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

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

  1. 1. THE POWER OF e-WORD OF MOUTH. Adding Social Media to the Marketing Mix. Fernando Barrenechea / @fbarrenecheaf
  2. 2. We are witnessing a revolution that will change the way we do marketing; that social network marketing has made traditional advertising obsolete.
  3. 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. 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. 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.
  6. 6. Redefining the Mix
  7. 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. 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. 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.
  10. 10. Main similarities and differences between traditional advertising and WOM.
  11. 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. 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. 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.
  14. 14. 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.
  15. 15. 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.
  16. 16. 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.
  17. 17. 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.
  18. 18. 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.
  19. 19. 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.
  20. 20. The volume of conversations about a product is directly and immediately correlated with sales – positively or negatively, as the case may be.
  21. 21. 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.
  22. 22. 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.
  23. 23. 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.
  24. 24. 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.
  25. 25. E-WOM is part of an ecosystem that complements traditional marketing channels.
  26. 26. 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.
  27. 27. 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?
  28. 28. 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.
  29. 29. Now that we know what WOM is all about, we can start to define a social media plan, following a series of recommendations.
  30. 30. 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.
  31. 31. 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.
  32. 32. 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.  
  33. 33. Questions ?
  34. 34. Thank You
  35. 35. Contact Fernando Barrenechea Fernando.barrenechea@iese.net @fbarrenecheaf