New Academic Research on WOM: The Role of Disclosure in Organized Word-of-Mouth Marketing Programs

As a follow-up to my earlier post, I am excited to announce the release of my latest journal publication on word-of-mouth marketing communication. This piece was published in the Journal of Marketing Communications titled "The Role of Disclosure in Organized Word-of-Mouth Marketing Programs". If this title sounds like a familiar topic for me you'd be right as it is the the academic version of my industry research report "To Tell Or Not To Tell?: Assessing the Practical Benefits of Disclosure for Word-of-Mouth Marketing Agents and Their Conversational Partners”" published in January 2006. At the time the research received a lot of attention in mainstream and social media being cited in Advertising Age, The Atlantic Monthly, The Boston Globe, and Business Week, among others.

The publication of the academic journal article also comes out at a fortuitous time and venue. By timing, I'm speaking of the latest legal and public policies coming out of the UK concerning the issues of transparency and disclosure in advertising and marketing practices By venue, I mean that the editorial board of the journal has a heavy contingent of UK and European-based scholars.

(By the way, see the Word of Mouth Marketing Association's position on this important topic. It turns out this new UK legislation was not targeted at organized word of mouth marketing programs in particular but it cast a much wider net in terms of unfair marketing and advertising practices in an effort to protect consumers from deception and other unethical practices).

OK, so to the content of the article. Here's the abstract:

Prevailing views of organized word-of-mouth (WOM) marketing programs suggest that disclosing corporate affiliation reduces perceived credibility and hampers campaign effectiveness. To test this view we surveyed WOM marketing agents and their conversational partners (CP) after a WOM marketing episode. Results indicate that when disclosure occurred – defined as when the CP was aware they were talking with a person participating in an organized WOM marketing program – agents were rated as more credible, CPs had fewer negative feelings about the agent’s corporate affiliation, and CPs told more people about the brand being discussed. These counter-intuitive results can be explained in part by the existing personal relationship between the agent and CP and invite us to consider how personal relationships may moderate the impact and potential business advantages of disclosure in organized WOM marketing programs.

If you read the To Tell or Not To Tell? report I STRONGLY encourage you to read the academic version of the article because it goes into a lot more detail and nuance about the research, the results, and the limitations.

The main difference is that the academic venue afforded more of an opportunity to underscore the importance that the underlying relationship plays in explaining the counter-intuitive results of the research. In fact the results that support the business case for disclosure -- higher perception of source credibility, higher relay rates when disclosure occurs (meaning more people were subsequently told about the product), and minimizing the potential for "backlash" if a person doesn't disclose but then the person they're talking with later finds out they were part of an organized marketing program) -- can be explained in large part by the pre-existing relationship between the people talking. The act of disclosure played a role in explaining the phenomena but not as much as the type of relationship between the people talking.

This implies that the same results may not be as salient when you're talking with someone you don't know very well, or at all, and disclose that you're participating in a marketing program. In these situations, because people may not know anything else about you as a person and your motives, then this disclosure may indeed diminish the program participant's credibility and diminish the perceived sincerity and effectiveness of the recommendation. And this is precisely the reason why there are consumer protections in place, and that's because non-disclosure may indeed make a difference in how people perceive the brand-related communication, even if there aren't any spurious motives (as in many things, perception is the reality).

But if you have an existing relationship (for example, friend, family member, co-worker) the act of disclosure is welcomed or a non-issue because this bit of information is contextualized by the history of all the other interactions the people have shared.

I believe there are a lot of significant implications to this research and underscores the importance of understanding the many contextual features that affect how people interpret each others' communication.

If you think you'd find this article interesting you can download it from the publisher's website here or a pre-press version from my download page (but if you're going to cite the paper be sure to cite the published version).

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Tags: WOM word of mouth Word-of-Mouth Marketing marketing communication

Yikes! How To Write A Pay-Per-Post Blog!?!

While I was doing some research online yesterday I came across a "How To" website (eHow.com) about how to write a Pay Per Post blog post.

As background, Pay Per Post's business model is to match bloggers and advertisers together: advertisers who want people to write about their products on their blog with bloggers who want to make money doing so. The blogger's deliverable is the post with a brand mention that conforms to any guidelines that the advertiser sets up.

This has been quite a controversial practice since its inception, as it represents a form of shilling. Further, Pay Per Post's initial policy was not to require, or even encourage, disclosure that the person was getting paid to write about the product. Pay Per Post's policy has since changed, coincidentally timed, it seems, with discussions by the FTC and disclosure.

Anyhow, the author sets up the article by saying "This article will help you learn how to rise above the competition and produce higher quality paid posts that your sponsors and readers will love."

Point #1 is to think long term and write a quality post since the advertiser will rate the quality of the post behind-the-scenes: "So while it may be easy to write a quick post for $5, it's better to invest a bit of extra time to understand what your advertiser wants out of the deal." This is concerning because then your endorsement is more for the advertiser than for the other people you are talking with (though the author suggests that you can still write a post your readers will enjoy).

Point #2 is to "Be Honest" about your opinion with the product ("If you lie, they are paying for a false testimonial. This can hurt their company, ruin your reputation as a writer and can get you banned."). OK, fine, honesty of opinion (which is WOMMA's second point in their Honesty ROI guidelines). But nothing about honesty being the ethical thing to do. The author adds the point about being relevant: "Instead, think about reasons why you might use their service or product. How would it help you? How can it help your visitors?"

But then the really strange part is point #3. The blogger says that writing a Pay Per Post blog is "secret" and that "If you want future work, don't tell your readers that you are writing paid posts. This includes filtering the posts into a "paid post" category, or tagging them as such. You are basically telling your sponsor that you are embarrassed to write about them."

I was shocked to read this. I'm not sure if my surprise has more to do with the logical inconsistency between point #2 (be honest) and #3 (don't tell people you are getting paid), or because just point #3 on its own being unethical.

I thought maybe this post was written a few years ago because people don't still think that hiding their identity is the way to go. But no, the post date is January 14, 2008.

Anyhow, folks if you are thinking about participating in the Pay Per Post or similar programs please check out the WOMMA Ethics Code as part of your decision to participate. And if writing a post about how to do it, please consider this.

