Putting Their Money Where the Mouths Are: Brands Increase Spending on Word of Mouth Marketing by 14.2% - Ed Keller - MediaBizBloggers

At a time when most forecasters report that spending by marketers is declining, spending on word of mouth (WOM) marketing increased 14.2% to $1.54 billion in 2008. And while 2009 is expected to see some moderation, WOM Marketing is on pace to grow another 10.2% in 2009, placing it among the fastest growing advertising and marketing segments.

The Word of Mouth Marketing Forecast: 2009 – 2013, conducted by PQ Media and licensed by WOMMA, which has distributed the results to all members, provides quantitative evidence not only that brand marketers recognize the growing power of word of mouth, but that they are investing in both online and offline strategies and tactics that stimulate consumer conversation and brand advocacy. This investment comes at a time when most research, including that conducted by agencies such as Universal McCann, Zenith Optimedia, and Razorfish – among others – finds that word of mouth is the most influential form of contact a consumer has with a brand, and one that leads to purchase or purchase intent.

In 2003, at the same time my book The Influentials was published, spending on word of mouth was only a $300 million. Since that time, as an industry has formed to help brands better engage in conversation with consumers, the compound annual growth rate (CAGR) has been 37.6%.

Looking ahead, the report forecasts growth of another 10.2% in 2009, meaning that WOM Marketing is on pace to remain among the fastest growing segments of the media and communications industry this year. Total spending on WOM is expected to grow at a CAGR of 14.5% between now and 2013, which would mean spending will top $3 billion by 2013. According to PQ Media's President, Patrick Quinn, "Double-digit growth in this economic climate is a strong sign of an increasingly prevalent role in the future."

Who are the leading spenders on WOM Marketing? Packaged goods and food/drink brands accounted for 30% of the spending in 2008. Other leading categories are: financial services, electronics and telecom, and retail.

For those wishing to know more about the report and spending trends in this emerging and dynamic industry, the report is available from WOMMA. John Moore, WOM Enthusiast for WOMMA, has also prepared a short video available via YouTube that does an excellent job discussing the findings further.

Ed Keller, CEO of the Keller Fay Group, has been called "one of the most recognized names in word of mouth." The publication of Keller's book,The Influentials, has been called the "seminal moment in the development of word of mouth." Ed can be contacted at ekeller@kellerfay.com.

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