landmark study return on word of mouth · process: data collection •extensive data collection...
TRANSCRIPT
RETURN ONWORD OF MOUTH
WOMMA SUMMITNovember 18, 2014
RESEARCH TEAM
SPONSORS
“Nothing’s more valuable
than a recommendation
from a friend.”
John CostelloCMO, Dunkin Donuts
IMPORTANCE OF THE STUDY
Watershed Moment in Word of Mouth
• Era of management and measurement of
WOM
• Ability to read ROI of WOM and interactions
with other media in the marketing mix
• Begin to understand the full impact of a
complex network of effects
LEARNINGS FROM THE PROCESS
• WOM ROI varies by brand
• Online & Offline interactions are complex
• Sophisticated analytic approach is required
• Data exists to fuel the model; however…
– we had just enough data to make it work
– need tightly aligned and granular brand
conversations data by market
• Push beyond paid/owned/earned
– size/directions of effects
• Continue addressing online WOM
“impressions” universe issue
• Elevate role of creative strength of copy
• Complete the picture with brand attitude data
RECOMMENDATIONS
RETURN ONWORD OF MOUTH
BACKGROUND
• Consistent measurement of WOM is lacking
• WOM is believed to be a strong business
driver
• Little evidence exists of WOM’s impact
• Proving the Return on WOM return is the
largest obstacle to pursuing a WOM and
social media strategy
OBJECTIVES
• Help the industry understand the optimal role
of WOMM in the marketing plan; guiding
smarter ‘social’ strategy
• Produce a best practice and good example
of how to include WOM in marketing mix
modeling; encouraging more evaluation of
WOM’s value
PROCESS: GOALS
• How much does WOM impact the businesses?
• Does WOM amplify marketing, and if so by how
much?
• Are there differences in the impacts of Online
and Offline WOM?
• What are best practices for measuring WOM?
• What is the value of WOM?
PROCESS: DATA COLLECTION
• Extensive data collection effort
• Two-three years of detailed weekly data for:– Business performance KPI (e.g. sales)
– Online & Offline WOM
– Paid media by channel
– Promotional activity
– Other external & internal factors
• AP scored the data on several dimensions to ensure it was robust for modeling
PROCESS: ANALYTIC MODELING
SALES
WORD OF
MOUTH
SEARCH
Promo-
tions
TV
PR
Online
Display
Sponsor-
ships
Analytic Partners used adaptive Structural Equation Modeling (SEM)
BRAND
WEBSITE
INSIGHTS &
LEARNINGS
WOM had a significant impact across all participants
While both Online and Offline WOM was strong, Offline WOM had 2X the impact
WOM plays both a direct and indirect role in driving business performance
WOM has a direct and amplifying impact on business performance
About one-third of the sales impact is attributable to WOM
acting as an “amplifier” to paid media, such as television
Relative to other media, WOM has a more immediate impact on performance
Offline and Online WOM has a stronger immediate impact
on business performance versus TV advertising
Relative to other media, WOM has a more immediate impact on performance
Offline and Online WOM has a stronger immediate impact
on business performance versus TV advertising
1 WOM impression is highly impactful when compared to 1 Paid Media impression
An offline WOM impression drives at least 5 times more
sales than a paid advertising impression, and much more
(as much as 100 times more) for higher-consideration categories
NOTE: A similar finding for Online WOM requires more comprehensive data on impressions and/or mentions, which are not yet publicly available.
KEY INSIGHTS | SUMMARY
• WOM Drives 13% of sales, on average
• Offline produces 2/3 of the impact; Online 1/3
• WOM Amplifies the Effect of Paid Media
• WOM has a more immediate impact vs.
traditional advertising
• 1 Offline WOM Impression > 1 Paid Media
Impression
GUIDELINES | Measuring WOM in Models