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Brands Spending More Than Ever on Word-of-Mouth Marketing

Brands Spending More Than Ever on Word-of-Mouth Marketing

word-of-mouth-marketing-reportThere is no doubt that word-of-mouth marketing on the social web can have a significant effect on a brand.  That effect has not gone unnoticed and according to a new report from PQ Media with the Word of Mouth Marketing Association (WOMMA), brand spending on word of mouth marketing in 2008 grew by 14.2% to $1.54 billion.  The growth is expected to slow to 10.2% in 2009, but that’s still a strong double-digit growth rate.  Clearly, word of mouth marketing is taking a chunk out of some other traditional marketing tactics.

It’s important to understand that word of mouth marketing spending still only comprises a small fraction of overall brand marketing spending, but it also represents a shift in marketing investments that is not likely to stop growing anytime soon.  Connecting with consumers on websites like Facebook, YouTube and Twitter is the low hanging fruit that every brand manager wants to pick but still hasn’t found the way to detach from the branch.  That makes the shift in marketing investment from traditional tactics to online word of mouth marketing a scary one, and that’s a risk that many executives still aren’t prepared to make.  It’s a shame really.  The opportunities are so great.

With the growing importance of word of mouth marketing, consultants are reaping the rewards.  In fact, PQ Media reports that the word of mouth business grew by 18.7% in 2008 to $197 million.  There are even awards and recognition for word of mouth marketing campaigns like the WOMMY Awards.

Interest in word of mouth marketing is coming from all sides these days.  It’s not surprising.  Consumers are tired of being spoken at and want to be spoken to.  With the economic client failing them, they have lost trust in brands and look to people they know more so than ads and traditional marketing tactics to get information and make purchase decisions.  The only question brand managers and executives should be asking themselves is how much can we invest in word of mouth marketing this year?  If they’re still wondering if they should invest in word of mouth marketing at all, then they’re in trouble.

Your thoughts?

Image: PQ Media

A Tale of Two Booksellers

It’s no secret that Borders has been struggling.  Top competitor Barnes & Noble has been a bit savvier (for example, selling off its mall-based stores sooner rather than too late), so it’s in relatively better shape.

But the reality is–traditional bookselling has been hit hard by a variety of economic and cultural factors, and the whole business model is in the midst of a huge, painful, and irreversible shift.  The market for CDs and DVDs, formerly a staple at both chains, is declining rapidly; downloadable books a la Kindle are on the ascendency; and the old, centralized publishing industry is rapidly being overtaken by a diffuse, diverse assortment of alternative publishing strategies.

So what’s the good news?  Not much yet.  But necessity is indeed mothering up some invention in the book world, and that’s a good reason to take a look at the Career sites of the two largest booksellers in America.

It’s fair to say there is no comparison.  B&N is bookish and buttoned up, while Borders is salsa-dancing hot.  Seriously.

b-n1borders2

Unfortunately, I  couldn’t find out when this design was implemented at Borders, so there’s no way of relating it to their overall business situation or marketing approach.  However, last year Borders took back its online operations from Amazon (after 17 years), and the Careers area may have been updated when the retail site was built.

Also unfortunately–there’s no way of knowing whether Borders gets better/more applicants through its site than B&N.  But for what it’s worth, they’ve done the right things at a fundamental level:  highlighting special opportunities (front-page AARP feature) and culture (front-page diversity feature); offering substantive information on benefits, as well as detailed position descriptions; and providing a seamless search-and-apply process.  (Barnes & Nobles does not have online search and application–listings are outsourced to HotJobs.)

No bells and whistles–videos, Flash, etc., at the Borders site.  A nice look and feel, though, suitable for a book business trying to reinvent itself in the digital age.  I had the impression that job-seekers are being invited along for an interesting adventure.

On the other hand, I definitely prefer the design of the customer-facing pages at Barnes & Noble over Borders.  So one wonders:  Is B&N behind the Careers curve because of complacency?  Do they have something new in the works?  Or . . . ?

