NEW YORK: Brands that increase their marketing budgets can fuel word of mouth levels, with potentially beneficial effects on sales, according to a study.

Koen Pauwels, a marketing professor at Northeastern University, discussed analysis he conducted with Engagement Labs, a research firm focused on word of mouth, at the Advertising Research Foundation’s (ARF) 2018 CONSUMERxSCIENCE conference.

Alongside the finding that 19% of next week’s sales for a brand are driven by word of mouth, their research tackled the issue of whether a lift in marketing spend can yield a spike in conversations.

“The answer is ‘yes’,” Pauwels revealed. (For more details, read WARC’s in-depth report: A new metric: How word of mouth translates into sales.)

“If you double your budget … your offline conversation will, on average, increase by 33% – so, a pretty successful uptick given the effect on next week’s sales.”

That insight drew on media data from research company Market Track as well as statistics from Engagement Labs – and it revealed that this shift is even more substantial on digital channels.

“Your online conversations increase by 51%. So what happens online is more sensitive to your marketing,” Pauwels told the ARF delegates.

“Advertising can really drive online conversations … It can also drive your offline conversations, but you have to work a bit harder at it.”

Given the significance of word of mouth as a sales driver, brand custodians may be left with an important question: “Once my word of mouth goes down, am I too late to help it before my sales get affected?” Pauwels said.

And the good news, he reported, is that marketers do have the time to track conversations and refine their strategies as needed.

“Conversations’ impact starts about eight weeks before sales. It does accelerate, and, of course, it depends on the category how soon before purchase people actually talk about you,” he said.

“This is a leading performance indicator. You can actually monitor it and take action before your sales get affected.”

Sourced from WARC