Wharton Study Shines New Light on Online vs. Offline Word of Mouth

By Word-of-Mouth Matters Archives
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Social media is the rage right now in marketing circles. One area of particular interest is the opportunity for marketers to "listen" to unstructured conversation based on the data that are now available via scraping of social media sites. This is part of the emerging discipline of social media research (SMR). But nobody—until now—has definitely answered the question: Are online social media reflective of the offline world?

The theory (and practice) that underlies SMR is that monitoring, organizing, and analyzing what consumers are saying in social media provides a rich data set for understanding important issues, themes, unmet needs, and so forth without the need for survey-based or other more "traditional" forms of marketing research.

One of the big, unanswered questions, however, is how representative is the data that comes from SMR? This question is particularly relevant when asked in the context of research findings from the Keller Fay Group that more than 90% of brand-related word of mouth takes place offline, not online.

Shedding important new light on this question is a major new academic research study that was presented last week at the Wharton School at a conference co-sponsored by the Wharton Interactive Media Institute (WIMI) and the Marketing Sciences Institute (MSI). The authors, Professors Renana Peres (Visiting Professor of Marketing at the Wharton School, and the Hebrew University of Jerusalem) and Ron Shachar (Fuqua School of Business at Duke and Tel Aviv University) have assembled a very large set of data including online word of mouth (provided by NM Incite, the joint venture between Nielsen and McKinsey), offline word of mouth (provided by the Keller Fay Group), brand equity (provided by Brand Asset Valuator), and custom research on brands (conducted by Decipher). Over 700 US brands in total were analyzed, spanning 16 product categories, covering the period from 2007- 2010. So this is a very comprehensive and robust research undertaking.

The authors' ambition was to address the scarcity of knowledge about the online/offline dynamic. "This raises a critical concern – are we searching for answers where the light is? Are the insights we gain from the online data sets relevant for the offline behavior? Are we doing the right thing when we generalize across channels? Are marketing managers doing the right thing when they choose between . . .[the analysis of] offline data, and [the analysis of] online word of mouth data, assuming that these two sources are substitutes?"

The headline finding is clear: "Online data does not reflect well the offline behavior. Word of mouth is not channel neutral. One cannot automatically generalize the results from online to offline."

This chart provides compelling evidence of the differences between the online and offline channels, which shows the distribution of the 700 most talked about brands, by category:

Category Distribution of Offline and Online Word of Mouth
 % of offline% of online
Beauty products5%1%
Beverages13%3%
Cars10%17%
Children's products2%0%
Clothing products7%3%
Department stores5%4%
Financial services4%2%
Food and dining12%4%
Health products and services3%1%
Home design and decoration1%1%
Household Products2%0%
Media and entertainment9%32%
Sports and hobbies3%8%
Technology products and stores13%17%
Telecommunications9%7%
Travel services3%1%
   

The first column is the distribution of the word of mouth mentions offline across 700 brands. The categories with the large percentage of conversation are technology, beverages, and food, followed closely by telecomm and media. But no one category dominates.

Compare this to online WOM in the second column, where the picture is totally different and in many respects much more extreme. Fully 1/3 of all conversation is about media and entertainment brands. Cars and technology together represent another 1/3 of all conversation. If you add in sports, you have covered three quarters of all WOM, and there is very little conversation about the rest.

What does this research mean? It means that we cannot look at the online WOM and think that it represents the offline WOM and vice versa. These are two different pictures. For marketers and researchers who are searching for the truth about what people are saying about products, services, and brands so that smart decisions can be made, we need to take a holistic view and listen to all the voices of consumers, both those that are expressed online and those that take place offline.

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