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Tags: Pay Per Post shilling Stealth Marketing

How To Stay Out of the Limelight of a Marketing Controversy

I've been invited to speak to the Public Relations Student Society of America group at Emerson College tomorrow night to reflect on the Aqua Teen guerilla marketing program gone wrong and to speak about my work with the Word of Mouth Marketing Association.

The latest development with the Aqua Teen Hunger Force guerilla campaign is that Turner Broadcasting and Interference Inc have accepted full responsibility for the panic caused by the campaign and agreed to pay $2,000,000 for damages (about $1 million) and future emergency preparedness programs (another $1 million). I have to think Turner is gonna cover all of this.

On NPR tonight I also heard that the charges against Peter Berdovsky and Sean Stevens, the two individuals who placed the LED devices in Boston, will be "resolved."

Interference Inc has also put its website back online (it had been offline for a couple days, and then at one point, only included an apology in black lettering on a white background).

One of the charts I'd like to show in our discussion is the graph above from the DIY BlogPulse trend tool. There's a huge spike and then a significant drop off. Based on volume, Aqua Teen Hunger Force has definitely benefited (which should help for the release of the upcoming movie). Turner Broadcasting had much more attention than usual, but interestingly Interference Inc. has still stayed relatively out of a lot of the public discussion on this.

There is a fascinating parallel here to another controversial campaign with which Interference was involved: the Sony Ericsson Fake Tourist campaign (go to Interference's website and click on "case studies" and then "Sony Ericsson"). According to Interference's website, they created the Fake Tourist campaign on behalf of Fathom Communications. However, when you see the CBS 60 Minutes "Undercover Marketing Uncovered" show (2003) where this campaign was brought to the attention of many in the mainstream, Interference (or Fathom Communications) was never mentioned, just Sony Ericsson. However, in the Wall Street Journal article from 2002, Fathom Communications was credited for the campaign.

Both of the campaigns raise concerns about disclosure of the fact that there is a marketing campaign involved. Interested readers may want to check out Sean Carton's ClickZ article on lessons that can be learned from the ill-conceived Aqua Teen campaign. He was kind of enough to mention my research on the role of disclosure in WOM marketing campaigns and I've had people downloading my "To Tell Or Not To Tell?" report all day today.

I look forward to talking with the faculty and students at Emerson tomorrow about these issues and more!

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication

Response to Justin Kirby's Comments About To Tell Or Not To Tell? Report

Recently Justin Kirby of Viralmeister posted on his blog, and left a comment on my blog post, regarding concerns he had about the methodology of my research report "To Tell Or Not To Tell?" So that other interested readers could follow along I wanted to "promote" his comment to its own blog post and respond. I apologize in advance for this being a long post but I think it's important to address each concern in detail (and besides, it's an occupational hazard for me to provide verbose explanations -- ask my students, they'll tell you).

Justin was responding to my post on a recent study by Alain Samson at the London School of Economics (I pull excerpts for the sake of space; see Justin's full post):

... To his credit Dr Carl does point out that not everyone is cheer leading the Net Promoter Score and makes some valid points about the need to see the methods and results used in the analysis in order to assess the merits of this latest research from the London School of Economics. ... Anyway, I was mildly amused about Dr Carl’s stance on methodology because I felt the same way about his research on Bzzagent’s model (To Tell or Not to Tell), which by his own admission was based on Bzzagent’s internal analysis of the 270,000 word-of-mouth reports from their own agents. I’d love to see how Dr Carl adjusted for bias of not only Bzzagent’s internal analysis of the reports, which is far from objective, but also the bias of the reports from a ‘trained’ group who are both directed and incentivised to spread the word.

I just wonder where the control group was because I’m dubious about solely using a panel which has been designed to leverage the Hawthorn[e] Effect rather than a more conventional research panel that tries to adjust for this kind of bias. Maybe Dr Carl could put me right on this because I can’t help thinking that facts were fitted to theories about disclosure which fly in the face of Attribution Theory.

I'd like to take the opportunity to respond to Justin's comments to clarify his valid points from apparent misunderstandings of my research. For a quick overview of the main findings of the To Tell Or Not To Tell? report please read here (the full report can be downloaded as well).

First, the To Tell Or Not To Tell? (TTONTT) report was not based on "BzzAgent's internal analysis of the 270,000 word-of-mouth reports from their own agents." This was mistakenly reported in a ClickZ article entitled "BzzAgent to Agents: Spill the Beans, Or Else." I wrote a blog post to clarify the mistake in that article, which Justin linked to, so I would encourage Justin and other interested readers to re-read that post. As I wrote in that post, BzzAgent prepared their own white paper citing internal reports of their agents; none of the findings from TTONTT relied on those reports so there was no bias to adjust for regarding a separate analysis conducted by BzzAgent.

Second, Justin was concerned about the "bias of the reports from a ‘trained’ group who are both directed and incentivised to spread the word." Here again, this is a misunderstanding of the TTONTT methodology. I employed a dyadic methodology that relied on surveys completed by BzzAgents (not the internal reporting done by BzzAgents as part of a campaign, but surveys completed as part of this specific TTONTT research project) and their conversational partners (the people they talked with about the brand, product, or service). To account for any potential bias in the BzzAgent's responses to the TTONTT survey we validated their responses with their conversational partners' responses. So, for example, if a BzzAgent said they disclosed but the Conversational Partner said they didn't disclose, this was noted as a discrepancy, and the discrepancy results were fully reported and accounted for in the analysis on pages 10-11 of the report.

Third, Justin wondered where the control group was because he is:

dubious about solely using a panel which has been designed to leverage the Hawthorn[e] Effect rather than a more conventional research panel that tries to adjust for this kind of bias. Maybe Dr Carl could put me right on this because I can’t help thinking that facts were fitted to theories about disclosure which fly in the face of Attribution Theory.

Justin's point about a control group is valid and I appreciate the opportunity to respond. The TTONTT report was part of a larger project where we were trying to understand multiple perspectives on the same interaction -- the BzzAgent's and the Conversational Partners' (many studies rely on just one person's perspective) -- and also to determine how Conversational Partners were affected by talking with a participant in a word-of-mouth marketing program. And then, in addition, the study was to look at what role disclosure of the agent's affiliation with a WOM marketing company might be.

