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January 16, 2006
The word of mouth bubble
Congrats to Dave and his BzzAgent crew for landing $14 million in new funding. The investment made the pages of Friday's Wall Street Journal and News.com.
What does this in the big picture? More money for new or existing word of mouth-oriented firms.
Already the landscape is popping up with new companies, such as me2u marketing, BoldMouth, BazaarVoice, Buzzoodle, and Tell-A-Pal. They're competing with an existing bench of companies like the aforementioned BzzAgent, plus Informative, Cymfony, BuzzMetrics and Intelliseek. Not to mention that a good number of traditional advertising and PR agencies are creating WOM practices, too.
With BzzAgent getting a big chunk of change, it's safe to assume more companies which promise to aid and abet word of mouth will announce themselves in the next few months, some backed by big money, some backed by credit cards. Some will claim to be competing in the space when that hardly seems to be the case.
It's the beginning of the bubble.
Let's pretend its early 2007. Some of the companies will have been acquired. Some will have burned through their cash. Perhaps one will have been exposed as a fraud. Jim Nail warns: "Message to various fraudsters, hucksters, former spammers and all forces of evil: Stay away from our industry. We will be on the lookout for you."
Who's going to succeed? Who knows. Passion, intelligence and speed are the components of successful entrepreneurialism; they require plenty of fuel as they burn quickly.
But which ideas seem most viable and which do not? Caveat blog emptor, but here are a few guesses:
* Those who invest in mechanizing evangelism will lose. Relying on a third-party vendor to create loyalty (via word of mouth systems) is a courtesan's solution. It maintains a hands-off relationship with customers. The idea is to disintermediate the distance.
* Those who help companies listen better will win. I hate to say it, but most businesses are oblivious, ignorant or tone-deaf to the opinions of most customers about their product or service quality. But good god, there's a lot of citizen marketer data to collate and analyze. The volume and complexity of the data is accelerating, too.
* Those who create incentive programs to spur word of mouth will lose. All of the evidence so far indicates that the vast majority evangelists and buzz-spreaders are motivated by altruism or recognition, not cash, points or prizes.
* Those who help organizations build loyalty through customer communities will win. This is the biggest promise for word of mouth. The top rung of the loyalty ladder is customer ownership. That's what a customer community, whether it's online, offline or both, can deliver. People congregate under the banners of communities that offer help, fellowship, news or guidance about stuff that improves their lives, careers or is exceptionally entertaining.
There's plenty of reasons why companies should undertake communities themselves rather than relying on the after-market, if you will, to build communities. It brings companies closer to customers. But it can be complex work, and that's the opportunity for vendors to consult on establishing and managing a variety of customer involvement programs, whether it's advisory boards, ambassador programs, customer conferences, user groups, or online communities. Some will provide their own management tools, some won't.
Managing such efforts to be community-centric, not company-centric, is the biggest challenge for vendor and client.
You'll know the bubble is ready to burst when someone promises to "create massively contiguous swarms of buzz-spreading influencers and evangelists who will make your product cool."
I can hear the business plan buzzwords already.
Update 1: Ardath Albee has six solid points to consider in building a customer community.
Update 2: Looks like more volume was just added to the bubble: BuzzMetrics acquires Intelliseek.
Update 3: I updated the paragraph about customer communities because, well, it was confusing.
Update 4: Wired's Chris Anderson: "Bubbles are inflated with hot air and speculation. They end with a wet pop, leaving behind messy splatters. Booms, on the other hand, tend to have strong foundations and gentle conclusions. Bubbles can be good: They spark a huge amount of investment that can make things easier for the next generation, even as they bankrupt the current one. But booms -- with their more rational allocation of capital -- are better. The problem is that exuberance can make it hard to tell one from the other."
