ChatThreads ChatterBox

Free access to Admap article: "Is Talking Getting You Anywhere? Measuring WOM Marketing"

Here's a PDF of my Admap article (Admap allows us to post it free for 30 days so read it now, or get your subscription to Admap). Be sure to check out other Admap articles devoted to WOM as well.

It was strange for me to give up editorial control over the final content of the article. Overall, though, the editors did a great job making my verbose language choices more concise and incorporating images and tables to bring the content alive. Just a couple comments to clarify some of the content:

- Figure 3 on p. 19: There should be a dollar sign not a pound sign by Net Conversation Value. (While we do work in the UK, this Conversation Value Model analysis was done for a U.S. client. Must have been a typo missed in the final editorial process).

- The blurb by the photo on p. 17: "Research by ChatThreads found that 50% of influencers' conversations were face-to-face, while 35% took place online." Be sure to read the full text in the body since we measured this for a new technology product launch where a company engaged influential bloggers. Other programs we measure, such as for CPG products, typically have 80%-90% of WOM that takes place offline. (Also, the article states that ChatThreads is the WOM marketing agency, while that text should refer to Matchstick).

WOMMA Webinar: Measuring the Value of WOM, Come Rain or Come Shine

What are you doing at noon EST on Thursday, April 9th?

You should be calling in to the free webinar I am doing (courtesy of the Word of Mouth Marketing Association) on how to measure the value of consumer conversations. It's free whether you are a WOMMA member or not. Here's the official blurb:

Whether the days are cloudy or sunny, or your brand is in or out of the money, measuring the value of word of mouth (WOM) has become a strategic imperative. This webinar will guide participants through five ways that consumer conversations impact a brand’s bottom line and offers specific tips and techniques to assess the value of WOM to your brand.

Hope to see you on the call! Register Here

Admap series of articles on WOM Marketing

Be sure to check out the current issue (April 2009) of Admap which has a series of articles on word of mouth. Articles include:

Where is talking getting you? Measuring WOM
Comparing new models for measuring word-of-mouth ROI, such as Conversation Value, Momentum Effect and Net Promoter Economics. 
Dr Walter Carl, ChatThreads

Influencers are essential in driving WOM
As demand for word-of-mouth marketing has grown, so has the need for insight into how influencers stimulate demand. 
Ed Keller and Brad Fay, Keller Fay Group

Empower consumers to shape the brand
Getting word-of-mouth right is not about telling people what to think, and may require a change in corporate culture. 
Ivan Palmer, Wildfire

Paying lip service is not enough
Word-of-mouth needs to be integrated into the whole brand development process, not tacked on as an afterthought. 
Geoff Gray, Naked Communications

Tap into passions of brand advocates
To ensure productive and long-term conversations with consumers, a brand must first identify its discursive matrix. 
Molly Flatt, 1000heads

State of Word of Mouth Research & Measurement 2008

Earlier this morning I presented the State of Word of Mouth Research and Measurement at WOMMA's annual Research Symposium. You can see it here.

"Is Talk Cheap? How Cheap?": Conversation Value and Conversation Cost

I was excited to see an article in Brandweek about the value of a conversation titled "Is Talk Cheap? How Cheap?". The article is about how the WOM industry is making efforts towards a standardized ROI metric, or at least a set of standardized metrics.

There are some really important points in this article, and to fully appreciate it I think it's valuable to understand the distinction between the *cost* of a conversation and the *value* of a conversation.

First, some key points from the article:

- putting a value on a WOM conversation is indeed a hot topic and definitely worthy of coverage
-  the Word of Mouth Marketing Association, of which ChatThreads is a member, is helping to shape the discussion on this important topic
- when determining how to attribute purchases to a particular initiative it can be challenging, though not impossible, to isolate the effect of WOM especially in light of other influences going on in the market
- there are companies actively working in this space to help define the value of a conversation (by the way, here are links to papers by three of the companies mentioned in this article who have written on this topic: ChatThreads, Satmetrix, and BzzAgent's series of papers and stay tuned for more in the upcoming Measuring Word of Mouth research book by WOMMA).

Second, to appreciate this topic it's important to distinguish between conversation cost and conversation value. Here's the scoop:

One way to calculate the *cost* of a conversation is to divide the amount invested in a marketing initiative by the number of conversations that can be attributed to that marketing initiative (this is the formula that BzzAgent was cited as using in the article and how they arrived at a figure of $0.50 per conversation).

A different formula is required to calculate the *value* of a conversation. At ChatThreads we use the Conversation Value(TM) model which incorporates the conversational reach of a marketing initiative, reported purchase behaviors, and a number of other factors related to customer lifetime value (see the white paper for details). The outcome of this analysis is a single number, like $0.51 per conversation, which means that each time a conversation occurred about a particular brand that can be attributed to a marketing initiative, the bottom-line value to the brand was $0.51 (if the number is negative then the program failed to deliver a positive ROI). Based on our internal analysis we have found that this number can vary widely across product and industry categories, as one might expect.

