Studying 12 months data of 42 auto brands in China, R3 and CIC measured the performance of IWOM in terms of its impact on sales.

1. Internet Word of Mouth Proven to Have Impact
on Auto Sales in China
A joint white paper by CIC and R3
Executive Summary
 Independent Research covering over 12 months of China’s automotive sales
by model, linked with online word of mouth per model
 Data shows correlation between sales and online buzz volume and in several
cases with online buzz trend one month ahead of sales trend.
 Foreign brands and higher priced car models show stronger correlation
 Marketers need to take a more proactive approach to encourage their
campaigns to be spread online,
With the Internet starting to have an increasingly powerful effect on the
relationship between brands and their consumers, marketers are now starting to
track and effectively measure what is being said about their brand online and
where possible to leverage the power of Internet Word of Mouth (IWOM) to their
advantage. Those who master the art are said to boost their return on
investment (ROI). This is especially true for China, where marketers need a
special weapon to fight against intense competition and a cultural climate of
great skepticism and distrust that advertisers face.
But to what extent does online buzz actually help marketers’ achieve their
bottom line? Studying 12 months data of 42 auto brands in China, R3 and CIC
measured the performance of IWOM in terms of its impact on sales.
The Art of Measuring WOM
WOM, whether online or face
to face, allows consumers to
communicate with each
other, hopefully referring a
positive product experience.
It also allows brands to
connect with consumers,
directly or through sharing of
other consumer generated
content, to highlight product
strength and brand value.

2. They are many different sources of IWOM, including BBS and forums, social
networks (i.e. KaiXin001, RenRen), Instant Messenger (i.e. MSN, QQ), blogs &
micro-blogs, and Q&A and review sites.
In addition to measuring quantity of IWOM on these sources, marketers can also
look at the quality or the sentiment of IWOM, with new advanced text-mining
technology such as those developed by CIC, now being able to help brands
identify whether a piece is positive, negative or neutral.
Chart 1 - Social network landscape of Xcar 307 forum, Dec 2008, from CIC Syndicated Auto report
What’s more interesting about advanced IWOM text mining technology is its
capability to help marketers identify in great detail what is being said about
brands by their customers on the Internet, and to then even visualize online
interactions and help identify who are the influencers (pictured above). Meaning
that if marketers now have an in-depth understanding as to what consumers are
talking about their brands and where/by who all that talking is going on,
marketers can leverage the company’s communication service and R&D
resources to address these issues, ensure the target consumers are addressed,
and in the process improve marketing ROI.
One limitation of WOM measurement is that technology cannot differentiate
consumer generated content from advertisers’ commercial messages, however
by taking this into consideration it’s still important that marketers realize what
consumers encounter when researching about brands or products online.

3. (Source - CIC Making Sense of IWOM White Paper Series Topic 1: The role of IWOM in purchase decisions)
Objective & Methodology
The research aims to
measure the power of
IWOM including its
impact on sales, the
ultimate key
performance index
(KPI) for all brands.
Using the auto
industry in China as
object of study, we
will also identify those
auto brands that
outperform others in
the area of IWOM.

4. - CIC defines IWOM as text and multimedia content related to companies,
products or services shared by netizens, including brands and consumers, via
online community platforms such as BBS, blogs and video sites. In this
instance CIC gathered the 133,071,049 consumer comments from 2500 +
Auto related sites and forums
- CIC measures positive and negative sentiment by using our customized
sentiment engine that measures both general sentiment and auto specific
sentiment
- For this study CIC tracked the IWOM volume and sentiment of the 42 leading
auto brands and over 500+ models in 2009
- Source of 2009 passenger car sales are quoted from China Association Of
Automobile Manufacturers
- Thanks must also go to media agency Carat (www.carat.com.cn) for providing
2009 media spending data, including TV, print, OOH, radio and online media.
IWOM Drives Sales for Total Buzz (000) Positive Buzz (000) Negtive Buzz (000)
42 Auto Brands in China 2,500 42 Car Models Online Buzz (2009) : Buzz Thousand
2,000
In 2009, the volume of auto 1,500
industry buzz increased
steadily month by month 1,000
despite seasonal activities. 500
By studying monthly sales
0
and monthly online buzz Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
data of 42 passenger car
models in 2009 (chart 3), Chart 2
we found a medium correlation (R2=0.4829) between total buzz and car sales
for 2009. The sales impact of IWOM is more obvious for foreign car brands
(joint venture brands) (R2=0.5961) and cars priced over RMB200k (R2=0.9135).

