Word-of-mouth marketing (WOMM), also called word of mouth advertising, is an unpaid form of promotion—oral or written—in which satisfied customers tell other people how much they like a business, product, service, or event. Word-of-mouth is one of the most credible forms of advertising because people who don’t stand to gain personally by promoting something put their reputations on the line every time they make a recommendation.
History
George Silverman, a mathematician and statistician, pioneered word-of-mouth marketing when he created what he called “teleconferenced peer influence groups” in order to engage physicians in dialogue about new pharmaceutical products. Silverman noticed an interesting phenomenon while conducting focus groups with physicians in the early 1970s. “One or two physicians who were having good experiences with a drug would sway an entire group of skeptics. They would even sway a dissatisfied group of ex-prescribers who had had negative experiences!”
With the emergence of Web 2.0, many web start-ups like Facebook, YouTube, MySpace, and Digg have used buzz marketing by merging it with the social networks that they have developed. With the increasing use of the Internet as a research and communications platform, word of mouth has become an even more powerful and useful resource for consumers and marketers.
In October 2005, the advertising watchdog group Commercial Alert petitioned the United States FTC to issue guidelines requiring paid word-of-mouth marketers to disclose their relationship and related compensation with the company whose product they are marketing. The United States FTC stated that it would investigate situations in which the relationship between the word-of-mouth marketer of a product and the seller is not revealed and could influence the endorsement. The FTC stated that it would pursue violators on a case-by-case basis. Consequences for violators may include cease-and-desist orders, fines or civil penalties.
Research firm PQ Media estimated that in 2008, companies spent $1.54 billion on word-of-mouth marketing. While spending on traditional advertising channels was slowing, spending on word-of-mouth marketing grew 14.2 percent in 2008, 30 percent of that for food and drink brands.
Concepts
Buzz
Marketing buzz or simply “buzz” is a term used in word-of-mouth marketing—the interaction of consumers and users of a product or service serve to amplify the original marketing message. Some describe buzz as a form of hype among consumers, a vague but positive association, excitement, or anticipation about a product or service. Positive “buzz” is often a goal of viral marketing, public relations, and of advertising on Web 2.0 media. The term refers both to the execution of the marketing technique, and the resulting goodwill that is created. Examples of products with strong marketing buzz upon introduction were Harry Potter, the Volkswagen New Beetle, Pokémon, Beanie Babies, and the Blair Witch Project.
Viral effects
Viral marketing and viral advertising are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of virus or computer viruses. It can be word-of-mouth delivered or enhanced by the network effects of the Internet. Viral promotions may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, or even text messages. The goal of marketers interested in creating successful viral marketing programs is to identify individuals with high Social Networking Potential (SNP) — and have a high probability of being taken by another competitor — and create viral messages that appeal to this segment of the population. The term “viral marketing” has also been used pejoratively to refer to stealth marketing campaigns—the unscrupulous use of astroturfing on-line combined with undermarket advertising in shopping centers to create the impression of spontaneous word-of-mouth enthusiasm.
Terminology controversy
Businessdictionary.com holds that the term “word of mouth advertising”, which is a common term used in marketing, is “incorrect”, as it doesn’t match their definition of advertising, which is limited to paid and non-personal communication.