campaign in the summer 2007 when it rolled out the product.
Spending on word-of-mouth marketing is projected to grow better than 30% over the next five years, PQ Media predicts.
PQ Media’s findings are based on data collection and analytic approaches using its proprietary econometric methodology, called Medianomics.
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