Word of mouth is a reference to the passing of information from person to person. Originally the term referred specifically to oral communication^[1] (literally words from the mouth), but now includes any type of human communication, such as face-to-face, telephone, email, and text messaging.

[edit] History of word of mouth marketing

One of the earliest Australasian references to and the active use of the term 'Word of Mouth Marketing' was by an Australian MLM company from the mid 1980's. This company may possibly have been the originator of the term. This company promoted its alternative-to-dairy product range through this method, especially to those with asthma, dairy allergies and cardiac issues. The related topics became a conversational piece, so product promotion and trial naturally resulted.^{[citation needed]}

[edit] Word of mouth marketing

Word-of-mouth marketing, which encompasses a variety of subcategories, including buzz, blog, viral, grassroots, cause influencers and social media marketing, as well as ambassador programs, work with consumer-generated media and more, can be highly valued by product marketers. Because of the personal nature of the communications between individuals, it is believed that product information communicated in this way has an added layer of credibility. Research points to individuals being more inclined to believe WOMM than more formal forms of promotion methods; the receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals).^[2]

To promote and manage word-of-mouth communications, marketers use publicity techniques as well as viral marketing methods to achieve desired behavioral response. Influencer marketing is increasingly used to seed WOMM by targeting key individuals that have authority and a high number of personal connections.

Marketers place significant value on positive word-of-mouth, which is traditionally achieved by creating products, services and customer experiences that generate conversation-worthy "buzz" naturally.^[3] The relatively new practice of word of mouth marketing attempts to inject positive "buzz" into conversations directly. While marketers have always hoped to achieve positive word-of-mouth, deliberate efforts to generate beneficial consumer conversations must be transparent and honestly conducted in order to meet the requirements of Section 5 of the Federal Trade Commission Act that prohibits "unfair or deceptive acts or practices."^[4] To help marketers understand the difference between legitimate and unfair practices, a number of professional organizations have put forward recommendations for ethical conduct.^[5][6]

Word-of-mouth effects in the life cycle of cultural goods has been mathematically modelled. One of most used ways to calculate it is based on the following formula: WOM'î¡÷î� (where î¡ is the number of persons that answered, in a representative poll, they somehow do talked about a brand or product; and î� is the number of planned impacts of an advertisement campaign for that specific brand or product ). ^[7] For evidence as to the conditions under which word-of-mouth communication is effective, see Grewal et al. 2003.

With the emergence of Web 2.0, many web start-ups like Facebook, YouTube, MySpace, and Digg have used buzz marketing by merging it with the social networks that they have developed. With the increasing use of the Internet as a research and communications platform, word of mouth has become an even more powerful and useful resource for consumers and marketers.

In October 2005, the advertising watchdog group Commercial Alert petitioned the United States FTC to issue guidelines requiring paid word-of-mouth marketers to disclose their relationship and related compensation with the company whose product they are marketing. The United States FTC stated that it would investigate situations in which the relationship between the word-of-mouth marketer of a product and the seller is not revealed and could influence the endorsement. The FTC stated that it would pursue violators on a case-by-case basis. Consequences for violators may include cease-and-desist orders, fines or civil penalties.^[8]

[edit] Word of mouth marketing agencies

As a result of the growing interest in word-of-mouth marketing worldwide, many niiched marketing agencies were formed around word-of-mouth marketing during the years 2000-2006. Today, there are many local and global agencies specialized in word-of-mouth marketing, e.g. Likeable Media^[9], Pronto Communication, Vanksen, Communispace, Keller Fay Group etc.

[edit] References

[edit] See also

• Referral economy

[edit] External links

• 'Online Consumer Review: A New Element of Marketing Communications Mix'
• Crowd DNA word of mouth research study for Guardian News & Media