The study did not employ a control group where we gave instructions to some agents to disclose their identity, other agents to not disclose their identity, and then another group where no instructions regarding disclosure were given (the third group here could be used as a control group). The reason for not doing this was because it would have violated BzzAgent's policy surrounding disclosure, which required agents to disclose their identity (see page 8 of report). Instead, what we did was to conduct the analysis by comparing two groups after we collected the data: 1) Conversational Partners who knew they were talking with someone affiliated with a word-of-mouth marketing company and 2) Conversational Partners who did not know the agent's affiliation. NOTE: I relied on the Conversational Partners' responses (that is, non-Agents) for most of the analyses, except when I conducted the discrepancy analyses where I matched the BzzAgent's survey response to the Conversational Partners' survey responses.

By doing this post-hoc analysis, rather than using a field-based quasi-experimental design, or a laboratory-based experiment, this study has limitations, as all studies do (and there are other limitations to the study as well, all discussed in the report on pages 20-21). For example, we found that there was no difference between the outcome variables between the two groups (no difference in a conversational partner's likelihood to inquire further, to use the product/service, to buy the product/service, or to tell others about the product/service). But we did find that people who knew of the agent's affiliation told more people about the product/service. Because we didn't use an experimental design we can't conclude that disclosing agent affiliation led to higher pass-along or relay rates (more people being told). We can only say that conversational partners reported higher pass-along rates in conversations where they knew they were talking with someone affiliated with a WOM marketing program. However, while noting this limitation there are a number of important results that are, as Justin rightly points out, at odds with what we would expect from attribution theory (see my blog post responding to some of these counter-intuitive results; for readers unfamiliar with attribution theory as it relates to WOM, see Greg Nyilasi's chapter in the Connected Marketing book that Justin edited with Paul Marsden).

I was surprised myself by a number of results from this study -- this is the great thing about conducting original research -- so it would be inaccurate to say "that facts were fitted to theories about disclosure which fly in the face of Attribution Theory." But when you dig deeper into the analysis you find something that's pretty interesting and it's that attribution theory may still apply, as long as you take into account the relationship between the BzzAgent and the Conversational Partner. Here's what I mean...

If you're talking with a stranger or acquaintance -- people you don't know particularly well, or at all -- and the only thing you know about them is that they're part of a particular kind of WOM marketing campaign, then you might be more likely to question the person's credibility to give an unbiased opinion or an opinion that may not be in your best interest (in fact, some of the data I had about interactions with strangers actually trended in this direction; however since most BzzAgents speak with friends and family members (see page 6), rather than going up to strangers, we didn't have enough strangers to make valid statistical comparisons). However, if you know a person in a range of different contexts and have talked with them before, and know from those interactions that they generally have your best interests at heart, you're much less likely to question their sincerity when they share their opinion about the brand, product, or service. I think that because there was a high number of "stong-tie" relationships between the BzzAgents and Conversational Partners, this explains a good bit about why the results turned out the way they did (both BzzAgent's internal research and my own research partnering with them shows that the majority of the conversations are with already-known others).

Finally, Justin also expressed concern about a using a business model that's designed to leverage the Hawthorne Effect (meaning that people's behaviors will be affected by the act of giving people attention and making people feel more involved, which is what many WOM markting programs seek to do in order to stimulate WOM; interested readers should see Paul Marsden's chapter on product seeding programs in Connected Marketing). Here, again, I would reiterate that I surveyed Conversational Partners, in addition to the BzzAgents, who were not affiliated with the WOM marketing company. I would also offer that the study should be repeated with a wide range of different models and techniques of WOM marketing programs.

I hope that there are still a few readers who have made it to this point of the blog post! :-) I apologize for the length of this, but I appreciate the opportunity to clarify the study and I invite others to challenge the results and engage with the study so that we can achieve a better understanding of the role of disclosure in WOM marketing programs.

Justin, does this address all of your concerns?

Download the full version of the To Tell Or Not To Tell? report, as well as other papers I've written, for free at my download page

UPDATE (01/22/2007): Justin Kirby has posted a response to my response.

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication

FTC Response on Word of Mouth Marketing Regarding Disclosure

I'm blogging today from the Word of Mouth Marketing Association Summit in Washington, D.C. We just heard a presentation from Mary Engle, Associate Director for Advertising Practices at the Federal Trade Commission. She discussed the FTC's response to a complaint received from Commercial Alert (see background on the complaint and FTC consideration here). She summarized their complaint as follows:

Commercial Alert states that it is deceptive for marketers to pay consumers to engage in buzz without disclosure of the monetary exchange. They sought investigation of "buzz marketing" practices and asked the FTC to issue guidelines and bring cases. (NOTE: Commercial Alert should be calling this "shilling" or "stealth marketing" rather than calling this buzz marketing).

Here's the quick summary, with more details below:

- when payment is made to a consumer, that payment, by law, needs to be disclosed;
- marketers do not need to get parental permission for teens 13-18, but do need permission if the kid is under 13 (consistent with COPPA);
- non-monetary compensation (such as free samples, reward points, swag, etc.) do not need to be disclosed by law, but the FTC referenced that the WOMMA ethics code requires disclosure regardless of payment.

Here are the details:

The FTC declined the request to issue specific guidelines for WOM marketing, arguing that they feel a case-by-case investigation and enforcement is adequate. However, they did issue an official response later stating the the FTC's Endorsement & Testimonial Guides are applicable to WOM marketing. The FTC states that paid WOM advocacy fits the following definition of endorsement:

"An endorsement is any advertising message that consumers believe represents the opinions, beliefs, experience, etc. of a person other than the sponsoring advertiser" (Slide 8)

The Endorsement Guides require disclosure of the relationship between a seller and endorser "that might materially affect the weight or credibility of the endorsement" (Slide 9). They define a material connection as "one that isn't reasonably expected by the audience" (Slide 9). They also provide the following examples of these relationships: 1) seller is paying endorser, 2) endorser is related to seller, and 3) endorser is business associate of seller.

Their reasoning is that consumers wouldn't normally expect that someone has been paid to talk to them about a product. Further they suggest that consumers may give more weight to Person A's views rather than Person B's views if they know that Person A is independent from a seller while Person B is getting paid. Therfore, the reasoning goes, "Under the FTC Endorsement Guides, financial tie between the seller and paid agent should be disclosed."

