Advertising Amid Crisis: Word of Mouth Lessons from the Auto and Financial Services Crises - Ed Keller - MediaBizBloggers

What should an advertiser do when its industry is being ravaged in the news media amid a crisis of historic proportions Go quiet until the trouble passes or continue to engage directly with paid messaging The recent crisis faced by the financial and automotive industries provides two excellent cases in point with lessons for marketers in all categoriesThis week at the Advertising Research Foundation39s Annual ReThink Conference my colleague Brad Fayjoined with Mediavest39sDavid Schiffman to address this topic Their paper is based on more than two years of continuous research that spanned the periods before during and since the height of the economic crises facing the financial services and automotive industriesThe paper links word of mouth about brands in these two industries with a 360 degree perspective on the mediamarketing elements that help to drive word of mouth amp8211 editorial coverage in the media paid advertising direct mail point of sale activity and so forth The question is which of these marketing elements are most strongly associated with positive versus negative word of mouth and intent to purchase individual brands It also compares and contrasts changes in word of mouth for companies that quotwent silentquot during the crisis to those that were more active in the use of paid messaging throughout the periodThe results amp8211 in short Brands that maintained stable levels of advertising fared far better in helping to maintain positive word of mouth and brand advocacy compared to those that quotwent silentquot by cutting back their expenditures in paid media and allowed the public conversation to be driven primarily by what they saw or read in the pressThe research involved categorizing auto ampamp financial brands into three groups amp8211 those that made large cutbacks in advertising spending as determined by The Nielsen Company those that made moderate cutbacks and those that maintained relatively stable advertising The study then examined how those choices affected the word of mouth surrounding those brands as measured by Keller Fay39s ongoing word of mouth tracking systemTalkTrackamp174 For the financial industry brands that maintained stable ad spend levels were the clear winners In early 2008 all of the companies we looked at had fairly similar WOM quality but their fortunes separated sharply when the crisis hit towards the end of the year In the spring and summer especially we see that the companies that maintained higher levels of advertising were rewarded with much higher levels of positive WOMSource Keller Fay Group39s TalkTrackamp174 March 2008 amp8211 January 2010Shaded area indicates the crisis period The same pattern was seen for automotive brandsWhile most auto brands saw dips in positive WOM levels throughout the crisis period brands that maintained stable advertising levels benefited from higher levels of positive talk When the auto industry took body blows as a result of failed firms and government bailouts the brands that cut back the most on advertising also suffered the most in terms of declining levels of positive talkSource Keller Fay Group39s TalkTrackamp174 March 2008 amp8211 January 2010Shaded area indicates the crisis period Now the question is which came first amp8211 the poor WOM outcome or the ad spend cutbacks In other words did buzz about these companies turn negative due to the underlying facts that also forced advertising to be cut or was it the reduced advertising presence that caused the buzz to go badOur word of mouth tracking research allowed us to find the answer here because survey respondents are asked to report whether or not their branded conversations included reference to the news amp8211 and therefore the quotunderlying factsquot amp8211 or advertising or other forms of mediamarketingFor all financial brands the percentage of talk containing references to the news surpassed that of talk referring to advertising in October ampamp November 3908 and again in April 3909 The surge in newsdriven talk was much more pronounced however when comparing the financial brands that made the most advertising cutbacks to the firms that cut the leastSource Keller Fay39s TalkTrackamp174 June 2008 amp8211 January 2010We see that the financial brands that maintained their advertising spending levels benefited from a much higher percentage of addriven talk than newsdriven talkThis becomes especially important when we consider the quality of addriven talk vs newsdriven talk For the financial industry specifically newsdriven talk became particularly negative with the percentages of mixed and negative conversations far outweighing the percentages of positive conversations For example in the quotearly crisisquot period of August 3908 to January 3909 a mere 23 of newsdriven financial conversations were positive while 45 were negative Positive newsdriven talk has since rebounded to 50 but negative talk is at 27Adinspired financial conversations on the other hand maintained their positive quality despite the crisis Since the crisis hit over 50 of adinspired conversations have remained positive while negative and mixed have hovered around 20 each amp8211 making adinspired talk far more beneficial to brands than newsinspired talk When we compare auto brands the same way the same tendencies are apparentSo what does this all mean It means that companies that maintain their advertising levels during crisis times are able to offset negative press and boost positive talk while those that cut back saw negative word of mouth dominate And while this research looked only at the auto and financial services categories the findings are almost certainly relevant for companies in all industries and potentially during other types of crises Advertising can be seen clearly to play a substantial role in driving word of mouth especially positive and even during major crises addriven WOM retains its positive quality Advertising messages should of course change to reflect the times and consumer attitudes but silencing advertising seriously dampens the brand39s ability to tell its story and leads to a sharp deterioration in public advocacy for the brand just at a time when it is most crucial Silence during times of crisis is not goldenEd Keller CEO of the Keller Fay Group has been called quotone of the most recognized names in word of mouthquot The publication of Keller39s book The Influentials has been called the quotseminal moment in the development of word of mouthquot Ed can be contacted at ekellerkellerfaycomRead all Edamp8217s MediaBizBloggers commentaries at Ed Keller MediaBizBloggersFollow our Twitter updates MediaBizBlogger

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Advertising Amid Crisis: Word of Mouth Lessons from the Auto and Financial Services Crises - Ed Keller - MediaBizBloggers

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