Word-of-mouth marketing (WOMM), also called word of mouth advertising, is an unpaid form of promotion—oral or written—in which satisfied customers tell other people how much they like a business, product, service, or event. Word-of-mouth is one of the most credible forms of advertising because people who don't stand to gain personally by promoting something put their reputations on the line every time they make a recommendation.
George Silverman, a mathematician and statistician, pioneered word-of-mouth marketing when he created what he called "teleconferenced peer influence groups" in order to engage physicians in dialogue about new pharmaceutical products.
Silverman noticed an interesting phenomenon while conducting focus groups with physicians in the early 1970s. "One or two physicians who were having good experiences with a drug would sway an entire group of skeptics. They would even sway a dissatisfied group of ex-prescribers who had had negative experiences!"
With the emergence of Web 2.0, many web start-ups like Facebook, YouTube, MySpace, and Digg have used buzz marketing by merging it with the social networks that they have developed.
With the increasing use of the Internet as a research and communications platform, word of mouth has become an even more powerful and useful resource for consumers and marketers.
In October 2005, the advertising watchdog group Commercial Alert petitioned the United States FTC to issue guidelines requiring paid word-of-mouth marketers to disclose their relationship and related compensation with the company whose product they are marketing.
The United States FTC stated that it would investigate situations in which the relationship between the word-of-mouth marketer of a product and the seller is not revealed and could influence the endorsement. The FTC stated that it would pursue violators on a case-by-case basis. Consequences for violators may include cease-and-desist orders, fines or civil penalties.
Research firm PQ Media estimated that in 2008, companies spent $1.54 billion on word-of-mouth marketing. While spending on traditional advertising channels was slowing, spending on word-of-mouth marketing grew 14.2 percent in 2008, 30 percent of that for food and drink brands.
Related topics: Direct Marketing, Product Marketing, Product placement, Publication Marketing, Referral Marketing,Sales promotion, Service Marketing, Visual merchandising, Loyalty Marketing, Broadcasting Marketing, Affiliate Marketing, Television Advertisement, Digital Marketing,Market Strategy, Marketing Effectiveness, Brand Management, Marketing Operations, Marketing Pricing, Market Segmentation, Supply Chain Management, Pricing,Brand awareness, Word of Mouth, Viral Marketing.
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