Ms. Engle's presentation also addressed if the WOM program participant isn't paid, is disclosure still required? The FTC argues that it depends on whether consumers would give more weight to an endorsement if payment was or wasn't involved. It also notes that WOMMA's ethical guidelines call for disclosure even when there isn't payment. (For a research study about the potential business benefits of disclosure and guidelines for companies, please read my "To Tell Or Not To Tell?" report).

The Commercial Alert complaint also expressed concern about children's involvement in WOM marketing programs. The same disclosure applies in these cases. But what about parental consent? If a marketer solicits participation of kids under 13, then marketers need to comply with COPPA (Children's Online Privacy Protection Act), which means parental consent is required. But outside the scope of COPPA, the FTC doesn't enforce any other law that requires parental approval.

Download Mary Engle's Presentation from the FTC (opens into PDF file)
Commerical Alert's Reaction (Dec 11, Dec 12)
WOMMA's Reaction
Download To Tell Or Not To Tell? Research Report (link to download page)

Disclosure: Advisory Board Member of WOMMA

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing disclosure

To Tell Or Not To Tell?: Question About If Inundation and Repetitive Experiences With WOM Agents Decreases Credibility

Over the past few days I've had the chance to talk with bloggers, journalists, and authors about findings in the "To Tell Or Not To Tell?" report. One issue that has surfaced in a couple of the interviews relates to what happens if, and/or when, people start to become inundated with agents who participate in organized WOM marketing programs; will non-agents become less accepting of the message? [Note that "agent" is being used here generically to refer to any participant in an organized WOM marketing program].

I wanted to reproduce a specific exchange I had over e-mail about this issue (it's actually a follow-up to my last post with Isaac from Chapell Associates). What follows is the question and then my response.

In the Ad Age article covering the release of your study, you're quoted as saying:

“There’s a sense if there’s an organized word-of-mouth marketing program there must be something interesting about it...There’s a sense that a company wouldn’t do this unless there was something interesting or new about the product.”

Correct me if I'm wrong, but part of this seems to be that consumers aren't used to being approached as part of a WOM program - so it seems important and exciting. This makes sense to me, but it makes me wonder: if WOM became more prevalent, and consumers got many a "recomendation" via WOM agent, would they be less accepting of the messages?

This is, to some degree, a question of inundation - how much WOM are consumers willing to accept? Are repeated experiences with WOM likely to increase or decrease their trust of the recommendations provided by WOM agents?

Here's my response:

Thanks for your question and you raise a valid point. First, let me respond with some background to the quotation that appeared on AdAge.com. I was asked to explain why I thought the number of pass-alongs (how many people a person told after talking with a WOM agent) was higher when there was disclosure. I think there may be three reasons: 1) conversational quality scores were also higher when there was disclosure (that is, those conversations were rated as more informal, personal, relaxed, and in-depth); 2) credibility scores were higher, specifically that there were higher ratings of trustworthiness (being genuine and ethical) and goodwill (feeling like the other person had their own interests at heart); and 3) there's a sense of being "in the know" when you receive information that's part of an organized WOMM program (because it might be a new product or something especially interesting about an existing one in order to warrant being part of an organized program). The AdAge quotation came from my explanation of this third point.

I provide this background because I think organized WOMM programs will only be effective when they incorporate the three bedrock principles of all WOM: trustworthiness, goodwill, and relevance. That is, WOM works because we feel the other person has our best interests at heart and we view them as a reliable, trustworthy source of relevant information.

In terms of your question about how much WOM are people willing to accept, I think we need to reflect on how WOM is being used here. WOM can be seen as part of a larger philosophy of engagement, listenting, responsiveness, involvement, etc. as well as a specific set of activities or tactics (such as a campaign). I think you're talking about the latter in your question and I don't know what the threshold is for exposure to organized WOMM campaigns. But again, I think it all goes back to if people perceive the program is facilitating the exchange of relevant, credible information within the context of a trusted relationship.

I also don't know if repeated experiences with a WOMM program lead to more or less credibility in a message or towards a specific person. But I think this one is easier to answer because it would probably be like any other experience and depend on the quality of the recommendation and the relevance of that recommendation to our lives. If people's experience with organized WOMM programs help them to make better decisions, feel more in the know, feel like they can help others better, etc., then I think repeated experiences will lead to higher credibility. If the converse is true then I think people will begin to lose any belief in the value of the organized WOMM programs.

One final comment, you write about people not accustomed to being approached by WOM agents, but I don't know if this is really how it works, at least based on my research. That is, it's not like agents are going around like a salesperson might, door-to-door, and trying to make contact with a certain number of people (granted, some participants might do this or some companies might encourage their participants to do this, but if they are, I think this is a very unwise approach). Rather, the brand-related talk is more likely to come up in relevant points of existing conversations. For example, based on some recent findings, only 24% of campaign-related WOM episodes were planned in advance by the agent, suggesting that 76% came up spontaneously, or at least without an existing idea that they were going to talk about it. And then we'd need to look at the 24% that were planned because an agent might be looking forward to telling someone about the brand, either because of a positive or negative experience with it (that is, as opposed to "plotting" a time to enter it into a conversation). So in sum, to the extent that agents are going up to people and talking about the brand when it's not relevant to the other person, or not a relevant point in the conversation, then I think there is a problem, and people will not accept this type of model and will have a strong desire to "tune out."

Thanks, and again, let's keep the discussion going!

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This work is licensed under a Creative Commons License.


Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing disclosure

Explanation for Counter-Intuitive Findings in "To Tell Or Not To Tell?"

I've had a great response from the blogosphere to my research report on disclosure and organized word-of-mouth marketing programs (see also the AdAge.com article). Some people are surprised by what seem to be counter-intuitive findings in the study, especially in terms of why consumers might not be more skeptical after learning of a person's commercial affiliation through their participation in an organized WOM marketing program. For example, Isaac from the Chapell Associates blog posted this:

I must to say I'm surprised by the report's findings. Intuitively, we like to think of recommendations as just someone liking a product and then telling others about it - "here, try this brand of coffee, I really like it," not "here, try this brand of coffee, the company that makes it tells me it's really good." To be totally honest: I can't see why consumers, having been told that someone has a commercial relationship with an advertiser, wouldn't be more skeptical of that person's recommendation.