In the Brandweek article, the figure that is attributed to BzzAgent refers to the average cost of a conversation. The figure that is attributed to ChatThreads refers to the value of a conversation (for a particular lower-involvement CPG product).

To summarize then, the cost of a conversation refers to the resources the company invested to generate those conversations (whether it be media spend, investments to improve the product or customer service, etc.). The cost of a conversation is established by the market, and can be used to set the rate for media spend, for example. The value of a conversation is the bottom-line impact to a brand of a WOM conversation. It is established by research and can be used to measure the effectiveness of particular marketing initiatives and for ongoing tracking of a company's performance.

This is an exciting time for WOM research and I'm appreciative that Brandweek chose to cover this important topic. Stay tuned for more research throughout the upcoming year!

(By the way, if you are a researcher who has something to add to this topic please consider contributing to the special section on Value of a Conversation for the Word of Mouth Marketing Association's research book, Measuring Word of Mouth, Volume 4.)

Sneak Peek: "Measuring the Value of Word of Mouth"

As I mentioned in my last post I'll be speaking at the Advertising Research Foundation's Audience Measurement 3.0 conference this week. I'm on a great panel titled "Putting a Ruler on Buzz" and I'll be speaking with folks from Nielsen Online and The Keller Fay Group.

My portion is "Measuring the Value of Word of Mouth" and here's the promo blurb:

We’re told that word of mouth works, but what’s the value of a conversation to a brand? This research shows how to measure spread and impact in order to determine the true value of a conversation.

In case you want a sneak peek, or can't attend the conference, below is a copy of the paper I'll be presenting. Here's the executive summary:

This paper presents a Conversation Value™ model that quantifies the bottom-line value of each conversation about a company’s product or service that can be attributed to a particular marketing or media initiative. We also present the G2X Conversation Tracking Methodology, which is used to collect data for two key inputs into the Conversation Value™ model: generational relay rates (used to compute the overall conversational reach of the initiative) and purchase rates (the percentage of people who report purchasing the product at each generation). We show how to compute the conversation value for a CPG product and then discuss four applications of how the model can be used in the media and marketing industries. In an extended appendix we provide technical details about how to calculate generational and purchase rates using a multiple imputation procedure.

Download "Measuring the Value of Word of Mouth" Conference Paper

Conversation Value Model: Explained

We've received a lot of inbound requests about our Conversation Value™ Model, which is one of the key models we use to provide clients who want to measure the effectiveness and ROI of their marketing initiatives designed to leverage word of mouth. There has also been some productive commentary about the model on John Bell's blog about the scalability of WOM programs. 

I'm going to talk about the model in detail at the Advertising Research Foundation's Audience MEasurement 3.0 conference next week, but in advance of that we wanted to put out a brief executive summary on our (newly re-designed) website for free download.

People who want to see a full version of the ARF paper can contact me offline.

If you have any questions about the model please ask them in the comments below or contact me offline.

Chat In The Box

Our society has a myriad of ways to discount the value of talk: Talk is cheap. All talk and no action. Just small talk.

For more than 15 years I have been researching how people and organizations communicate. If there is one thing I learned it's that such expressions couldn't be further from the truth. Everyday, routine conversations are the "stuff" of life; they create and sustain relationships, and we miss them when they're not there.

Everyday talk is also the context for a lot of our discussions about companies, brands, products, and services. Such conversations are a currency in a few senses of that word. Not only are conversations widespread (everybody talks and over 15% of all our conversations include reference to a brand), they circulate among people and social networks, and they have value to the people talking and to the brands being talked about.

There's been a lot of research on how "word of mouth" has value to the people talking: creating opportunities to share positive and negative experiences, allowing others to display themselves as particular types of people (helpful, knowledgeable, hip), and reducing risk and uncertainty when making decisions.

Quantifying the value of brand conversations to the company has been less understood.

This is where ChatThreads comes in.

I started ChatThreads in the summer of 2007 to help companies understand how conversations about their brands, products, and services spread, and what the bottom-line impact of those conversations are. I called it ChatThreads because people's talk about brands come up in our everyday "chit chat" and these conversations can be seen as threads that form the fabric of our connections.

This blog creates a space to chat about the true value of these seemingly inconsequential conversations and how they weave in and out of one social network to another.

You will see contributions on this blog from multiple ChatThreads employees over time about a range of topics having to do with word of mouth research and measurement as well as the marketing and media industries. We hope you enjoy and will contribute your own perspectives through your comments.

Walter