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Epidemic, Buzz, and Experimental Marketing

Dave Balter is CEO of BzzAgent. David Scott Carlick is a venture fellow with Vantage Point Venture Partners. Dan Mechem serves as VP for Intelliseek. David Reis leads DEI Worldwide. And Samantha Skey is VP of the convergent marketing group for 360 Youth.

Dave Balter is CEO of BzzAgent. David Scott Carlick is a venture fellow with Vantage Point Venture Partners. Dan Mechem serves as VP for Intelliseek. David Reis leads DEI Worldwide. And Samantha Skey is VP of the convergent marketing group for 360 Youth. Their panel discussion this afternoon at Ad:Tech 2003 shared some insights on how to divine strategies from customers’ opinions, how to harness their enthusiasm, and how to manage their disgust. Here is a rough transcript of their conversation:

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David Scott Carlick: One of the things we’ve found over the years is that when you look at the correlation of a customer base — regardless of whether they recommend the company — there’s a substantial difference in the performance of those companies. When we array the airline industries’ loyalty scores, it’s not a coincidence that Southwest Airlines has high loyalty and a high market cap. Market capitalization is the fundamental gauge of brand equity. There is no statistical correlation between knowing a brand and its performance. But there is with customers referring a brand to other customers.

Across different industries, the results are striking. If you make your customers your sales force, you will dominate the competition. The same is true in e-commerce. Referral rates lead to growth rates. The same principles are also true in high technology. There’s a profound difference.

My argument is that since customer loyalty and advocacy drives shareholder returns, marketing needs to organize the resources of the organization around customer loyalty and advocacy. Companies will take their money and focus on what happens after a person becomes a customer.

What impacts the scores? The number one loyalty lever is employee loyalty. No. 2 is the quality of the product or service. The buying experience matters. And service experience is important. You’re going to hear a lot about this and see a lot of this.

Dan Mechem: I run Intelliseek’s entertainment division. In terms of our view of the world of buzz marketing, there are three W’s. It works, well-established companies are using it, and it brings “weally good” analytics.

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Traditional marketing sees all consumers as the same. They’re not. The most vocal consumers stand out. Consumer-generated media is high-impact word of mouth. We encounter it in discussion forums and chat sites. We need to put a name on this kind of activity.

We’re taking this a step further when we look at buzz online. Are folks advocates? Evangelists? Trackers? Loyalists? Who are these people? You need to get down into subtext and categories. As you look at what impacts people’s decisions to buy, recommendations from others is increasingly an ingredient. Traditional advertising falls on deaf ears. We’re beginning to measure not just that people are posting in discussion boards but what impact they’re having.

What’s great about buzz marketing is that there is measurable impacts on the ROI’s of companies. We’ve helped movie companies with useful examples from consumer-generated media. They’re changing trailers. They’re changing marketing plans. We’ve also worked in the automotive space.

Who benefits? The brands benefit from the energy that’s created. The media drives marketing efficiency. Agencies access “ahas” embedded in the emotion of commentary.

We’re looking at message boards, chat rooms, and other public areas such as review sites and turning that into market intelligence. We’re also looking at Web feedback that you get at your sites online. We also pull in data from other sources such as focus groups. Then you can look at all the consumer data from multiple sources.

Dave Balter: How many of you have some sort of loyalty cards? What do you do with these cards? How do you use them? I’m here to tell you about the new era of word-of-mouth marketing and how to market with your customers rather than at them.

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Traditional media is changing. Small companies understand this and for years have gone with nontraditional media instead of buying an ad in the New York Times or on TV. Now Fortune 500 companies are understanding this. Consumers choose what they decide to see. TiVo, XM satellite radio, and Google‘s pop-up blocker give us the ability to surf safely.

What’s made us decide we have to choose? Big media has abused and saturated the channel. A couple of months ago I was on a flight on Delta to Atlanta. At the end of the flight, they thanked their sponsor, Certs, and handed out mints. We groaned. Oh, great, another ad we can’t escape.