To end on a high note, here’s a book-related reward for reading all the way to the end of the post!  A link to Librarians Gone Wild.  Yes, it’s highlights of the Golden Book Cart Drill Championships–and if you need further enticement, I’ll just mention that there are swords involved.


Private Label Brands Show Impressive Growth

equateAccording to a U.S. study by Mintel, private label food product introductions in 2009 made up 25% of all food product launches.  In 2005, they only comprised 13% of all food product introductions on retail shelves.

In 2008, private label food sales grew by 9.3% versus 4.5% for branded food product sales.  Mintel reports that private label food sales are expected to grow another 8.1% in 2009.  Should branded food products be worried?  Is this a trend that could (or already is) spilling over into other categories?

Certainly, the recession drove some of the shift from branded to private label food products among U.S. consumers.  The question is whether or not consumers will be satisfied enough with private label brands to stay loyal to them when the economy recovers.

The other factor to consider is the amount of information consumers have access to in the 21st century.  There is less risk associated with purchasing a private label brand for the first time because consumers have learned that often the difference between private label and branded products is negligible or doesn’t exist at all.  For branded products that are competing directly with private label for the same consumer dollars and retail shelf space, this is a problem area.  Suddenly, branded products must find ways to differentiate themselves as truly better than private label products or as offering a distinctly superior value than similar private label products.  It’s a competitive factor that most branded product managers could ignore ten years ago.  Branded products still held a perception of superiority in quality a decade ago.  That perception has all but disappeared in 2009.

A third factor to consider is the variety of private label products that are available in the 21st century.  As CSNews.com explains, private label products are being introduced as more than just copycats of existing branded products.  Today, consumers can find a wide variety of private label products to choose from that often meet perceived needs that branded products don’t cater to.

Finally, private label products today are not quite as “private” as they once were.  Brands like Sam’s Club and Equate are accepted as viable competitors to consumer brands that have been around for generations.  A private label brand that has a direct association with a well-known brand (e.g., Walmart or Target) can offer the same sense of trust and security to consumers making purchase decisions without the advertising dollars backing them.  It’s an interesting challenge for branded products, and it’s one they’ve never really faced before.

When the recession fades, will consumers remain loyal to private label products?  My guess is yes.  What’s your prediction?

Image: Flickr

Is Being Green an Option for Brands?

packaging_wasteA recent study by RSR Research analyzed the strategies companies are employing for brands in terms of ensuring those brands are eco-friendly, but I wonder not what brands are doing but whether or not being green is even an option for brands anymore.  Or is it a strategic imperative?  My vote is for strategic imperative.

In other words, green strategies should be at the core of product development and positioning strategies.  It shouldn’t just be an ancillary element or tactic of differentiation.  It should be a key component to the brand’s overall promise.

I think of toy brands and consider all the wasted plastic and materials used in the packaging of toys (I have triplets who just turned 5-years old, so I see a lot of toy packaging but there are many examples — check out the wasteful packaging in the image above), which so clearly demonstrates the need for “green” to be at the heart of brand and product development.

There is that old saying, “waste not, want not”, which is very appropriate here.  The same thing applies to being a green brand.  Many consumers simply expect companies and brands to be making an effort to be environmentally-friendly.  If brands are deemed to be wasteful and environmentally harmful, it’s likely that a certain amount of consumers will lose trust in those brands.  They may even move on from those brands to find replacements that do meet their expectations for brands and companies to live up to their environmental responsibilities.

Sure, the abandonment rate might not be that high today, but what about in 5-years?  10-years?  Will “green” still be the cool thing, or will it be the essential thing for brand survival.  While I don’t think I’d go so far as to say it will be the only thing that matters to consumers when they make brand choices, I do think it will have a greater impact than it does today.  Bottom-line, green is no longer an option.  It’s a must.

Your thoughts?

