Marketers Seem Smitten With Online Social Media’s Reach and Power, But Real Brand Influence Comes (Principally) From Offline Word-of-Mouth

In this time of X Box, Wii, HD, PDAs, iPads and sophisticated cell phones, the Internet is the acknowledged great, central enabler of social media. Nothing during our lifetime has so influenced the way people live their lives as the Internet.

Brand marketers, especially those representing food and drink products and consumer packaged goods, have dramatically increased their word-of-mouth marketing spending, especially online. They are actively creating new communities of product and service users, whose principal purpose is to spread the word and, hopefully, influence consumer behavior. Even so, word-of-mouth, through online social media, remains a fraction of the overall advertising and marketing budget.

A phalanx of consulting organizations has evaluated the role of the Internet in our day to day existence, and, at the same time, creating major sea changes in traditional medial channels. One such study was conducted by Fleishman-Hillard, a major public relations firm. Their study is particularly important in that it represented almost half of the global online population, with respondents in France, Germany, United Kingdom, United States, Canada, China, and Japan. Fleishman-Hillard evaluated influence; however, their definition of influence was not impact on purchase behavior, but the amount of time consumers spend on each communications medium and the degree of importance each medium has in their daily lives, particularly in their perceptions and attitudes.

Their study revealed several key insights:

– Though digital communications dominate in terms of its use as a medium of conveying information (roughly twice that of television, and ten times that of print media), relatively little is spent in real marketing dollars. As consumers continue to shift their methods of communication, companies will need to rebalance their media mix so that it is more aligned with what customers are doing.

– Asia is on the march as a digital power. Chinese use of the Internet has seen significant increase over the past few years. At 330 million users, they now represent an entity larger than the population of the United States. Combined with India, the Internet-using population is over 500 million (and is expected to grow by over 700 million by 2015, according to a McKinsey study). In addition to their numbers, Chinese Internet users are different as well, with much heavier researching, and expression of personal views through online social media.

– Malaysia, however, won top prize for Internet use, especially where social media are concerned: though the country has only 15 million Internet users, this represents almost 60% of the population (and McKinsey forecasts that this will rise to 25 million, or 80% of the population by 2015). Malaysians are active users of social media sites and instant messaging, consuming 35% more digital media than Internet users in China and 150% more than those in India. India, with only 7 percent of the population having Internet access, is anticipated to grow to 28 percent penetration by 2015; and they are heavy users of email and downloaded videos and music.

Digital communications impact decision-making, especially its facility as a resource to compare options, and to identify expert and peer advice which creates greater confidence. Especially important here is the role of search engines, which often serve as information research launching points. This is where showrooming begins.

Online information-sharing is also coming to be seen as somewhat dangerous, or having the potential to be damaging due to security issues. As more and more people use online social media and generate content, over half of the respondents in Fleishman-Hillard’s study felt that people share too much personal information online, and over one-fifth felt that expressing personal opinions online could have a negative effect on their reputation, career, or financial well-being.

Trust is a critical social media issue. It’s one of the key reasons why mass advertising and promotional communication is something of the past. Consumers no longer trust information shoveled at them through a few large channels, and are far more interested in retrieving content from sources that they select and cross-checking for accuracy. Though there is increased usage of online postings to glean information on the experiences of others, there is also increasing skepticism. The Fleishman-Hillard study found that 39% believe it is safe to communicate with others online, but 19% felt it was unsafe to do so. We can conclude that, insofar as online dialogue is concerned, consumers are ‘cautiously trusting’.

Mobility in countries like India and Malaysia is a fact of life, and there is active use of mobile applications on PDAs and smart phones. In the U.S., Canada, Germany, France, and the U.K., however, actual adoptions of these applications remains fairly low, with almost one quarter of respondents admitting that they don’t use the full range of features available on their phones and mobile devices. Among the biggest gaps is the use of emails for communication and access to the Internet.

Fleishman-Hillard concluded that, in most countries, the Internet is just beginning to be an influential tool for peer-to-peer communication. Many consumers felt that the Internet would continue to increase in importance and influence, with Chinese Internet users giving the strongest endorsement to this perception.

Much of what transpires on online social media, the interchange between individuals, is what sociologists call ‘phatic’ dialogue, that is content like ‘Where should we meet for lunch?’, ‘Do you like my new glasses?’, ‘How are you feeling today?’, ‘Did you see the Phillies game last night?, ‘I’m going to the zoo next week with my grandkids.’, and the like. Where there is online brand-related communication, it mostly revolves around customer experience and customer service.

A study of consumer use of social media by Nora Ganim Barnes, a Senior Fellow of the Society for New Communications Research, showed that, when customers are considering purchase of a product or service, about one-third said they went to social media sites to learn about the customer care offered, and about half of them take customer care, learned about online, into consideration. Online social media was among the less frequently used online sources, well behind search engines and online rating systems. Microblogging sites like Twitter and Oownce, YouTube, and social networking sites like Facebook were seen to have relatively little value as trusted sources of information leading to brand decision-making.

The use of social media for at least contributing to consumer decision-making, though, does seem to be increasing. Social media is, if nothing else, becoming a marketers’ tool for using two-way dialogue to deepen customer relationships. Though often defined as a set of tools and technologies – blogs, wikis, podcasts, and social networking sites – for people to have conversations with one another, advanced companies are using, or beginning to use, social media to engage customers and build enthusiasm for its products and services.

Informal communication monitoring organization Keller Fay reckons that there are 3.5 billion word-of-mouth conversations each day in the United States, and two-thirds of these involves product and service brands. Their studies, like those of consulting organizations such as McKinsey, show that word-of-mouth has the dominant influence on customer decision-making. Their data, collected through online surveys of consumer panelist who are 13 through 69 (700 per week, 36,000 per year) and covering word-of mouth in all categories shows that:

– Word of mouth is mostly positive – 63% of brand references are positive, compared to only 9% that are negative (but, it’s the negative that gets most attention)
– Word of mouth has impact – About half see high credibility, are likely to pass information along to others, and are likely to purchase

In addition, their studies repeatedly show that most of the brand-related informal word-of-mouth takes place offline. This may change in the future; but it’s a present reality. So, while online social media may stimulate and even facilitate customer decision-making, offline word-of-mouth continues to dominate influence. This reality, among all demographic groups, must receive attention by all organizations which include informal communications as an element of their marketing program.

Source: The Customer Advocate and The Customer Saboteur, 2011