Word-of-mouth (WOM) marketing is rapidly becoming big business in the United States and around the world, despite its sometimes questionable ethics. The Word-of-Mouth Marketing Association (WOMMA) estimates that two-thirds of all economic activity in the United States is influenced by its industry. WOMMA counts among its members such recognized brands as American Express, Best Buy, Coca-Cola, and Sony. According to PQ Media, spending on WOM marketing in 2007 was an estimated $1.4 billion.
By 2011, WOM spending is expected to reach $3.7 billion.
At one time or another, almost everyone has been approached by a friend or relative trying to sell something. Companies that engage in door-to-door direct sales, like Amway, Avon, Tupperware, and Herbalife, have long followed the word-of-mouth model with success, pitching products through personal connections in return for everything from free samples of moisturizer to shiny pink Cadillacs.
According to the Direct Selling Association (the leading industry trade group), worldwide revenues from direct sales topped $89 billion last year. By their count, nearly 14 million people in the United States-about 8 percent of the adult population-are employed in the direct sales industry. Sales have nearly doubled in the past decade.
Diet pills, furniture, vacuum cleaners, encyclopedias, plants, lingerie, pet food-you name it and chances are you've got a neighbor who can get a product for you at a "discount." Eager to reach new customers, name-brand companies are encouraging their most loyal devotees to sell goods in the cozy setting of their living rooms.
In 2001, following the Tupperware conscript-your-customers model, the beauty products retailer The Body Shop launched The Body Shop At Home.
Besides "the opportunity to work with a globally recognized brand,"
members have access to loads of free products and promotional kits and can host themed, prepackaged events for their neighbors (among them the "Pure Pamper Party" or the "Flawless Facial Party"). Similarly, Crayola, the century-old crayon-making subsidiary of Hallmark, started enlisting customers to knock on doors in 2004. The company's "Big Yellow Box"
initiative "promotes togetherness" by encouraging moms to hold crayon-selling parties for "friends, neighbors, co-workers and more."
But no matter how many trusted brands take part in direct sales, the industry will always be saddled with a certain stigma for the simple fact that many people find buying stuff from friends somewhat awkward.
Word-of-mouth marketing, however, represents a significant evolution in face-to-face salesmanship and a controversial new front in our obsessive branding disorder. Rather than sell products outright, WOM participants may just talk glowingly about the merits of the item in question. Rather than inviting you to a party in their home, they may sidle up to you at work, in the bar, or over dinner at your house. Rather than tell you what they're up to, they'll keep their motives to themselves.
For the past several years, Procter & Gamble has been building the two most advanced and comprehensive WOM programs in the world. Tremor, founded in 2000 to create and manage buzz in the teen market, now counts 250,000 teens among its members. Vocalpoint, Tremor's equivalent for mothers, has amassed some 600,000 advocates. Recruited through websites, banner ads, emails, and fellow members, these mothers and children aren't just hawking Procter & Gamble wares. For a fee, P&G hires their recruits out to brands in the entertainment, fashion, music, food, and beauty industries. At last count, 80 percent of Tremor's clients were non-Procter & Gamble brands-companies like Coca-Cola, ABC, Toyota, and the music label EMI. About 50 percent of Vocalpoint brand clients are external.
P&G emphasizes that the free products and samples in its programs are offered in exchange for participation, not as a form of compensation.
Assuming that they like the products, members are encouraged to sing their praises to friends and family (and pass on a coupon or two).
Tremor and Vocalpoint have, from Procter & Gamble's standpoint, been a huge success. Though Procter & Gamble guards clients and results closely, according to early press reports, Vocalpoint delivered double-digit sales increases in test markets.
If Procter & Gamble's numbers are right, one in every one hundred kids in the United States works for Tremor, and about seven in every one hundred U.S. moms works for Vocalpoint. Don't be surprised if you haven't heard of either program before. As with a number of other WOM efforts, neither Tremor nor Vocalpoint requires that its members reveal their affiliation.
The idea that a neighbor could be surreptitiously selling us a new type of deodorant or toothpaste in return for free goods is inherently repulsive. But like the bugs that lodge themselves in the corners of our television screens, word-of-mouth marketing has spread without much objection from mainstream media or society at large. The consensus seems to indicate instead that we ought to get used to it or tune it out. If 7 percent of the mothers in the United States are members of Vocalpoint, it's troubling to consider how nonmembers distinguish between a genuine Pampers recommendation and an incentivized pitch. Dissembling to promote diapers is not a concern for most of us, but if secretly promoting products to friends and neighbors in return for coupons and free goods is legal, it's imaginable that word-of-mouth could become increasingly commonplace.
Seventy-six percent of consumers cite word-of-mouth product recommendations as their primary sources of information for making purchasing decisions.9 As these channels become more polluted with marketing, that number will fall. As it does, it will act like a social barometer, tracing the falling level of trust and goodwill in our culture. It's easy to imagine where this will lead: progressively more jaded consumers will become wary of the slightest hint of ulterior motives, real or not. Consumers will gradually come to view all but their closest friends as possible salespeople. Lacking the ability to trust each other, we will become increasingly isolated and lose a fundamental faculty for forming strong communities.
Copyright (c) 2008.