Posted this on the very interesting WOMMA discussion of Word of mouth vs Advertising. Link.
1. You are exposed to thousands of ads/commercials a month and only act on a very small handful.
2. You are likely to act on about one in 3-5 recommendations from friends.
3. Therefore, WOM is hundreds to thousands of times as powerful as advertising.
OK, that’s the power. Now, how about the spread?
If 25 people tell 25 people 6 times, it’s the entire population of the world!
Once 25 x 25 = 625
Twice x 25 = 15.625
3x x 25 = 390,635
4x x 25 = 9,765,625
5x x 25 = 244,140,625 (order of magnitude of pop. of US!)
6x x 25 = 6,103,515,625 (population of the WORLD!)
Obviously, this assumes that no one tells someone who has already heard. In real life, there are many duplicates, creating the impression that “everyone is talking about it,” -- which they are -- making action even more likely.
So, while WOM can spread at viral rates of 1.1 times, successful WOM campaigns are explosive. Gladwell and everyone else got the math wrong. It’s not viral marketing, it’s nuclear marketing. Advertising (at least print) has miniscule pass-along rates. Broadcast commercials have none. Successful WOM is not only explosive, but thousands of times more powerful.
So, why would you ever want to kill WOM? Yet, that’s precisely what saturation advertising and sales campaigns do. Past a certain point of creating initial awareness, if advertising and other traditional marketing efforts are perceived as saturation campaigns -- as they are with virtually all new drugs, for instance -- they kill WOM. Why, especially when we always thought that good advertising stimulates and complements WOM?
Because people tell other people about things they think they don’t know about. If you tell someone about something that they already know about, you look stupid. So, for instance, a doctor is not going to tell another doctor about a drug that he/she already knows about. In other words, people stop talking about things that are no longer news. Certainly something that is getting saturation exposure is not going to get talked about.
I’ve been designing WOM campaigns for more than 35 years, yet only understood this in the last few years. It’s always been very hard to get WOM going when my client is sending salespeople around, sampling heavily, giving out coupons and taking double page spreads in every magazine in sight. My smaller clients have always done much better, and I never knew why.
So, advertising is not only increasingly ineffective, it is destructive to sales, even if it is increasing sales, and everyone is thrilled. It may be the case that if less advertising were done, more and better WOM campaigns could do much better.
Saturation advertising has other negative consequences. These days, it causes people to wonder, “If their product is so good, why do they have to keep reminding me?” and “Why are they wasting so much money on advertising? Why can’t they put the money into improving their product?”
Jeff Bezos of Amazon has the right idea. He has always found (he’s actually tested) that money put into surprising people with free shipping and other service improvements has a much better return than advertising (which also has a return, but much less).
The ad people will say, “Oh yeah, prove it.” I can’t, yet. The data I have can’t be released. So, at the moment, my case has to rest on common sense and experience.
If the WOM community can develop and release data, it would be devastating. So far, we are making the case that WOM is more powerful, spreads faster, and is a lot cheaper. But if clients saw that they were potentially killing the Golden Goose, instead of hedging their bets by running parallel traditional campaigns, the whole world of marketing would open up. In fact, I think that today’s savvy consumer would realize that ads are for me-too, unremarkable products, and that no product that was worth talking about would be wasting their time and money on saturation ads.
Am I saying, "Avoid all advertising and other traditional promation."? No. Advertising should compliment WOM (WOM being the primary medium). Ads shoud give testimonials, stories and other WOMworthy content. Ads should stimulate customers to talk to other customers, reminding them how happy their friends will be after they get the kind of demo, for instance, that only a friend can give. So, the right kind of advertising can support the WOM and be subservient to it. No ad should ever be considered that doesn't contribute to WOM.
Now, I’ve done it. I won’t even be able to walk down Madison Avenue.