Here's three reasons why I think credibility may be the same or higher when there is disclosure in an organized word-of-mouth marketing program (I presented some of these points in my talk at the WOMMA Basic Training conference on Thursday):

1) In a clear majority of the cases there was an existing personal relationship between the agent (a person participating in the organized WOM marketing program/campaign) and their conversational partner (the person with whom they were talking). In fact, the median length of time the two knew each other was about 6 years. That existing relationship implies a history of conversations about brand-related and non-brand-related topics. In those conversations that aren't related to the organized program the conversational partner builds up trust and credibility in the other person (the agent). Thus, the fact that the person/agent is participating in the program is contextualized by all the other conversations and history of their relationship. That is, in many cases, the conversational partner is likely to feel like it doesn't matter that the person is in the campaign because s/he has my best interests at heart, I know I can trust her/him becasuse of our other interactions, and I know s/he is providing information that would be valuable and relevant to me.

2) A second reason credibility is unaffected, or may even be higher, when disclosure takes place has to do with the fact that the act of disclosing affiliation might be interpreted as a marker of honesty and credibility. That is, the conversational partner hears the disclosure and realizes the person isn't trying to be deceptive or pulling something over on them.

3) Additionally, I don't think many of the conversations play out as the hypothetical scenario you created might indicate. You wrote:

"here, try this brand of coffee, I really like it," versus "here, try this brand of coffee, the company that makes it tells me it's really good."

I don't have actual recordings of the interactions but I do have narrative accounts. A more likely scenario might be:

"hey I got some new coffee from company x as part of this campaign I'm in. It's a bit strong for my taste but I think you'd like it."

Part of the point with my admittedly hypothetical scenario (I didn't use an actual excerpt because I wanted to keep it as close as possible to your example for illustration purposes) is that, while people do receive information about the product from the company, they also try it out for themselves and then tell others what they think about it. Thus, the participants are spreading WOM based on their own experience with the brand, product, or service not (just) what the company said.

Thanks for the comment Isaac!

Disclosure is a crucial topic in the word-of-mouth marketing industry so please pass-along the link to download the study to anyone who might be interested in reading the report. Let's keep the discussion going!

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This work is licensed under a Creative Commons License.


Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing disclosure

To Tell Or Not To Tell? -- Research Report on Disclosure & Organized Word-of-Mouth Marketing Programs Now Available!

I am excited to announce that my research report on disclosure and organized word-of-mouth marketing programs is now available free of charge at my download page. The report is a result of a major industry-academic collaboration between BzzAgent, Inc. and Northeastern University.

My hope is that the report will stimulate discussion about the role of disclosure in organized word-of-mouth marketing initiatives and I invite thoughful commentary and criticism. If you are so inclined to blog about the report, please provide a trackback and a link to my download page -- http://www.waltercarl.neu.edu/downloads/ -- rather than uploading the file to your server. Also, please feel free to write comments to this post.

Below is a summary of the main findings...

• For approximately 75% of the conversational partners (the people with whom the word-of-mouth marketing agents engaged in word-of-mouth communication) it did not matter that they were talking with someone affiliated with a marketing organization. Instead what mattered was that they trusted the agent was providing an honest opinion, felt the agent had their best interests at heart, and were providing relevant and valuable information.

• None of the key outcome metrics (credibility, inquiry, use, purchase, and pass-along/relay) were negatively affected by the agent disclosing their affiliation. In fact, the pass-along/relay rate (the number of people a person told after speaking with a word-of-mouth marketing agent) actually increased when the conversational partner was aware they were talking with a participant in an organized word-of-mouth marketing program.

• In over 75% of the cases where a person learned about a brand or product from another source of information (such as a print, radio, TV, or web advertisement), talking with the marketing agent increased the believability of that other source of information. This finding was also unaffected by agent disclosure.

• Prior to the enforcement of the word-of-mouth marketing organization’s disclosure policy (where agents were required to disclose their affiliation in episodes involving an organized word-of mouth campaign), 37% of the conversational partners reported they did not know of the agent’s affiliation.

• For about 5% of the conversational partners who were not aware of the agent’s affiliation with the marketing organization there was a negative “backlash” effect when they found out. These negative feelings could be directed toward the agent, the interaction with that agent, the brand being discussed, and/or the company who made the brand, product, or service. There were virtually no negative feelings, however, when the conversational partner was aware of the agent’s affiliation.

... and key conclusions:

• Participation in an organized word-of-mouth marketing program does not undermine the effectiveness of word-of-mouth communication.

• Disclosure has practical business benefits. It does not interrupt the “natural” flow of conversation.

• Word-of-mouth marketing organizations should adopt a clear policy that requires disclosure. This policy should be implemented with a combination of both education about the practical business benefits of disclosure as well as enforcement procedures.

• Word-of-mouth marketing organizations should pay special attention to interactions with strangers and acquaintances as these relationship types were the least likely to know about agent affiliation and also more likely to have negative feelings when they did not know about agent affiliation.

• Policies regarding disclosure should go beyond requiring agents to disclose affiliation and should have special considerations to make clear the market research aspect of the business model.

Many thanks to all the agents and conversational partners who participated in this study!

Click on the links below for other posts on this blog regarding disclosure and word-of-mouth marketing:

- Clarification in ClickZ's Story "BzzAgent to Agents: Spill the Beans, Or Else"

- The Practical Value of Disclosure in Word-of-Mouth Marketing Campaigns

- How Much Can You Trust Buzz?

- Do You Know of Video Clips about WOM, Buzz, and/or Undercover/Stealth Marketing?

- Faked Out By BK?

- Campus Ambassador Programs, Buzz Marketing, and Disclosure

- On Affiliation with a Buzz Marketing Agency, Disclosure, and Shopping in a Supermarket -- Part 2

- On Affiliation with a Buzz Marketing Agency, Disclosure, and Shopping in a Supermarket -- Part 1

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing disclosure

Sneak Peek at "To Tell Or Not To Tell?"

To coincide with WOMMA's Basic Training conference I'll be releasing a major report on disclosure and organized word-of-mouth marketing programs.

Starting January 18th copies of the report can be downloaded free of charge at my download page. A special page will be set up on my blog for comments and discussion of the findings.

