Advertisers Want You To Do Their Work

MIKE PESCA, host:

So have you heard, it's Shrimpfest at participating Red Lobsters?

PATRICIA MCKINNEY: Have you heard that Certs now have retsin?

PESCA: You know, Tricia, I have a confession. I was paid to say that. I am a word-of-mouth marketer.

MCKINNEY: Well, I, too, have a confession. I am also a word-of-mouth marketer, and furthermore, my grandfather was eaten by a red lobster, and now I'm very offended and leaving.

(Soundbite of door slamming)

PESCA: Well, that didn't go well. Word-of-mouth has always been valued as the most reliable way to drive someone to your business, but that's honestly come by word-of-mouth. What about this new trend of companies paying shills, like me and Trish, to spread the word for a fee? And just how much should that fee be? Walter Carl is a professor of communications and business at Northeastern University. He's also founder of a word-of-mouth marketing research firm called Chat Threads. Hello, Professor Carl.

Dr. WALTER CARL (Communications and Business, Northeastern University; Founder, Chat Threads): Hello, how are you?

PESCA: Great. First, let's quickly explain what we're talking about. Give us an example of word-of-mouth marketing that someone may encounter.

Dr. CARL: Sure, I think we really need to understand right out of the gate the definition of word-of-mouth marketing, and maybe contrast that with some of the examples that you were just providing.

PESCA: Correct? Yeah, yeah.

Dr. CARL: So first of all, word-of-mouth marketing is really about providing reasons for people to talk about your brand, your products, your service, your mission, whatever type of organization you are, and giving them the tools to help people to do so. That's a real broad, general definition. Word out mouth itself is really - it's consumers, or stakeholders, or citizens, depending upon what type of organization. It's talking about the company, about what their service is, what they offer, from one to another, where people aren't getting paid by the company themselves, or aren't employees of the company, et cetera.

And traditionally, of course, that's done by word-of-mouth in an oral medium, but given all the recent explosions of technology and very social media, like blogs, podcasts, things like that, there's a whole new range of tools that can be used for people, that they should just share their thoughts with one another.

PESCA: Isn't there, though, this trend - I mean, I have read many stories about liquor companies and so forth kind of hiring people to talk up their brands in bars. That does happen, right?

Dr. CARL: Absolutely, it does, and I think what we really need to do is make a real clear line that that's not word-of-mouth marketing. That's shill marketing. That's stealth marketing. That's undercover marketing, and those types of things just really aren't acceptable, both from an ethical perspective, and in some counties, a legal perspective.

PESCA: So how does word-of-mouth marketing, when done ethically and aboveboard, how does that work, in a best-case scenario?

Dr. CARL: Best-case scenario word-of-mouth marketing starts from a foundation of listening, actually. There's a lot of people talking about you. In fact, my research at Northeastern indicates that about 15 percent of all our conversations include a reference to an organization, brand, product or service. And there's just, you know, millions and millions of conversations. A lot of companies are monitoring the web for discussions that take place on blogs, customer forums, discussion boards, and what you can do is you can actually listen to these conversations, as people are having them in their naturalistic environment, and learn from them, get insights, get product idea, understand that there might be problems with your product or your customer service experience, and actually reach out and kind of address those proactively. So that's one...

PESCA: Now...

Dr. CARL: Yeah?

PESCA: I was just going to say, in the old days, wasn't word-of-mouth marketing - didn't that just naturally spring forth and perhaps it wasn't harnessed by the companies, but you know, you liked Downy, and so you tell your friend, hey, Downy is really good? There have been great developments in that?

Dr. CARL: Well, yeah, I mean, that still goes on. That's what kind of organic word-of-mouth, and it's still very important. But the problem is, companies never really paid a lot of attention to it because they were so focused on big media spend, advertising, broadcast media that it was kind of one way and using kind of very traditional media and it was very difficult to measure.

What companies now are seeing is that you can measure this stuff. You can see it when it's online. The company that I work in and my academic research actually focuses on the offline word-of-mouth that goes on as well. But when you can start to realize that this stuff is important, it's consequential and you can measure it, you start paying more attention to it, which companies, frankly, should have been doing all along.

