Mumbai: BzzAgent, a WoM (word of mouth) and media network based in Boston, created some buzz of its own when it estimated that each WoM conversation costs US marketers $0.30-0.50 (Rs13.77-22.95).
The “value” of each conversation, however, varies by product category. Dave Balter, founder of BzzAgent, says the company measures WoM primarily by calculating reach or total number of consumers who heard about or discussed the product and return on investment. BzzAgent’s 2008 white paper on “Valuing WoM in the Sales Funnel” examines how marketers can compare WoM impressions with other media. The broad end of the sales funnel starts at lifting brand awareness and moves down to getting consumer attention, trial and retention with the consumer finally becoming a brand evangelist. The BzzAgent approach evaluates media effectiveness at the top and bottom of the funnel and calculates the corresponding investment needed to achieve equivalent awareness and purchase intent levels.
Estimating value: Dave Balter.
At the top of the funnel, a media buyer needs to consider how many impressions are required to capture the attention of the intended audience and lift brand awareness. The model considers ad recall (attention) rates and cost of media. Ad recall rate of WoM communication was found to be 95%, versus 7.5% for print, 70% for paid search (clicks) and 2.5% for television.
Due to the significant level of consumer engagement created by a WoM communication, a $157,895 WoM media investment delivered 500,000 consumers who were aware and informed about a product, says the BzzAgent white paper. So, the same level of impact would need a $200,000 print investment, a $357,143 paid search investment or a $400,000 television investment. Moving down the sales funnel, the efficacy of WoM was monitored at different stages. It was found that consumer-to-consumer product and brand conversations frequently generate 10-15% rate of purchase intent versus 0.50% for print, 0.05% for online display, 3% for paid search and 0.05% for TV.