My talk at the conference is entitled "To Tell Or Not To Tell?: Managing Effective Word-of-Mouth Marketing Programs Based On Why People Talk (and Listen!)"

Tags: WOM word of mouth Word-of-Mouth Marketing disclosure

Clarification in ClickZ's Story "BzzAgent to Agents: Spill the Beans, Or Else"

Pamela Parker covered BzzAgent's latest change in disclosure policy in a ClickZ article entitled "BzzAgent to Agents: Spill the Beans, Or Else."

I just want to clarify a statement she made in the article:

BzzAgent says its new stance stems from a study conducted by Walter Carl, a professor at Northeastern University. The report found that disclosure created trust, combated a stigma about "stealth" marketing, and increased the depth of product-related discussions. Carl came to his conclusions by examining 270,000 word-of-mouth reports submitted by BzzAgent volunteers.

While BzzAgent's white paper did reference findings from a collaborative study we conducted (details forthcoming in the weeks ahead as I write up the findings for academic publication), it was BzzAgent who conducted their own internal analysis of the 270,000 word-of-mouth reports.

Reference to preliminary findings from our collaborative study are specifically called-out in the white paper. Otherwise, the results stem from BzzAgent's internal research or other third-party sources.

Thanks to Pete Blackshaw's post for raising my awareness of the ClickZ story.

Tags: WOM word of mouth buzz marketing disclosure

The Practical Value of Disclosure in Word-of-Mouth Marketing Campaigns

Today BzzAgent has released a white paper (link opens PDF in new window) arguing for the practical value of disclosure in word-of-mouth marketing campaigns.

Their report is based on analysis of more than 270,000 reports filed by their WOM volunteers (BzzAgents) over three years, preliminary findings from our collaborative research project investigating dyadic (two person) or multi-party perspectives on the same WOM episode, and other third-party sources.

In short, BzzAgent concluded that "disclosure increases the validity of WOM interactions without reducing the breadth of campaign reach" (p. 2). More specifically they found that:

- Disclosure does not reduce WOM activity.
- Disclosure creates peer trust.
- Disclosure combats “stealth” stigma.
- Disclosure supports perceived product value.
- Disclosure increases depth and reach of product-related discussions.

I am currently in the process of writing up the results of our collaborative study for academic publication and will be releasing additional findings over the coming weeks and months. I will also be sharing some of these findings in my presentation at WOMMA's WOM Basic Training conference in January 2006.

It should also be noted that the findings from their white paper also led to changes in their disclosure policy. Here's a comment from BzzAgent's PR person that elaborates on their new policy:

BzzAgent also issued a press release today announcing the impact the conclusions in the whitepaper had on the company's business.

Specifically, the positive relationship between agent transparency and campaign performance has inspired us to strengthen our disclosure policy. Here are the changes BzzAgent volunteers can expect to see:

1.) New volunteers will be required to accept a Terms of Service prior to completing their registration.
2.) Agents that complete a report will be given the option of clicking a "disclosure check box" prior to submitting their WOM report. This box verifies that the conversational partner was aware of the agent's participation in the WOM campaign.

Please be sure to disclose. It's the right think to do from an ethical standpoint ... and now we know that it's also vital from a performance standpoint. Agents that do not disclose their affiliation will be required to participate in an online disclosure training -- similar to the BzzAgent "boot camps" -- prior to being offered access to future campaigns.

Keep in mind that the primary benefit to transparency is agent credibility. Revealing you are part of a BzzCampaign contributes to the legitimacy of everything you say and it underscores the validity of your opinions.

Tags: WOM word of mouth buzz marketing

How Much Can You Trust Buzz?

Scott Kirsner wrote an article that appeared in today's Boston Globe entitled "How much can you trust buzz?"

The article contributes to the ongoing discussion about social and ethical concerns surrounding buzz marketing and issues of disclosure. (See my previous posts on this: 10/24/2005 Part 1, 10/24/2005 Part 2, 10/25/2005, 10/28/2005, and 11/4/2005).

This article focuses on BzzAgent, and a book ("Grapevine: The New Art of Word-of-Mouth Marketing") recently authored by its founder and president, Dave Balter.

Apparently a number of volunteers affiliated with the agency, or BzzAgents, posted reviews on Amazon's website about the book, most identifying their affiliation with BzzAgent, but a small few who did not. According to the article, BzzAgent was able to determine that 3 of 4 people who didn't identify their affiliations were indeed part of the BzzAgent network. The article states that BzzAgent considers the activity of these agents "unacceptable" and that these Agents will face some type of disciplinary action.

Kirsner, the article's author, contends that since BzzAgent's business model is built on a word-of-mouth network, "it needs to get more serious about disclosure. It's one thing to ask agents to be honest and open, but BzzAgent would avoid more bad publicity, and do well by its clients, if it gave its disclosure policy some teeth -- kicking agents out of the network when they fail to disclose their connection."

It will be interesting to hear BzzAgent's response to this article. Their policies have developed over the years towards increasing disclosure to the point now that disclosure is required of BzzAgents. They also have a disciplinary program in place, which they call Pest Control.

Kirsner's point goes beyond just BzzAgent, however, because it is calling for something that is not layed out explicitly in WOMMA's Code of Ethics. That code requires disclosure of relationship, opinion, and identity, but does not currently provide guidelines for its member companies on disciplinary behaviors.

Stay tuned to see how these issues develop in the coming weeks and months.

By the way, you can read my review of Grapevine that I sent to Dave Balter, and which he posted on the BzzAgent blog back in September. In the interests of disclosure, I am not a BzzAgent, I have collaborated, and am currently collaborating, with BzzAgent on research projects regarding managed word-of-mouth marketing programs (some of the findings from an earlier project are cited in Grapevine), and I am an Advisory Board member of WOMMA.

Tags: word of mouth buzz marketing

Campus Ambassador Programs, Buzz Marketing, and Disclosure

I was recently interviewed for an article that appeared in the Boston Globe yesterday about the use of campus ambassador programs on university campuses. The author, Sarah Schweitzer, writes about how major companies like Microsoft, JetBlue Airways, The Cartoon Network, and Victoria's Secret are attemtpting to reach the "elusive" college market through such word-of-mouth and peer-to-peer programs.

