Study: Word of mouth accounts for 13% of all sales
HOLLYWOOD, Calif. — Researchers on Tuesday announced the results of a study that measured the impact of "consumer word of mouth" in six diverse categories, finding that online and offline consumer conversations and recommendations account for 13% of consumer sales, on average, which represents $6 trillion in annual consumer spending. In higher pricepoint categories, word of mouth's impact is almost 20% of sales.
The results contain good news for practitioners of both paid and earned marketing. About one-third of the sales impact is attributable to word of mouth acting as an "amplifier" to paid media, such as television, with consumers spreading advertised messages. But most of the impact of word of mouth works independently of advertising, whether stimulated by product or customer service experiences, public relations, owned and earned digital content or referral marketing, for example.
Other key findings include:
Offline and online word of mouth are both strong purchase drivers, with offline accounting for two-thirds of sales and online accounting for one-third;
Researchers found that an offline word-of-mouth impression drives at least five times more sales than a paid advertising impression, and much more (as much as 100 times more) for higher-consideration categories; and
Word of mouth's impact happens closer to the time of purchase than traditional media — often within two weeks.
"Intuitively, we know that a consumer recommendation is going to be a powerful contributor to brand sales, but this is the first time a rigorous study has quantified that impact across a range of product and service categories," stated WOMMA president Suzanne Fanning. "We hope this research will lead marketers to elevate the role of word of mouth, both online and offline, in their marketing plans."
The study was organized by the Word of Mouth Marketing Association, which is hosting its annual summit conference in Hollywood this week, and was paid for by agency and brand sponsors, including AT&T, Discovery Communications, Intuit, PepsiCo and Weight Watchers. The study was based on econometric modeling of sales and marketing data provided by participating brands on a confidential basis. Analysis was conducted by Analytic Partners, an independent analytics consultancy in marketing analytics.
In addition to the data contributed by the sponsors, social media data for participating brands was contributed by the analytics firm Converseon, and offline word of mouth data was contributed by the market research company Keller Fay Group. Agency sponsors of the study included Brains on Fire, House Party, Ogilvy and Zocalo Group.