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THE POWER OF
e-WORD OF MOUTH.
Adding Social Media to
the Marketing Mix.
Fernando Barrenechea / @fbarrenecheaf
We are witnessing a revolution that will
change the way we do marketing; that
social network marketing has made
traditional advertising obsolete.
In a very short time,
social media have
captured market
share and attention
among all kinds of
c o n s u m e r s a n d
companies.
Given this change in
consumption habits
and the fact that
social media are
more interactive,
there is a danger that
messages sent using
traditional advertising
will fall flat.
Quite simply, many viewers preferred to interact
through social media, sharing their thoughts,
opinions, criticisms and suggestions. They wanted
dialogue, not a monologue delivered from the
stage.
Redefining the Mix
Given this reality, many companies have started to redefine key aspects
of their marketing mix to include social media, adjusting their budgets.
79 percent of the top 100 Fortune companies already use Twitter,
Facebook, YouTube or corporate blogs to communicate with their
customers. 2/3 have at least one account on Twitter, which is the
platform most used by companies and 54 percent have a Facebook.
Maintaining an
active SM presence is
commonly
considered an
alternative to
traditional advertising
as a means of
achieving brand
awareness.
THIS IS A MISTAKE!!!!!
Social media obey very different
rules from traditional advertising. A
company can use social media to
start conversations or build brand
recognition, but the results are
much more difficult to predict or
measure.
Main
similarities and
differences
between
traditional
advertising and
WOM.
Advertising in conventional media has high and potentially massive
reach, while traditional WOM based on one-to-one communication is
limited by nature.
However, the rise of SM is radically transforming the pattern of social
interactions, including personal recommendations. Now, hundreds of
thousands of people can conspire to put a company’s reputation,
brand or product on a pedestal or drag it through the dirt.
REACH.
Not even the best advertisement can match a personal
recommendation in credibility. WOM is almost unbeatable in its power to
influence and persuade.
Obviously, an anonymous advertising message does not have the same
credibility as a recommendation from someone we know and trust. 38
percent of SMM users pointed to other consumers as the most reliable
source of information about a brand or product. The next most popular
option, 32 percent of respondents, was the brand itself.
CREDIBILITY.
In conventional advertising, advertisers always have full control over the
message they want to convey. WOM is different in that it cannot be
controlled.
CONTROL.
The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix
e-WOM has one major advantage over advertising: It is immediate and
interactive, and that makes it easier to intervene. If a campaign goes
off the rails, you can adjust it as you go along. You can try to deflect
negative feedback by joining in the conversations or making amends.
INTERACTIVITY.
From a consumer’s point of view, a fundamental advantage of WOM
over advertising is that it is voluntary and consensual, whereas
advertising can be annoying and intrusive. There is always the risk of
saturation or causing a nuisance if the messages sent through social
networks are not carefully measured.
INTRUSIVENESS.
In a cost comparison, we might expect WOM to win hands down over
advertising. But it’s not that simple. Traditional WOM may be relatively
inexpensive, but if a company wants to use social networks to get
people talking about a brand or product, it will have to put up the
necessary resources.
COST.
The fact that most
social media
platforms are free
does not mean that
your communication
strategy will be free.
In fact, e-WOM
requires a sustained
commitment of time
and staff.
Advertising has shown that it can increase the value of a brand by
enhancing the brand’s image, reputation and recognition. At its best,
WOM can do the same. Positive WOM enhances brand value, but
negative WOM can cause serious, even irreversible, damage to a
brand’s reputation and sales.
Advertising plays a key role in achieving brand recognition, whereas, as
things stand today, WOM has very little to contribute in that respect.
BRANDS.
Empirical evidence suggests that the elasticity of sales in response to
advertising is rather low in the short run, but that advertising does affect
brand value and consumer price sensitivity in the long run.
In contrast, the volume of conversations about a product is directly and
immediately correlated with sales – positively or negatively, as the case
may be. Furthermore, the duration of advertising’s “pull effect” is
disputed, whereas the effect of WOM appears to be more lasting.
SALES.
The volume of conversations about a product is
directly and immediately correlated with sales –
positively or negatively, as the case may be.
Some products and services naturally generate conversations, while
others simply are not talked about. People are more inclined to talk
about things they purchase rarely and use publicly, such as holidays or
cars, whereas things they buy regularly and use privately, such as
toothpaste brands, are barely mentioned. This is a key factor when
deciding whether or not an e-WOM initiative is appropriate.
PRODUCTS AND SERVICES.
How much WOM is generated will also depend on the context in which
the communication takes place. Whereas advertising has proven
effective in all kinds of cultural and social environments, WOM appears
to behave differently among different social and cultural groups.
CONTEXT.
It is tempting to think that social
m e d i a a r e a l o w - c o s t
alternative to traditional
advertising, for informing and
p e r s u a d i n g c o n s u m e r s .
However, even though the
investment to establish a
presence in social networks is
relatively small, the cost of
generating content is high, as it
demands creativity, time and
qualified talent.
A l t h o u g h m o s t
marketing experts
consider advertising
and e-WOM to be
complementary, the
fact is that the two
are competing with
one another for a
diminishing budget.
E-WOM is part of an
ecosystem that
complements traditional
marketing channels.
The lesson to be learned here is that social networks act as
amplifiers of traditional advertising, which remains
indispensable in order to reach the point of sale.
Many questions remain
unanswered.
What combination of
advertising and WOM is
best?
How can WOM reinforce
the image of a brand that
a l r e a d y h a s s o m e
recognition in traditional
channels?
When, if ever, can WOM
b e a s u b s t i t u t e f o r
advertising?
Today, the ad may be the opening gambit in an ongoing
conversation across platforms or, conversely, a continuation
of what consumers have already heard in social media.
As a general
rule, advertising
and e-WOM
should reinforce
one another, as
if through cross
fertilization.
The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix
Now that we know what WOM is all about, we
can start to define a social media plan,
following a series of recommendations.
Be aware. Whether you planned it or not, your brand
or product is already being talked about in social
networks. So listen to what people are saying.
Do a brand audit. Before you rush out to conquer
social networks, analyze your brand or product to see
if it is capable of attracting the target audience and
withstanding pressure. If, for some reason, you cannot
act transparently, if your product is not the kind that
generates conversations or if there are reputational
risks, such as a fair chance of generating hostile
conversations, then perhaps you should hold back or
keep a low profile.
Set targets. Decide exactly what you want to achieve
via the Web. Possible goals might be: to attract
customers; to gather feedback from existing
customers; to build links and mentions, so as to
generate traffic to the corporate website; to become
an opinion leader or expert in a certain area; to use
the network as a benchmarking tool; to launch
promotions.
Choose the right mix. Specify exactly where you
want to be and how you want to get there.
Decide on platforms, profile, message type and
frequency.
Decide on content and tone. The content may
be generated by the company itself, by users or
even by employees. You will need to establish:
the type of content; the user participation
model; and, above all, the right balance
between content (70 percent) and selling (30
percent). First, you inform; second, you entertain;
third, you interact; and last, you sell.
Measure. What metrics will tell you whether you
have succeeded or failed? It will depend on your
goals. On the Internet, you need a variety of
metrics, but you have to appreciate that they
are likely to be more diffuse than in traditional
channels.
Deciding	
   what	
   strategy	
   to	
   pursue	
   is	
   not	
   easy.	
  