Image: Packaging Waste via Flickr

Toyota Scion Unleashes Brand Manifesto

scion-toyotaIf you’re releasing something called a “brand manifesto”, then it better be good.  It better be unique, incredible, and downright jaw-dropping.  Last week, Toyota’s Scion brand released what it refers to as its own brand manifesto.  Unfortunately, it’s neither unique nor incredible, and it’s definitely not jaw-dropping. Instead, the Scion brand manifesto delivers a message that brands targeting young consumers rely on all the time – “we’re cool and we don’t conform.”

I’m not saying the new Scion ads using the messages of the brand manifesto aren’t good.  I’m sure they’ll appeal to some of Scion’s target audience.  All I’m saying is not to declare “brand manifesto” when it’s really just a new ad campaign.  If you’re going to go so far as to brand your brand message, then dare to be different just like the Scion brand manifesto claims but doesn’t deliver on.  It’s a missed opportunity that leaves the audience feeling let down, which is never a good thing.

The lesson to learn is this — don’t set consumer expectations that you can’t live up to.  A brand manifesto is something I’d expect to see from a revitalization attempt by a company like Microsoft, not Toyota.  I didn’t know Toyota was that desperate yet.  In other words, don’t exaggerate and don’t try to make your brand be more than what it really is.  I’m sure the Scion target audience of the youngest car buyers aren’t impressed by the announcement of a Scion brand manifesto.

I will give Scion props for including an online element to the campaign, although that effort leaves much to be desired considering the target audience.  For example, consumers could visit ScionReveal.com where they could reveal 10-pixels of a 1-million pixel image each day until they saw the complete photo of the Scion up for grabs in a sweepstakes.  Or they could visit a second site where, according to Brandweek, they could “turn their own manifestos into videos.”

What do you think?  Is the $18 million investment by Scion in media in 2008 and the $7 million invested through May 2009 working?  What would you do differently?  Leave a comment and help get the conversation going here on Corporate Eye.

Image: Flickr

The Scary Thing about Social Media

scary-faces

CIOZone just published a smart article by Michael Neubarth called Social Media:  How We Got Here, Where We’re Going.  It’s fairly long, and worth reading, so I won’t try to summarize all the content-which includes a backward look at a decade of predictions about the fate of mass marketing.

I just want to focus on this statement:  “Like the fall of the Berlin Wall, many observers say we are witnessing the collapse of the command-and-control power of corporate mass marketing.”

That’s a much bigger message than “you can’t afford to ignore Twitter.”  That’s the end of the world as we know it.

And fall of the wall requires a huge adjustment in strategy, not just some revision of tactics.  The story goes on to quote Tim Walker’s piece Social media: Control without command (on Hoover’s Business Insight Zone):

What’s required on the part of companies is to let go of the fantasy of command: You will not “command” the airwaves. You will not “command” the conversations around your offerings in the marketplace. Also, you will not “command” your employees, who can access all sorts of scary hiring-market information via LinkedIn and Jobster and Monster and Craigslist and the rest.

I added the italics, to focus attention on the effects this shift will have-and is having-on HR.  Just take it one step further, adding the caution that “you will not ‘command’ your candidates.”  The best prospects are already looking for something much more than one-way messaging and a one-size-fits-all application process.

Neubarth’s article is blunt about the stiff mental challenge this evolution presents for many corporations and executives.  Walker’s suggestion:

The antidote for this loss of command: just get over it. Historical and technological forces are against you, and those corporations and executives who insist on retaining command are destined to failure.

But you can exert a modicum of control. You can shape a conversation. You can rebut erroneous information about your company or your product. You can harness transparency so that it works for you. You can grow into the language of the social media so that you fall naturally into the mode of persuasion-and-recruitment rather than command-and-control.

Elsewhere in Neubarth’s article, there’s a discussion of Seth Godin’s concept of the “meatball sundae” (check out this podcast introduction), in which companies try to dress up old attitudes and ideas (the meatball) with some whipped cream and sprinkles.  Not an appetizing thought–even if the meatball might be tasty in itself!

Relevant question:   Has your company’s online recruiting strategy really shifted away from old models?  Or is it just dressed up with some creamy videos and a sprinkle of tweets?


(Thanks to Chris Breeze for the Very Scary Faces.)