With such programs, Schweitzer writes, niche firms recruit students from a particular university so that they can market products and services on behalf of the company (and sometimes companies may directly recuit and train students themselves). An example she mentions in the article concerns Microsoft's OneNote software program.

The issue of disclosure of affiliation came up again (see my two prior posts, Part 1 and Part 2). The students Schweitzer mentioned said they didn't disclose their identities, but they were wearing "logo-bearing t-shirts," in the case of Microsoft. She also writes that...

"Campus ambassadors generally are not required to state their corporate affiliation, but most companies instruct them not to try to obscure it."

The article went on to say...

"Students they approached said, in interviews after listening to the pitch, they did not understand the students' relationship with Microsoft, but that it mattered little."

In my own class discussions I find that a lot of students view this type of P2P and WOM marketing as acceptable and just "the way things are done now." Some argue the way things "have to be done now." A much smaller number criticize the practice or see it as invasive.

It's an interesting article that's worth checking out. One critique I have is that Schweitzer writes that buzz marketing is when "people talk up a product to friends and family without necessarily revealing corporate affiliation." Should people who write and talk about buzz marketing be encouraged to use the term "undercover marketing" instead when the corporate affiliation isn't disclosed? Or "shill" marketing when they received monetary compensation for their activities?

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On Affiliation with a Buzz Marketing Agency, Disclosure, and Shopping in a Supermarket -- Part 2

This post picks up with the second part of Matt Galloway's comment to my earlier post regarding what policies buzz marketing agencies should have regarding the issue of disclosure:

What we can (and should) expect is for Tremors NOT to discourage disclosure - either directly or indirectly. Since everyone working in the area of WOMM says you can't control the message, I think it is an unrealistic for us to expect agecies to be able to when it comes to disclosure.

So, "You never tell a panelist what to say." is not a cop out AS LONG AS "You ALSO never tell a panelist what NOT to say."

Well said, and I wonder if we're also focusing too much on the actions of the panelist in our discussion.

That is, what if the guiding principle was less on what the panelist does or does not do, and more on the sense-making of the "conversational partner"? The key criterion would be to make sure that the people with whom the panelist is talking do not feel misled, deceived, or manipulated, at the moment of the WOM episode or afterwards. I add the last part "at the moment of the WOM episode or afterwards" because conversational partners might not feel misled if they don't know about the institutional affiliation, but may feel "tricked" after learning about it (see the 60 Minutes episode on "Undercover Marketing" for examples of some people feeling deceived after being "shilled").

Of course, the conversational participant would have to be aware that the person is participating in a buzz marketing campaign; explicit, verbal disclosure is just one way of doing this.

But one might counter: "If you can't control what a panelist will or won't say, how can an agency control what a conversational partner will think or feel?" Yep, that's right, but since you can't control either one (you can seek to influence both), you might as well aim for which is the most important, and I would argue it's how the conversational partner walks away from the WOM episode. The agency's responsibility in all this might be, for example, to host discussions among its panelists/agents/etc. and allow them to come up with ways to ensure that the conversational participants walk away from the episode engaged but without being misled. I think any principled buzz marketing agency would want to adopt the same criterion.

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On Affiliation with a Buzz Marketing Agency, Disclosure, and Shopping in a Supermarket -- Part 1

John Cass and Matt Galloway made two very interesting comments to my blog post about the issue of buzz marketing and disclosure, especially in light of the Commercial Alert letter to the FTC seeking disclosure requirements for WOM marketing firms like P&G's Tremor. John made the following comment:

I was thinking the P & G example is a little bit like going to a supermarket where someone asks you to test a product, say a dip or a new type of microwave sandwich. If I ate the product, liked it, bought it and went home and told all my friends. Commercial alert is suggesting the company would ask me to inform everyone I spoke with about the new product that I received a free product at the supermarket. Somehow I don't think that type of product testing and promotion is against the FTC rules. What do you think?

Thanks for the comment John! I agree with you that I don't think the the supermarket situation would violate FTC rules about deceptive advertising. Why? The identities and affiliations of all the parties are clear and transparent, and thus the potential for being misled about the affiliation is low. The customer in the store knows that the person giving you the sample is employed by the store (or, in some cases, is from the company making the product) and the purpose of the interaction is to provide the customer with a product sample.

But what you're writing about is whether the person who tries the product at the supermarket through a free sample marketing campaign needs to tell the other person how they learned about it. This is different. In the supermarket example the person talking about the product DOESN'T HAVE an institutional affiliation with the store or with the company making the product. With buzz marketing, the person telling others about the product DOES HAVE an institutional affiliation.

And not only is there an institutional affiliation in buzz marketing, but this affiliation is not marked by the context cues (meaning no one is in uniform, one may not be in a "commercial" setting, etc.). In fact, the context cues often suggest an "everyday" conversation (the scare quotes are used to mark the fact that I'm using the term "everyday" as a contrast term to "institutional" talk where either the product/service/brand being discussed is part of an organized WOM marketing campaign, and/or the person doing the talking is affiliated with a buzz marketing agency). The/an explicit purpose of a buzz marketing campaign is to stimulate discussion about the brand/product/service and the person talking about the product has made a conscious alignment and affiliation with that process. The context cues of everyday interactions would not usually suggest participation in such a process. So with buzz marketing campaigns there is greater opportunity for people to feel like they are being misled (even though there may be no intention to mislead).

Thus, I don't think the free-sample-in-the-supermarket example matches the situation for buzz marketing and disclosure of identity.

Now to the first part of Matt's posting (thank you for your comment as well!). Matt writes:

I've been thinking a lot about disclosure in the BzzAgent/Tremors WOMM model. I'm currently reading Grapevine and I've heard Dave Balter speak on this and I've read some of you stuff from previous WOMMA events. Dave says (usuallu citing some study conducted by you) that the effectiveness of a BzzAgent isn't effect by the disclosure of their association with a WOMM program . This makes sense to me as I think it is more about the trust of the listener and the tone, context, sincerety, etc. of the WOM Unit.

So the question from this first part of Matt's comment is "does it matter?" The "it" meaning how a person learned of a product or service. The free-sample-at-the-supermarket analogy is a useful starting point here: For example, if someone tells me about a great new food item it doesn't matter to me whether that person bought it on their own, tried it, and told me, or if that person got the sample in a supermarket, tried it, and told me. I imagine many people would agree that it doesn't matter in the supermarket scenario.