5. Chart 3
In addition to looking at correlations between WOM and sales, we also measured
the time lag for an increase in WOM to result in an increase in sales and found a
clear pattern of short term residual effect on some auto brands. Take the
Teane for example, its positive IWOM led the way by one month for positive sales
results (chart 4).
Sales(000) Positive Buzz000
天籁Teana- Sales and Online Buzz
14 30
12 25
Ca r Sa les(000)
10
20
B u zz (000)
8
15
6
10
4
2 5
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Chart 4

6. Another interesting finding is the high correlation (R2=0.5961) between positive
and negative IWOM (chart 5). Those who are active online have both positive
and negative IWOM.
This means that while marketers should listen closely to negative sentiment
happening around their brand they need to focus on engaging netizens which
can both encourage and amplify positive IWOM instead of focusing all their
efforts of subduing negative IWOM which has proved is inevitable.
42 Models- Positive Buzz(000) on Negative Buzz(000)
400
350
Negative Buzz(0 0 0 )
300
250
200 y = 0.3323x - 11.85
150 R2 = 0.8883
100
50
0
0 200 400 600 800 1,000 1,200
Positive Buzz(0 0 0 )
Chart 5

7. Foreign, More Expensive Models Show Closer Correlation
Some brands benefited more from buzz and buzz marketing than others (table
1). Ranked among the top five by ‘Revenue Per Buzz’ were many mid to high
price models including Audi A6, VW Passat, Teana, Honda CR-V, and Toyota
Camry. These brands outperform their peers in IWOM ROI.
Estimated Total Buzz Revenue
Rank Model Revenue Volume By Post Per Buzz
(M) (000) (000)
1 A6L 55,724 306 182
帕萨特领驭
2 Passat Lingyu 26,356 242 109
3 天籁 Teana 29,436 318 93
4 CR-V 23,818 317 75
5 凯美瑞 Camry 34,886 553 63
6 悦动 Elantra 27,489 447 61
7 卡罗拉 Corolla 24,589 408 60
8 雅阁 Accord 46,002 872 53
9 伊兰特 Elantra 18,095 372 49
10 比亚迪 F3BYD F3 18,107 373 49
Table 1

8. Recommendations to Marketers
IWOM is an integral part of any brand’s crisis management and Public Relations
scheme. At the same time, it is probably the most efficient platform to collect
consumer feedback and improve service quality. This also includes keeping a
close look at how the brand is talked among your own employees and business
partners.
In addition to monitoring and measuring IWOM data 24/7, marketers need to
take a more open and proactive role in the online community. Open,
non-commercial networking by general public that creates shared culture, by
setting up branded blogs, twitters to express yourself.
Marketers should keep in mind the democratic nature of the Internet, and avoid
taking an autonomy or too promotional-oriented approach.
The best strategy to win is to immerse into the community and become a part of
the consumers’ network.
Last but not the least, in order to ensure that your buzz marketing helps drive
sales, marketers need to focus on product related messages and leverage real
consumers and brand advocates. The ultimate buzz and buzz marketing is all

9. about consumers talking up their positive product experience and
recommending to other consumers.
About R3
R3 is a global marketing consultancy with our heart in Asia. We focus on
improving the effectiveness of marketers and their agencies, with the right
efficiency. Founded in 2002, we’ve worked with more than fifty companies on
global, regional and local assignments to drive efficiency and effectiveness. We
have talent based in Beijing, Singapore, Shanghai, Chicago, New York and Delhi.
Our core service offerings include proprietary processes and tools in agency
performance and marketing ROI consulting.
About CIC
As China's first and leading provider of Internet intelligence and insights based
on IWOM (Internet Word of Mouth), CIC provides customized research consulting
services, syndicated reports, as well as technical solutions and platforms to help
companies meet their business and marketing needs. Since coining the term
IWOM in 2004, CIC has pioneered the industry by supporting strategic planning
and innovations across the entire spectrum of communications including brand
reputation, business intelligence, product development, advertising, media,
campaign planning and execution all via an objective, third party perspective.
CIC has built and maintained strong, long term retainer relationships with
multinational agencies and Fortune 500 companies, including Nike, Pepsi, Intel,
L'Oreal Group, BMW, P&G, Unilever and many more.