IDG’s MERIT Series: Word-of-mouth can’t be measured, but advertising can be controlled

While the inaugural debate at IDG’s technology symposium MERIT held in Bangalore saw speakers voice forceful opinions on advertising in the Niche Media and the Mass Media, the second debate held in Mumbai covered the effectiveness of word-of-mouth publicity versus advertising in marketing technology products and services.

The debate commenced with Patrick McGovern, Chairman and Founder, IDG, throwing light on research done by IDG on the role of IT and how organisations decided on what technology products they needed to buy and when.

According to the research, CIOs and CTOs have close to 80 per cent involvement when the organisation is buying a technology product. More interesting is the fact that it is the IT department that is the sole deciding factor on the technology vendor and not the top management from other departments.

Some of the effective technology vendor communication methods such as websites and newspaper articles are more forceful in convincing people to buy technology products rather than telephone calls that promote technology products and online advertising. Also, the last three years have witnessed most IT executives increasing their use of IT websites. IT companies can also leverage sales by having a well informed website that has white papers and informing people through technology-specific print publications.

The panel was moderated by Anurag Batra, Editor-in-Chief, exchange4media. Batra said that word-of-mouth publicity was people-to-people marketing, where users passed on positive or negative feedback about products and services to others. According to research, word-of-mouth publicity contributes to a company’s bottomline. Also, users are much more willing to talk about negative experiences rather than positive experiences.

Sunanda Ambardar Chak, Director Marketing, India and SAARC, CA, strongly supported word-of-mouth publicity and said that exchanging ideas was an individual’s basic need and this was how we connected with others. Passing information is the basic principle of word-of-mouth publicity and this creates a buzz around a product.

She cited several examples of ideas, services and products such as Hotmail and the Bollywood blockbuster ‘Sholay’, which have thrived because of initial word-of-mouth publicity.

According to Chak, advertising shared information about a product or service, while word-of-mouth publicity lent credibility to this information. While advertising is marketers talking to consumers, word-of-mouth publicity is consumers talking to marketers, which is why advertising is effective while launching a product and word-of-mouth publicity is effective after a product is out in the market.

Counter her was M G Parameswaran, Executive Director, FCB Ulka, who said that while word-of-mouth publicity was influential in a closed user group, advertising reached millions. Word-of-mouth publicity is also not credible as it is neither measurable nor predictable, according to him. Word-of-mouth publicity is also controversial as certain companies pay people to spread good opinions about their products and this makes it a mode of advertising rather than credible consumer opinion. Perhaps the only advantage of word-of-mouth publicity is that it is cheap, but the cost that companies pay by not advertising does not justify the damage that negative word-of-mouth publicity can do.

Advertising is useful in spreading information and it creates attitudes, which is why advertising is more evolved today than it was few years back. According to Parameswaran, word-of-mouth publicity was sometimes useful in extremely closed user groups, but advertising lent scalability and popularity to a product and was also advantageous by being a controlled and easily monitored medium.

Moninder Jain, Director, South Asia, Logitech, felt that advertising was self-publicity while word-of-mouth publicity was credible information from people who had experienced a product. This made word-of-mouth publicity more credible as it was a fair and unbiased point-of-view by the consumer. The technology product space is about high involvement and when people buy technology products they rely on ‘circle of trust’ by always first consulting those who have used the product. Jain said, “Word-of-mouth publicity is supreme in the technology space.”

Ishan Raina, CEO, Euro RSCG (India and Middle East), cited the examples of technology product companies like Dell, Intel, and Microsoft, who have huge ad spends. “Word-of-mouth publicity is one-to-one communication, but digital media like SMS, blogs and the Internet are many-to-many advertising. This makes digital media a form of advertising and not word-of-mouth publicity as people very often feel. Companies that want to ramp up and scale have to advertise,” Raina added.

He also listed some facts, some of them being – all big technology companies spend a fortune on advertising; digital media is mass media and is as much scalable as advertising; the ‘circle of trust’ phenomenon is present not only in the technology space but across categories; and seeking the opinion of those who have used a product is inherent in human nature when one wants to buy a product.

The open discussion by panelists broadly concluded with word-of-mouth publicity being defined as small scale promotion and advertising being recognised as a measurable and scientific tool that companies can use to reach larger audiences.

Also see:

IDG’s MERIT Series: Niche Media is here to stay, Mass Media for Brand building, say experts

http://www.exchange4media.com/e4m/news/newfullstory.asp?section_id=8&news_id=21204&tag=15931&pict=4

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