What is word of mouth? Let’s start with what it’s not. Word of mouth is not street teaming. It’s not shill marketing. Ericsson hired actors to get people to take their pictures with phones. Lastly, word of mouth is not spam, chat rooms, or fake blogs. The people who did that have been ostracized from their communities.

Word of mouth is real. We do it every day. Companies must focus on marketing with their customers, not at them. Let’s go back to loyalty cards. Some of us talk about products we love just because we love the product, not because we have a loyalty card. BzzAgent performed a campaign for a national restaurant chain. With 400 people, we helped them learn how their informed, trusted opinion was important and how to share it with the world. Those people generated $1.2 million in additional revenue.

I’m going to debunk a myth. You’ve heard of the influencers, right? Everyone’s heard of the influentials, the sneezers. You’ve got to find them. That’s just not true. Everyone can be a sneezer. We look at when, where, and how many people are hit. But the qualitative also matters.

Our BzzAgents are out there communicating about products and services, telling us what they’re doing, and our staff responds with feedback, training, and enthusiasm. We work with companies to help them identify who their evangelists are so they can market with them not them.

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Samantha Skey: A little bit of this is a teeny bit redundant because we’re all on the same page. While we’re having some particular difficulties with traditional media, this is not to say that traditional media is broken. In today’s media mix, there is an evolving structure that’s a much better way to address your consumer. Traditional marketing is ROI challenged. But it’s not all about TiVo. The remote control’s been around a long time.

Millennials are Generation Y, 12-24 year olds. Why is buzz key to reaching young adults? Millennials absorb media differently. They grew up with multiple platforms. Just watching TV is not a way of life. You want to be on your cell phone and maybe IM. And you’re not engaging in discussions of the same topics. It’s not a convergence in the sense that you thought it might be five years ago.

College students are always doing something. No one sits and inactively absorbs media without engaging. On average, 28% of an hour of TV viewing is commercials. Now that we have 200 channels, the price for a set of eyeballs on TV is going to rise.

Millennials want efficiency, independence, and control over media. There’s a long way to go for different media to communicate commercial messages. Take the Innovation Diffusion Model from 1960. We don’t believe in that any more. Britney Spears went straight to the mainstream, bypassing the early adopters. We’re looking at connectors. It doesn’t matter if they’re cool or dorks. What matters is that they’re connected with a lot of people.

The reason you buzz about something is always somewhat emotional and about who you hope your social circle thinks you to be. Kids and teens can hardly hear you. Young people are skeptical. And they’re connected. Now that they’re smart, savvy, and skeptical, we need to make sure that we approach them in the right way. If we piss them off, they’re going to tell all their friends. How does your product affect their image?

David Reis: We’ve talked a lot about the idea of viral and buzz marketing. We all know what it is. I want to give you a primer on how to actually do it. Has anyone heard about the Honda Cog ad? Those were viral marketing campaigns, but they weren’t planned as viral marketing campaigns. How do you make something that’s not that interesting, interesting?

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I’m going to give you three essential elements to a successful viral marketing campaign. There is a difference between a planned viral campaign and an organic viral campaign. There are three essential elements. And you have to find a balance.

In terms of relevance, you need to think of it in terms of niche marketing and niche messaging. People will listen to you if what you have to say is relevant. Take bedwetting. There are 30,000 chat rooms focusing on that. People are talking about it.

Element two is compelling content. Is your product buzzworthy or chatworthy? People must find the message compelling, worth noting, and passing along. This includes avoiding complicated URL’s.

Then there’s scope and scale. If you want a campaign to have a massive impact, spend money on it. If you give the smallest percentage of your budget to something, you cannot expect it to outperform other aspects of your marketing. Viral marketing should not be an afterthought.

The reason we named our company DEI is because there’s a new marketing interaction that’s interactive. It’s not a static impression. It’s a directly engaged/interactive impression. Consumers receive, interact with, and respond to our messages.

The bottom line is that advertising is not going away. People need and want to purchase things. They will listen intently to what we have to say if the message we’re giving them are relevant. And a viral marketing campaign can help give those messages a life of their own.

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