CHICAGO: Two thirds of marketers believe that word-of-mouth marketing is more effective than "traditional" marketing but they struggle to measure it effectively and to show ROI a new survey has said.
The Word of Mouth Marketing Association (WOMMA) and the American Marketing Association (AMA) collaborated on a survey of 328 corporate marketing professionals to assess the state of the word-of-mouth marketing industry, both online and offline.
The biggest issue facing the sector, it said, and one that may hamper its growth, is measurement. Fully 89% of marketers stated they had problems calculating offline WOM, while 79% said the same thing about online social.
And those difficulties contributed to another factor that is holding the sector back: 85% of respondents said they couldn't prove the return on investment of WOM marketing.
Consequently WOM was not a major budget item in most companies' marketing plans, coming well down the pecking order behind customer service (54%), email marketing (40%), customer relationship management (39%) and digital advertising (36%).
On 21%, it was, however, ahead of television (12%). This was, WOMMA said, because TV spending was concentrated among the very largest companies.
And it noted that when the data was broken down between smaller and larger companies (larger being those with 1,000 employees or more), smaller companies showed a greater financial commitment to WOM.
Some 29% of smaller companies described social media marketing as a "major" category, compared to 20% of larger companies. The equivalent figures for offline WOM were 23% vs 17%.
Despite the reservations about measurement, 70% of marketers were intending to increase spending on social media, more than any other marketing channel. Most expected spending on offline WOM to remain stable.
Larger companies were more likely planning to doing this than smaller ones (74% vs 67%), but that situation was reversed when it came to offline WOM, which 32% of smaller businesses described as a growing budget area, compared to 23% of large firms.
WOM marketing was used primarily to increase brand awareness, with 82% of respondents identifying this as a "major" objective. And more than two thirds also expected it to increase brand equity (73%), create consumer engagement (69%) and drive recommendations (65%).
Data sourced from WOMMA; additional content by Warc staff