WOM drives $6tr spending

19 November 2014

HOLLYWOOD, CA: Word of mouth, both online and offline, is responsible for driving $6tr of consumer spending every year, new research has shown.

The Return on Word of Mouth study was organised by the Word of Mouth Marketing Association (WOMMA) and based on econometric modelling of sales and marketing data provided by participating brands – including AT&T, Discovery Communications, Intuit, PepsiCo, and Weight Watchers. This found that online and offline consumer conversations and recommendations accounted for 13% of consumer sales.

And despite digital making inroads into most aspects of people's lives, off line word of mouth remained more important, driving two thirds of these sales compared to online's one third.

"Intuitively, we know that a consumer recommendation is going to be a powerful contributor to brand sales, but this is the first time a rigorous study has quantified that impact across a range of product and service categories," said WOMMA President Suzanne Fanning.

"We hope this research will lead marketers to elevate the role of word of mouth, both online and offline, in their marketing plans," she added.

Happily for the world of advertising, word of mouth was also found to amplify the effects of paid media by 15% as consumers spread advertised messages. But most of the time WOM worked separately from these, based around such things as product or customer service experiences, public relations, owned and earned digital content and referral marketing.

Researchers also established that an offline word-of-mouth impression drove at least five times more sales than a paid advertising impression, and as much as 100 times more for higher-consideration categories.

And the impact of such recommendations typically happened much closer to the time of purchase than traditional media, often within two weeks.

"Word of mouth is an area that begs for more deliberate decisioning and planning from marketers, as it works hand-in-glove with paid media," said Nancy Smith, president of Analytic Partners, one of the research consultants on the project.

Her colleague Alice K. Sylvester of Sequent Partners, added that world of mouth could be "incorporated into marketers' econometric models and managed with the same level of knowledge as advertising and promotion".

Data sourced from WOMMA, PR Newswire; additional content by Warc staff