If we apply this to buzz marketing, does it matter if people learned about something from a participant in a buzz marketing campaign? Would that person's recommendation count just as much? This was a question asked by GfK/NOP World. According to their study, 76% of the people surveyed said it didn't matter to them if a product was recommended as part of a buzz marketing campaign as long as the person, who they knew and trusted, thought the product was good. 19% of the people surveyed said they wouldn't trust the recommendation because they got the product for free. The take-away here is that some people seem to think that receiving the free sample affects the credibility of the recommendation (I wonder if this would also apply to the supermarket situation; this wasn't asked in their survey), while most others either don't worry about the fact the recommendation results from a buzz marketing campaign or feel that any bias is outweighed by the existing level of familiarity and trust they have in the person.

So, based on this survey, participation in a buzz marketing campaign doesn't seem to matter to the credibility of a recommendation. In the near future I'll be reporting data from a study that looks at the effects of institutional affiliation and participation in a buzz marketing campaign in much more detail.

Matt had some additional comments -- about what a buzz marketing agency's policy should be about the issue of disclosure -- which I'll take up in a subsequent post...

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Is Tremor’s Justification – “You Never Tell A Panelist What To Say” – a Cop Out?

USA Today published a story entitled “P&G ‘Buzz Marketing’ Unit Hit With Complaint” (written by Bruce Horowitz). Apparently, a consumer advocacy group – Commercial Alert – recently filed a complaint with the Federal Trade Commission that charges Tremor targets teens with deceptive advertising.

According to the article, the executive director of Commercial Alert, Gary Ruskin, suggests states that buzz marketing agencies are at fault for “perpetuating large-scale deception upon consumers” when people recruited to promote products via WOM don’t disclose their affiliation with the marketing agency.

Steve Knox, Tremor’s CEO, defended his company’s practices stating that their “panelists” are not paid cash but instead receive free samples or other kinds of materials. He is also quoted as saying “If we’ve done our work correctly, they talk to their friends about it” but Tremor does not tell their members to say they are part of Tremor “because you never tell a (panelist) what to say.”

Hmm…

Of course you shouldn’t tell a panelist what to say or how to say it. People should be sharing their honest opinions (one of those lessons we learned in kindergarten). However, if this quotation is a fair representation of Tremor’s position, it seems like it’s a lame justification for not having panelists be open about their affiliation. Further, their position opens up the perception that Tremor engages in stealth or undercover marketing (see WOMMA’s stance on stealth marketing, recently released in light of news stories about the legality and ethics of WOM and buzz marketing, but consistent with the association’s position from the beginning).

Buzz marketing and firm-facilitated WOM doesn’t need to be undercover to be effective. I am developing a theory of institutional WOM that contends that WOM encouraged by an organization (aka, “amplified” WOM) can be just as effective as “organic” WOM when two conditions are present: 1) sincerity, and 2) relevancy. That is, conversational participants need to trust that the other person is sincere and has their best interests at heart, and also that the information provided is relevant to their daily life and the conversational context (meaning that the WOM is talked about at relevant point in the conversation and in the history of their relationship). I am currently collecting data that will provide evidence for or against this theory. Stay tuned for results!

Two final comments:

1) Be sure to visit Commercial Alert’s website to read the comments posted regarding their complaint filed against P&G. This provides some fascinating insight into arguments for and against buzz marketing in a highly commercialized society.

2) The USA Today article mentions that “several smaller buzz marketing specialists” were also named in the complaint. I invite someone to follow-up with this to see what other companies were named. Please post anything you find in a comment or track back :-)


Content Added (10/20/2005, 7 pm EST):

Commercial Alert's Letter to the FTC The "several smaller buzz marketing specialists" are named in this PDF version of the letter. I think the spirit of the Commercial Alert complaint -- that people who voluntarily affiliate with buzz marketing agencies, or are paid by companies or agencies, should not mislead the people with whom they talk -- is sound and consistent with the WOMMA ethics policy. However their complaint unfairly lumps together companies that abide by the WOMMA ethics code with those that do not.

WOMMA's "WOM 101" Page distinguishing different kinds of word-of-mouth marketing (the Commercial Alert letter conflates "buzz marketing" with "guerrilla" and "stealth" marketing and fails to distinguish it from "shill" marketing).

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Should Bloggers Disclose Financial Compensation?

In today's Sunday Boston Globe (pp. A1, A22), Jenn Abelson wrote an article citing concerns about bloggers who receive compensation to mention certain companies on their blogs. According to the article, a marketing firm -- USWeb -- enlisted 2,000 bloggers to mention USWeb's clients' products and services on their blogs, sometimes regardless of whether the blogger had direct experience with the company. (When more blogs mention, and link to, particular websites, those websites are rated higher in search engines like Google; this has led some in the advertising industry to interpret blog to mean "better listing on Google." Currently, there is no government regulation regarding such disclosure of compensation in the blogosphere.)

It seems like failure to disclose financial compensation on blogs represents yet another form of "undercover," "stealth," or "shill" marketing. Further, non-disclosure seems to violate the Word-of-Mouth Marketing Code of Ethics, which supports honest disclosure of identity and relationship with a marketing company.

The situation is complicated by the following example: a software marketing company mentioned in Abelson's article -- Marqui of Portland, Oregon -- discloses that they pay bloggers to have their clients' names mentioned on blogs. However, the blogger mentioned in the article didn't consistently disclose that she received compensation. Thus, Marqui would seem to be abiding by the WOMMA* Code because they disclose they pay bloggers. But should the blogger receiving compensation also abide by such a code? How much can, and/or should, a marketing company control the actions of the people they compensate for their participation in marketing campaigns?

To me, this issue of the most effective and ethical way to manage institutional identity and affiliation is of paramount importance to longevity of word-of-mouth, buzz, viral, and blog marketing. I am especially interested in this identity management in more interactive settings, especially interpersonal contexts. Stay tuned for upcoming reports from research projects on this and related topics.

* Disclosure: As mentioned in previous posts and in my bio, I am an Advisory Board member of the Word-of-Mouth Marketing Association which has developed a code of ethics surrounding the online and offline word-of-mouth marketing industry.


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