Agora Media Group Innovation Blog

Yesterday I read an article on McKinsey Quarterly on a new way to measure Word-of-Mouth Marketing.
The Word-of-Mouth Equity as they call it is an interesting equation to further explore. Besides the quantification of Word-of-Mouth, the overall development and importancy pointed out by McKinsey is well explained.

There are Word-of-Mouth three forms marketers need to understand: Experiential, Consequential and Intentional Word-of-Mouth.
The Experiential is the true C2C marketing, whereas Consequential and Intentional Word-of-Mouth is a B2C2C marketing, where Word-of-Mouth is being orchestrated and promoted by the company in order to trigger their target group(s) for further viral the C2C distribution.

The Experiential Word-of-Mouth is the most powerful and trusted form, because it’s a direct experience of the product/service by the person, which then is being positively or negatively recommended. If it’s positive or negative depends on the gap between the expectation and experience of the product or service.
Here the thorough understanding must be present that Experiential Word-of-Mouth is forcing a paradigm shift in brand experience, it is what your target audience think your brand is, instead of a push perceivement.

The shift from a produced influence -solely- created by the company to a prosumerist or co-creational or even customer-driven influence can be seen clear in the image below:

A couple of points stand out in the image:

* In a developing market, Word-of-Mouth is the most powerful influencer in the customer decision journey. This has the advantage that the innovators and early adopters do act as evangelists, which trigger their peers to show similar behavior. The second advantage is that Word-of-Mouth is relatively cheaper than advertising tactics, being able to achieve a better margin or lower overall costs in the introduction phases.
Extensive information is not yet available, forcing consumers to rely faster on each other.
* In the mature market, Word-of-Mouth is less influential, this has part to do with the transforming market, also because advertising in mature markets and later phases in product life cycles require lots of advertising and other still “conventional” tactics to be able to compete in the mature market. It could be well that proportionally there were much more advertising touch points with the target audiences than the consumers amongst them, creating a lower percentage which blur results.

The second image below is the equation by McKinsey which shows an interesting perspective which can be applied to understand better how Word-of-Mouth impacts the brand and the causes, be it on any kind of device or channel, which I will elaborate later on.

Because media convergence is rigidly diffusing amongst (mobile) devices, companies need to overthink tactics twice before executing them, the power of consumers is huge, the hyperconnective society is updated nearly in real-time, making the companies vulnerable when actions are not well thought.
The Volume and Impact equals the Word-of-Mouth Equity.
The Impact is determined by four aspects, Network, Sender, Message Content and Message Source.
The Volume is of importance with regard to the reach per message, but it doesn’t determine the quality of the reach. From an utopian one-on-one marketing point of perspective, the smaller the reach is, but the better the quality is, due to personalized or relevant alignment between Sender, Message and Receiver.

Why is it important to understand the impact on media convergence?
Because it offers many opportunities for companies to granulate content (in the Consequential and Intentional Word-of-Mouth) to create a most effective trigger for their consumers per touch point, per channel.
Online communities grow, vertical networks with highly specialized topics and followers do grow.
Networks become interoperable, devices become interoperable, content can be requested via mobile, laptop, TV and iPad, “small” is relative and the impact is and will be forceful.

The advent of Social TV is only going to increase the power of Word-of-Mouth Marketing to new levels, creating new opportunities and challenging companies at the same time to understand, yet another channel used by consumers.
Think of what will happen if TV widgets (Twitter, Facebook and others) will enable real-time direct communication with their network to comment on the content which is being broadcasted?
Advertising, product placements, concepts, lots will be subject to consumer influence, instantly.

I do think the Word-of-Mouth Equity is worth the try in understanding what kind of messages will impact the brand more than others.
What’s your opinion on Word-of-Mouth Marketing?
Is the equation one that you would experiment with in understanding the dynamics of Word-of-Mouth?