 Learn About "Word of Mouth Marketing" - Aug 2009 Spending on word-of-mouth (WoM) marketing rose 14.2% to $1.54 billion in 2008, despite the worst economic recession in 70 years, accentuated by secular and structural trends battering traditional advertising and marketing media, according to new research from PQ Media. While year-over-year growth is expected to slow in 2009, WoM spending is on pace to grow another 10.2% this year, placing it among the fastest growing advertising and marketing segments. By comparison, the U.S. economy, as well as the advertising and marketing services sectors are all expected to decline in 2009 for the first time since the Great Depression of the 1930's.
The WoM industry, which PQ Media was the first source to define, structure and size in 2007, includes two major sectors content & service providers and ancillary products as well as six additional segments within those sectors strategy & consulting, WoM agencies, online communities, WoM media, research & measurement, and technology & tools. PQ Media defines WoM marketing as an alternative marketing strategy supported by research and technology, which encourages consumers to dialogue about products and services through various online and offline tactics, often facilitated by brand ambassadors. Industry spending increased at a compound annual growth rate (CAGR) of 37.6% from 2003 to 2008, as the rise in popularity of blogs, social networks and online communities led brands to shift dollars to WoM as part of integrated media solutions in their quest to engage more elusive consumers.
The most influential marketer in a consumer's life is someone they know and trust, such as a family member, friend or colleague.
PQ Media's Word-of-Mouth Marketing Forecast 2009-2013, analyzes an industry changing and growing as consumers become more connected to one another through high-tech devices, such as smart phones, and social media outlets, like Facebook and Twitter. As a result, brand marketers particularly packaged goods and food & drink brands, which accounted for nearly 30% of all WoM spending in 2008 have increased spending and emphasis on WoM as part of their overall marketing strategies. Accordingly, PQ Media analyzed spending by WoM brand categories for the first time ever in this report. In addition, PQ Media's Word-of-Mouth Marketing Forecast 2009-2013 includes 280 new company profiles and 42 case studies, making it the most comprehensive report ever assembled on the WoM marketing industry.
Due to the popularity of PQ Media's 2007 report and increased demand from its membership, the Word of Mouth Marketing Association (WOMMA) the leading industry trade organization has licensed the research for its membership as the definitive source tracking the economics of WoM marketing. As part of PQ Media's econometric methodology in developing this research, WOMMA provided the firm with access to its entire membership, which participated in PQ Media's Key Opinion Leader Panel™ survey and interview process.
Meanwhile, with the rise of WoM spending by brands, content & service providers are experiencing sizeable growth. WoM strategy & consulting remains the largest segment at $832 million in 2008, but year-over-year growth slowed to 7 percent. WoM Agencies grew 18.7 percent to $197 million in 2008.
Developing WoM communities both online and offline are emerging trends within the content & services sector. Spending on WoM online communities increased 26.6% in 2008 to $119 million. Although it's the smallest category, WoM media is the fastest growing content & services segment with spending up 34.6% in 2008 to $109 million.
Changing consumer behaviors and advancing technology, and their residual effects on the advertising and marketing sectors, will continue to fuel growth in WoM marketing spending during the 2008-2013 period. Total spending on WoM is expected to increase at a CAGR of 14.5% from 2008 to 2013. Both major sectors – content & services and ancillary products will post strong gains and contribute to overall growth.
Ancillary products spending will increase faster than content & services spending primarily because the market is smaller and, therefore, has more growth potential.
Although more leading brands are accepting WoM, they are demanding data to justify their spending. Marketers are requesting research that extends beyond anecdotal information about online conversations and consumer attitudes. They expect proof of return-on-investment, and WoM research companies are developing new metrics to address these demands.
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