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

Doin' It "Animal Style" In Vegas

I am on my way home from Las Vegas after attending the Word of Mouth Marketing Association's annual conference and had to stop at In-N-Out on my way to the airport.

As I was placing my order in the drive-thru my taxi driver heard me ordering a Double-Double with onions. He said "Make it 'animal style'." I was sure I had no idea what that meant. He said "grilled onions and extra sauce."

I knew about the grilled onions, but not this animal style business. I was skeptical so I made sure to tell the In-N-Out guy just give me the Double-Double with grilled onions. But the cabbie wouldn't have it. He insisted I do it animal style.

In the face of such certainty, and with a bit of adventure, I told the guy at drive-thru to make it animal style.

I've been going to In-N-Out every trip to the West coast for the past 15 years and had never done it animal style. Never even heard of it. I was an animal style virgin. I felt so naive and vulnerable.

But no more.

With great anticipation I ripped into the first bite, and it did not disappoint.

It was a little more greasy than what I was used to but the flavor was richer beyond my wildest dreams. I devoured it with a raw, hungry passion. I didn't want it to end but knew it must.

The cabbie says he's made the recommendation to 150 people and I can see why.

I tipped him extra in appreciation when he dropped me off at the airport.

My first time doing it animal style was special indeed. Maybe it can be for you too. As it turns out, a relevant word of mouth recommendation, with a bit of surprise and delight, is good for everyone.

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.)