Other blogs that reference The word of mouth bubble:
» Customer Communities Riding the Bubble? from Marketing Interactions
Church of the Customer posted a forward-looking post about The Word of Mouth Bubble. They make some interesting predicitions about what's coming down the pike with WOM marketing. They predict that those who try to mechanize evangelism and those who foc... [Read More]
» How Word-of-Mouth Marketing Works for Me from New Persuasion
I keep reading about the growth of word-of-mouth (WOM) marketing these days: Ben McConnell at Church of the Customer blog writes about all the new firms entering the WOM arena - and lists why some will fail and some will [Read More]
» Is There a Word-Of-Mouth Bubble? from BusinessPundit
There could be. Ben McConnell notes that:With BzzAgent getting a big chunk of change, it's safe to assume more companies which promise to aid and abet word of mouth will announce themselves in the next few months, some backed by... [Read More]
» Using public relations to build 'word-of-mouth' organically from On Message from Wagner Communications
I often talk with clients about the importance of communicating with their current customer base, although I often use the words "marketing to" rather than "communicating with."
And I rarely use the words "building a community," though in effect tha... [Read More]
» Learn from Customers from Propagate Online
Theres a lot of talk around today about word-of-mouth marketing (WOM). I started my career in promotions in the theater in New York and WOM was and is a hot topic in that hit or miss business. It was pretty obvious: either you had WOM our you d... [Read More]
Great post, Ben.
And I can't help but notice that your bullet points don't exactly go hand-in-hand with the practices of the company who landed all the VC cash (they who shall not be named). Coincidence?
And the latest news: VNU has funded the merger of BuzzMetrics and Intelliseek to create Nielsen BuzzMetrics. This is huge.
-Matt
Thanks, Spike. About BzzAgent: Dave knows this since both Jackie and I have told him that we think BzzAgent's greatest potential is in helping manage their clients' existing evangelist communities. Evangelists attract true believers, sometimes even the agnostics.
Matt -- Thanks for the heads-up. I posted an update about the news.
Couldn't agree with you more. Listening is a powerful force. But at the end of the day, we are dealing with human beings, and all their emotions, sensitivities and irrationalities. Technology can help you figure out what to do, but the doing requires a carbon unit.
Carbon unit? Jim, we may have to start calling you Spock.
Ben,
Your winners and losers point to an important principle for business leaders. Relationships matter. And if they do, then the character of the persons who form those relationships matter. Buzz works when the person is perceived as authentic, real, truthful and transperant.
Right on, Ed! That's why I'm not a big believer in buzz-creation stunts. They may grab the attention of some people but in the end, they do little to create relationships of value.
What I'm curious about is whether all of this movement in the word-of-mouth / buzz marketing industry will translate down to small businesses, startups (bootstrapped ones, not hugely funded ones), and mom-and-pop type companies.
The big companies have the resources to pay for significant word-of-mouth/buzz marketing projects, the little guys do not.
I hope we'll see some companies entering this industry (or already in the industry) developing programs, ideas and providing valuable (free) information on how smaller businesses can benefit and orchestrate their own plans.
To answer that last question - yes, we already exist. Our company, BlueLine, does work for some mid-size to large companies but much of our work has been in educating smaller companies. We have some of our clients who are actively utilizing our grassroots marketing techniques to spread word of mouth and build community as menitioned above.
By the way, all of us attend the services at your church regularly - we are true believers!
To Brian's point, I think there's a healthy number of firms that help smaller businesses with word of mouth. Some of them, though, may fly under the masthead of grassroots or guerilla marketing.
As far as tools, Technorati.com and BlogPulse.com are fairly sophisticated for tracking online buzz. And you can't argue with their price.
www.customerforce.com has software for companies to start their own communities, a generic community that all small business owners can use for free. We also have a way to cross reference products and services with consumers favorites and comments, that is lacking in other communitites. We just launched our Alpha version and would welcome feedback.
Our tool at www.kudosworks.com is perfect for any size business but particularly small business. We promote the notion that testimonials are the ideal positive word of mouth unit and companies would do well to maximize their ability to capture testimonials, showcase their reputation and accelerate client-to-friend referrals.
Thanks Pam and Herbert for the updates. If you're a vendor with a word of mouth solution for small businesses, feel free to post a comment here.
Darn, From birth to a bubble in less then a year and I'm not even rich yet! LOL
Start calling yourself a web 2.0 company on your blog and watch the money-scented air fill the balloon!
In this situation, the runner posts(shows) an impertinent physical condition, while the others sink into the effort. At the conclusion of the journey(running) this runner shows an exceptional state of coolness, as if he had crossed(gone through) only some kilometres.
