Presented at WOMMA's Summit on November 18, 2009 in Las Vegas, NV. For more information visit ChatThreads at www.chatthreadscorp.com

1. Annual State of
Word of Mouth
Address
2009
Walter J. Carl, Ph.D.
ChatThreads Corp.

3. Exponential Growth
Of “Social Media”

4. WOM & Social Media:
Clarifying the Relationship
• Social media as sub-set of WOM.
1. Online WOM activity.
2. Digital venues where WOM occurs.
3. Flexible and scalable set of tools to
achieve WOM marketing goals.

5. Scope of
Topics Covered
11 Core Entries: Special Section on Social
- Advocacy Measurement Media Success Metrics
- Conversation Volume / Frameworks:
Share - Conversation Impact™ of
- Cost Deflection SM Campaigns
- Cost Per Conversion - Social Influence
- Influence Marketing (SIM) Score
- Marketing Mix Modeling - Activities, Reach,
- Ratings & Reviews Relevance, Outcome, and
- Reach Worth (ARROW) Model
- ROI of WOM Case Studies:
- Sentiment Analysis - SM in Restaurant Business
- Value of a Conversation - SM in Online Knitting
Community
- SM on Facebook for
“Smart Pen”

6. Three Observations
#1:
What You Can Measure ≠
What You Need To Measure

7. From “Test & Learn” to
“Competitive Resource Allocation”
• Page Views
• Volume of Posts
• People Reached
• Comments on Posts ≠ ROI
• Sentiment Shifts
• Time Spent
• Number of Fans
• Etc.

8. Proof of Business Performance,
Then Optimization

9. Ways That WOM
Adds Value
- Cost
1. Deflects costs Deflection
- Value of a
2. Adds revenue Conversation
- ROI
3. Accelerates impact
4. Amplifies impact of other media
5. Offers learning and insight

10. Three Observations
#2:
Play the (Accountability) Game,
But Don’t Get Played

11. ROI Is A Short-Term Indicator
(Or Is At Least Often Used This Way)…
“… customers acquired through marketing contribute more to
the firm’s performance in the short run than customers
acquired through WOM.” (Villanueva et al., 2008)
“… this firm can increase its short-term revenue more
through MKT customer acquisition ($6,695) than
through WOM customer acquisition
($5,631).” (Villanueva et al., 2008)
Villanueva, Julian, Shijin Yoo, and Dominique M. Hanssens. 2008.
The impact of marketing- induced versus word of mouth
customer acquisition on customer equity growth. Journal of
Marketing Research 45(1): 48–59.

12. WOM Has Ongoing,
Long-Term Value
“… WOM has a greater financial impact ($23,481 of present value)
than MKT ($11,759 of present value).” (Villanueva et al., 2008)
“The primary reason for this difference is that customers
acquired through WOM tend to stay longer as active customers
and thus generate more value over time…”
(Villanueva et al., 2008)
“… each customer acquired through MKT is
expected to bring approximately 1.77 new
customers throughout his or her lifetime, whereas
a customer acquired through WOM is expected to
bring 3.6 customers.” (Villanueva et al., 2008)
Villanueva, Julian, Shijin Yoo, and Dominique M. Hanssens. 2008.
The impact of marketing- induced versus word of mouth
customer acquisition on customer equity growth. Journal of
Marketing Research 45(1): 48–59.

13. Three Observations
#3:
Innovate Your
Research & Measurement
As Well As Your Activation

14. Patterns You Need To See
May Be Hidden From View
When WOM has a positive effect in year over year changes in
business the impact can range from 2% to 7%, with ROIs as
high as $5 for every dollar spent. (Marketing Management
Analytics)
- Marketing Mix
Modeling
- Also see
Definitive
Social Media
ROI link at:
tinyurl.com/
waltersentme

15. Patterns You Need To See
May Be Hidden From View
Brands that seed products even in random networks of people
can increase customer equity by 17%. (Libai et al., 2009)
By targeting influential customers, rather than just random
customers, brands can increase that social value by 33%
(Libai et al., 2009)
If Brand A can achieve first-mover
- Agent-Based
advantage with their seeding program Modeling
over its competitor(s) the gain in
customer equity can be as high as 66%.
(Libai et al., 2009)

16. Patterns You Need To See
May Be Hidden From View
Building Customer
Networks for
Successful WOM
Marketing
link at: tinyurl.com/
waltersentme
Combining Empirical - Agent-Based
Data with Simulations Modeling
link at: tinyurl.com/
waltersentme

17. Learn
More…
11 Core Entries: Special Section on Social
- Advocacy Measurement Media Success Metrics
- Conversation Volume / Frameworks:
Share - Conversation Impact™ of
- Cost Deflection SM Campaigns
- Cost Per Conversion - Social Influence
- Influence Marketing (SIM) Score
- Marketing Mix Modeling - Activities, Reach,
- Ratings & Reviews Relevance, Outcome, and
- Reach Worth (ARROW) Model
- ROI of WOM Case Studies:
- Sentiment Analysis - SM in Restaurant Business
- Value of a Conversation - SM in Online Knitting
Community
- SM on Facebook for
“Smart Pen”

18. Three Observations
#1:
What You Can Measure ≠
What You Need To Measure
#2:
Play the (Accountability) Game,
But Don’t Get Played
#3:
Innovate Your
Research & Measurement
As Well As Your Activation
Walter J. Carl, Ph.D.
ChatThreads Corp.
tinyurl.com/waltersentme