The	
   important	
   thing	
   is	
   to	
   remember	
   that,	
   in	
  
social	
   media,	
   the	
   decision	
   does	
   not	
   always	
  
depend	
   on	
   us.	
   O9en,	
   it	
   is	
   the	
   users	
   and	
  
consumers	
   who	
   decide,	
   whether	
   we	
   like	
   it	
   or	
  
not.	
  
Questions
?
The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix
Thank You
Contact
Fernando Barrenechea
Fernando.barrenechea@iese.net
@fbarrenecheaf

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The Power of e-Word of Mouth. Adding Social Media to the Marketing Mix

  • 1. THE POWER OF e-WORD OF MOUTH. Adding Social Media to the Marketing Mix. Fernando Barrenechea / @fbarrenecheaf
  • 2. We are witnessing a revolution that will change the way we do marketing; that social network marketing has made traditional advertising obsolete.
  • 3. In a very short time, social media have captured market share and attention among all kinds of c o n s u m e r s a n d companies.
  • 4. Given this change in consumption habits and the fact that social media are more interactive, there is a danger that messages sent using traditional advertising will fall flat.
  • 5. Quite simply, many viewers preferred to interact through social media, sharing their thoughts, opinions, criticisms and suggestions. They wanted dialogue, not a monologue delivered from the stage.
  • 7. Given this reality, many companies have started to redefine key aspects of their marketing mix to include social media, adjusting their budgets. 79 percent of the top 100 Fortune companies already use Twitter, Facebook, YouTube or corporate blogs to communicate with their customers. 2/3 have at least one account on Twitter, which is the platform most used by companies and 54 percent have a Facebook.
  • 8. Maintaining an active SM presence is commonly considered an alternative to traditional advertising as a means of achieving brand awareness. THIS IS A MISTAKE!!!!!
  • 9. Social media obey very different rules from traditional advertising. A company can use social media to start conversations or build brand recognition, but the results are much more difficult to predict or measure.
  • 11. Advertising in conventional media has high and potentially massive reach, while traditional WOM based on one-to-one communication is limited by nature. However, the rise of SM is radically transforming the pattern of social interactions, including personal recommendations. Now, hundreds of thousands of people can conspire to put a company’s reputation, brand or product on a pedestal or drag it through the dirt. REACH.
  • 12. Not even the best advertisement can match a personal recommendation in credibility. WOM is almost unbeatable in its power to influence and persuade. Obviously, an anonymous advertising message does not have the same credibility as a recommendation from someone we know and trust. 38 percent of SMM users pointed to other consumers as the most reliable source of information about a brand or product. The next most popular option, 32 percent of respondents, was the brand itself. CREDIBILITY.
  • 13. In conventional advertising, advertisers always have full control over the message they want to convey. WOM is different in that it cannot be controlled. CONTROL.
  • 15. e-WOM has one major advantage over advertising: It is immediate and interactive, and that makes it easier to intervene. If a campaign goes off the rails, you can adjust it as you go along. You can try to deflect negative feedback by joining in the conversations or making amends. INTERACTIVITY.
  • 16. From a consumer’s point of view, a fundamental advantage of WOM over advertising is that it is voluntary and consensual, whereas advertising can be annoying and intrusive. There is always the risk of saturation or causing a nuisance if the messages sent through social networks are not carefully measured. INTRUSIVENESS.
  • 17. In a cost comparison, we might expect WOM to win hands down over advertising. But it’s not that simple. Traditional WOM may be relatively inexpensive, but if a company wants to use social networks to get people talking about a brand or product, it will have to put up the necessary resources. COST.
  • 18. The fact that most social media platforms are free does not mean that your communication strategy will be free. In fact, e-WOM requires a sustained commitment of time and staff.
  • 19. Advertising has shown that it can increase the value of a brand by enhancing the brand’s image, reputation and recognition. At its best, WOM can do the same. Positive WOM enhances brand value, but negative WOM can cause serious, even irreversible, damage to a brand’s reputation and sales. Advertising plays a key role in achieving brand recognition, whereas, as things stand today, WOM has very little to contribute in that respect. BRANDS.