PESCA: So how do you measure it? Sometimes it's just called the buzz, or people are talking about X, Y and Z. How do you measure it?

Dr. CARL: Right. Well, a lot of companies are measuring - in the offline world, they're measuring the amount of buzz that takes place, so there's various tools. Some are kind of free, do-it-yourself tools, like Technorati or Google. Nielsen offers a blog-pulse service that you can use to track the conversations that are going on. People there are looking for how much word-of-mouth is going on, whether it's positive, negative or neutral, and you can line that up to when you're rolling out a new product. You can see when you first launch it, is there a lot of people talking about it? Well, what are they saying? And then as you launch a TV ad, what is that effect for the word-of-mouth? So, that's one way that people are measuring it.

We also measure it in the offline world as well through asking people to tell us about the conversations that they have. Other companies are looking at people's likelihood to recommend, so they ask people, how likely are you to recommend this brand, service or product to a friend or a colleague or a family member? And then they track that over time.

PESCA: Is it just quality that makes you recommend it? Or is there something else that a company can do to push, not just having people have a positive interaction with product, but then taking the next step of mentioning that to a friend?

Dr. CARL: Yeah, absolutely, I mean, there's a - in the academic research, you look at the role of satisfaction, and it's a U-shaped curve, so if you think about a U, at the top of it, if people are really dissatisfied with the product, you'll have negative word-of-mouth. And at the other end, if they're really, positively satisfied with it, at an extreme level, they'll go and have word-of-mouth. But if they're just kind of passively satisfied with it, you know, kind of towards the bottom of the U, they don't really talk about it because, well, what's there to say?

You know, it kind of met their expectations but it wasn't - so you have to do something really remarkable, either positively or negatively, to get people to talk about the product. So that can be through making a really, you know, an innovative product. That can be doing something, having great customer service experience, having it satisfy a need that surprised people, that they didn't realize they could use it. So there's a lot of things in product design, but also customer service experience, that people can do to have people talk about the product.

PESCA: Wait, so is what you do - you advise companies. Do you advise them how to push people from the trench of the U to the right side so that they're more satisfied, or do you advise them how to grab those people in the trench of the U, and somehow, even though they don't love the product that much, talk it up?

Dr. CARL: Well, I think some companies - I mean, first of all, your first strategy, if you have negative word-of-mouth, so that would be at the kind of upper left of the top of the U, you want to first of all minimize that, so find out what the problems are, what the concerns are and address them because that negative word-of-mouth can be really damaging to a company and that can spread very quickly. But also, yeah, if you just have kind of a lackluster product or a product that's just kind of satisfying, or I mean, just kind of meets basic needs, you need to do something special, unique, that will create an experience such that people will want to talk about it.

PESCA: And you put a cost on it. How much - how much is word-of-mouth mentions - how much are they worth?

Prof. CARL: Well, these are the word-of-mouth recommendations, and this is the value of a conversation, and it can vary based on the industry or the product category. We did one for a consumer-packaged-good product and it was something that people use every day. Unfortunately, I can't tell you what it was, but what we measured was each time a consumer had a conversation about this particular product, the company made 50 cents. That was the bottom-line impact to it.

PESCA: Fifty cents?

Prof. CARL: Yeah, 50 cents. Now, that can range if it's a much bigger-ticket item. If it's a computer, for example, or if it's a digital, you know, mp3 player, that may be much more.

PESCA: Right.

Prof. CARL: Now, it could be a negative number, too, which means that, you know, that program or that product isn't doing well in the marketplace.

PESCA: You could tell me. It was the Epilady Leg Hair Removal, right?

Prof. CARL: How did you know?

PESCA: I knew it was the Epilady. Walter Carl studies word-of-mouth marketing at Northeastern University and he's the founder of a word-of-mouth marketing research firm called Chat Threads. Thank you, Professor Carl.

Prof. CARL: Thank you.

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