WOM ROI still elusive
According to a survey of over 300 marketers across a variety of industries, nearly two-thirds (64 percent) believe social marketing is "more effective than traditional marketing." Yet, few think they can effectively measure the ROI of online social media (34 percent) or offline WOM (22 percent).
The end-result is that measurement problems are preventing greater usage of word of mouth marketing. The top three cited obstacles are difficulty in measuring offline WOM (89 percent), not being able to show ROI (85 percent), and difficulty measuring online social media (79 percent). Other obstacles are a lack of company coordination (75 percent) and lack of understanding about WOM marketing (64 percent).
The American Marketing Association (AMA) and the Word of Mouth Marketing Association (WOMMA) sponsored the first of its kind survey.
In an interview with Business 2 Community, David Smith, director of research & analytics at House Party, a social media marketing company, cited weak measurement tools as the reason only 43 percent of marketers listed "direct sales" as a major objective of their WOMM/social media campaigns. Coming in much higher were driving brand awareness (82 percent) and increasing engagement (69 percent). He added, "If marketers were better able to measure a sales impact, they’d feel more comfortable listing that as an objective."
Demonstrating the particular challenges around quantifying offline WOM ROI, organizing parties or events earned the highest level of satisfaction overall, with nine in 10 marketers saying they were "very" or "somewhat" satisfied using this tactic. Yet only 30 percent of all respondents surveyed utilized such events.
WOMMA plans to unveil a landmark study on ROI at its November summit.
Other findings from the survey:
- Online social media is considered a "major spending area" by only 26 percent of marketers with "offline word of mouth" ranked at 21 percent. That’s well behind customer service (54 percent), e-mail marketing (40 percent), customer relationship management (39 percent) and digital advertising (36 percent);
- Yet 70 percent will increase spending on social media, more than any other emerging marketing channel with digital marketing (59 percent), e-mail marketing (53 percent) and CRM (47 percent) also rating high. Offline WOM is expected to expand 29 percent.
- The most-used WOM tactics were building/managing profiles (82 percent), monitoring online social media (72 percent), and using sharing buttons (68 percent). Forty-two percent measure offline WOM;
- The tactics best poised to see more usage are enlisting advocates (40 percent are considering it), and setting WOM as an advertising objective (35 percent).
- The State of WOMM 2014 – Word of Mouth Marketing Association (press release)
- State of Word of Mouth Marketing Survey (2014) – Word of Mouth Marketing Association (study)
- House Party Director of Research & Analytics David Smith – Business 2 Community
Why do you think finding a measurement tool for ROI on word of mouth marketing has proven so elusive? Does online WOM promise to offer much better ROI than offline WOM? Should online WOM be given a much higher priority at this point than offline?