  • 20. Empirical evidence suggests that the elasticity of sales in response to advertising is rather low in the short run, but that advertising does affect brand value and consumer price sensitivity in the long run. In contrast, the volume of conversations about a product is directly and immediately correlated with sales – positively or negatively, as the case may be. Furthermore, the duration of advertising’s “pull effect” is disputed, whereas the effect of WOM appears to be more lasting. SALES.
  • 21. The volume of conversations about a product is directly and immediately correlated with sales – positively or negatively, as the case may be.
  • 22. Some products and services naturally generate conversations, while others simply are not talked about. People are more inclined to talk about things they purchase rarely and use publicly, such as holidays or cars, whereas things they buy regularly and use privately, such as toothpaste brands, are barely mentioned. This is a key factor when deciding whether or not an e-WOM initiative is appropriate. PRODUCTS AND SERVICES.
  • 23. How much WOM is generated will also depend on the context in which the communication takes place. Whereas advertising has proven effective in all kinds of cultural and social environments, WOM appears to behave differently among different social and cultural groups. CONTEXT.
  • 24. It is tempting to think that social m e d i a a r e a l o w - c o s t alternative to traditional advertising, for informing and p e r s u a d i n g c o n s u m e r s . However, even though the investment to establish a presence in social networks is relatively small, the cost of generating content is high, as it demands creativity, time and qualified talent.
  • 25. A l t h o u g h m o s t marketing experts consider advertising and e-WOM to be complementary, the fact is that the two are competing with one another for a diminishing budget.
  • 26. E-WOM is part of an ecosystem that complements traditional marketing channels.
  • 27. The lesson to be learned here is that social networks act as amplifiers of traditional advertising, which remains indispensable in order to reach the point of sale.
  • 28. Many questions remain unanswered. What combination of advertising and WOM is best? How can WOM reinforce the image of a brand that a l r e a d y h a s s o m e recognition in traditional channels? When, if ever, can WOM b e a s u b s t i t u t e f o r advertising?
  • 29. Today, the ad may be the opening gambit in an ongoing conversation across platforms or, conversely, a continuation of what consumers have already heard in social media. As a general rule, advertising and e-WOM should reinforce one another, as if through cross fertilization.
  • 31. Now that we know what WOM is all about, we can start to define a social media plan, following a series of recommendations.
  • 32. Be aware. Whether you planned it or not, your brand or product is already being talked about in social networks. So listen to what people are saying. Do a brand audit. Before you rush out to conquer social networks, analyze your brand or product to see if it is capable of attracting the target audience and withstanding pressure. If, for some reason, you cannot act transparently, if your product is not the kind that generates conversations or if there are reputational risks, such as a fair chance of generating hostile conversations, then perhaps you should hold back or keep a low profile. Set targets. Decide exactly what you want to achieve via the Web. Possible goals might be: to attract customers; to gather feedback from existing customers; to build links and mentions, so as to generate traffic to the corporate website; to become an opinion leader or expert in a certain area; to use the network as a benchmarking tool; to launch promotions.
  • 33. Choose the right mix. Specify exactly where you want to be and how you want to get there. Decide on platforms, profile, message type and frequency. Decide on content and tone. The content may be generated by the company itself, by users or even by employees. You will need to establish: the type of content; the user participation model; and, above all, the right balance between content (70 percent) and selling (30 percent). First, you inform; second, you entertain; third, you interact; and last, you sell. Measure. What metrics will tell you whether you have succeeded or failed? It will depend on your goals. On the Internet, you need a variety of metrics, but you have to appreciate that they are likely to be more diffuse than in traditional channels.
  • 34. Deciding   what   strategy   to   pursue   is   not   easy.   The   important   thing   is   to   remember   that,   in   social   media,   the   decision   does   not   always   depend   on   us.   O9en,   it   is   the   users   and   consumers   who   decide,   whether   we   like   it   or   not.