Online Word of Mouth: Effective and Necessary Marketing

Forrester research released a study on electronic “Word of Mouth”. Facebook takes 63% of the word of mouth share.

After the article on mashable I thought I’d post a short excerpt of my thesis. Note: This is really only the first review of a chapter still strongly in progress and might still have some weird sentences in it. It’s a good overview on some literature and studies tough.

Word of mouth is the process of passing on information from one person to the next person. According to Richins and Root-Shaffer (1988) “ word of moth plays a major role in customer buying decisions” (Richins/Root-Shaffer 1988, p. 2169).

Word of mouth (WOM) is perceived as a powerful but hard to control marketing tool. It involves consumers sharing attitudes, opinions, or feedbacks about businesses, goods, or services. Positive WOM strongly influences buying decisions, since the recommenda-tions are based on trust. People rely on family, friends or other people in their social networks (Jansen et al. 2009). Not only do people trust their closest relationships but research from Duana et al. (2008) indicates that “people appear to trust seemingly disin-terested opinions from people outside their immediate social network, such as online reviews” (Duana/Gub/Whinston 2008, p. 2169).

With the step we’ve taken into the digital age, new forms of WOM are becoming widely popular. Especially microblogging systems, such as Twitter, which are using social web communication services have gained recognition in last couple of years. With the new paradigm of “attention economy” (Davenport/Bekcer 2002, in Jansen 2009) brands compete for the attention of potential customers with modern social network services (Jansen et al. 2009, pp. 2170). Microblogging, as a new form of communication and spreading the word of mouth via digital channels, is also known as electronic word of mouth (eWOM). Hennig-Thurau et al. (2004) define eWOM as a: “statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet” (Hennig-Thurau/Gwinner/Walsh/Gremle 2004, p. 39) Users can describe their interests, experi-ence with products, express their opinions with others in posts no longer than two sen-tences. Microblogging has great impact on brands, since people can share their thoughts almost anywhere, at any time and with anyone (Jansen et al. 2009, p. 2170)

As research from Hennig-Thurau et al. (2004) could show, eWOM is less personal than face-to-face communication but has a more significant reach, is credible by being dis-played, more accessible to others and therefore more powerful and influential than tradi-tional WOM (Hennig-Thurau et al. 2004, p. 42).
Goldsmith and Horowitz (2006) specified several reasons for this online information seeking and the effectiveness of eWOM. The study reported several reasons, such as risk reduction, popularity, lowering costs, easy access to information, encouragement from offline channels such as Television, and purchase information acquisition (Gold-smith and Horowitz 2006, p. 12).

Additional research from Jansen et al. (2009) on microblogging services, showed that they had strong impact on brand awareness and brand knowledge. This has strong implications for corporations, organizations and individuals. The study found that 19% of all reviewed microblogging post mentioned an organization or product brand in some way. “This is a good percentage and indicates that the microblogging medium is a vi-able area for organizations for viral marketing campaigns, customer relationship man-agement, and to influence their eWOM branding efforts” (Jansen et al. 2009, p. 2184). Jansen et. Al. further highlight, that “microblogging is a social communication challenge affecting brand awareness and brand image, that managing brand perception in the mi-croblogging world should be part of an overall proactive marketing strategy, and maintaining a presence on these channels should be part of a corporation’s branding cam-paign” (Jansen et al. 2009, p. 2184).
The study further reveals that 50% of branded post are positive while 35% are negative. Negative customer feedback trough digital media can be useful for identifying customer preferences or correcting accidental product defects. Therefore monitoring eWOM can be used as early warning system. Since microblogging branding is a fluid process and customers can give direct feedback to an individual’s experience of a product or service, it requires constant and continual management (Jansen et al. 2009, p. 2185).

Microblogging services have bunged the emotional gap between the buyer and businesses. With microblogging posts customers can express their feelings, provide feed-back, ask questions and get answers (Jansen et al. 2009, pp. 2185) For companies this means new challenges on their overall branding strategy and customer relationship management, including the customer in the decision process and engaging in the communication. “Customers are screaming to be engaged with the companies that affect their lives, (…) they want to be asked and the want to be involved” (Weber 2007: p. 19 )