Mobile accounted for 25% of Ulta's e-commerce revenue during Q2.
It’s one of the most powerful forms of advertising. It’s been around forever.
And now, it’s online.
Word-of-mouth advertising-consumers talking freely to other consumers-has always been a boon for the purveyor of a good product or deal and a bane to those with a problem on their hands. And consumers have always talked among themselves about brands and products. But the effects of those conversations have been limited: if a consumer had a complaint about a product or service, it might escalate as far as a letter-writing campaign.
The Internet’s changed that. Now, any consumer with an axe to grind and a mouse at hand can put his complaint in front of hundreds, thousands or more, in blogs, review features and sites, complaint sites and social networking sites. Conversely, if delighted by the product or brand, the consumer can turn to the same outlets to sing your praises.
The good and the bad
That’s how it works at Petco.com. The web site of Petco Animal Supplies Inc. had been looking for a way to cost-effectively leverage what it already knew was its customers’ strong desire to connect with others on the topic of their pets. “For our target customer, this is their child,” says vice president of e-commerce John Lazarchic.
The solution came from outsourced service provider BazaarVoice Inc., which since October has been hosting an application that gathers and posts consumers’ product reviews and ratings on Petco.com-both pro and con. Lazarchic understands that showing both sides is part of the deal. “We always knew that for the program to have any validity, we’d have to be willing to put up negative reviews,” he says.
Like it or not, the phenomenon of consumer-generated online media is turning on its ear the notion that enough of the right kind of advertising can control brand perception. “The acronym I use with brand marketers now is URUE,” says Andy Sernovitz, CEO of the Word of Mouth Marketing Association. “You Are the User Experience. You’re not what your ads say you are, you’re not what the brand says it is.” For example, he says, a cable provider such as Comcast might spend big on advertising about how ‘Comcastic’ it is, but if the personal experience of a user of the service is poor, the reality of that experience is the brand impression that user conveys to friends. “You can’t out-advertise that,” says Sernovitz.
The web’s made the consumer’s voice a highly visible part of the marketing mix and a significant consideration in brand management in some quarters, and more marketers are now watching and in some cases finding ways to participate in consumer media such as blogs, rating and review sites, and social networking sites. In 2004, a Jupiter Research survey found that 34% of marketers polled already had tried some form of viral marketing program in the previous year. More recently, eMarketer estimated that almost half of all online marketers engaged in some form of word-of-mouth or viral campaign in 2005. This year, it predicts, a majority of online marketers will conduct such efforts.
Making the commitment
But participation requires a commitment to an open and honest dialog with customers in the very public forum of the Internet. That’s a twist on 100 or more years of marketing practice in which marketers have been unwilling to put any resources behind messaging they did not originate and control.
“Brands are moving away from a position of holding a megaphone to holding a microphone,” says Joe Crump, executive creative director of interactive agency Avenue A/Razorfish’s Eastern region. Crump adds the trend is most relevant for two types of brands. One is brands that are essentially, digital: a pure play such as Amazon would be one example. The other is what he calls “analog” brands-Procter & Gamble, for instance-that may or may not have a direct digital channel, but that definitely have in their audience base a lot of heavy users of digital media.
“With different types of clients, we have different conversations about the relevance of social media,” says Crump. Relevance is a starting point for such discussions, and the requirements of execution are a consideration as well. Staffing levels and in some cases, in-house or third-party technology and services are needed to monitor, facilitate or publish the consumer voice. And unlike what online marketers have become so accustomed to in a cost-per-click environment, ROI is less directly measurable.
Retailers such as Lazarchic are willing to live with that. “Web sites are becoming so interchangeable and people are so easily able to jump between them,” he says. “So you have to look at what you are going to do to make yourself different. It may not be that what you do, whether it’s product reviews or different types of content, contributes directly to the sale, but it contributes to your differentiation from your competitors and causes customers to come back to you when they are ready to shop. There’s value in that.”
That’s a branding perspective, but the ratings and review tool at Petco has managed to deliver on some hard metrics as well, when those reviews were leveraged in an outbound e-mail campaign that targeted customers by pet type. Petco chose six top-rated products in each pet type and included snippets of favorable reviews on the product as part of the e-mail message. E-mail recipients could click-through on the message to read the rest of the featured reviews, as well as other reviews of the product. The click-through rate on the e-mail messages that contained product reviews was 200% higher than those in the campaign that did not.
Avoiding the liability
Petco.com had looked for ways to leverage the affinity of pet-lovers, and in fact, had hosted a community message board on its site from 1999 to 2001. When the staffing needed to maintain the feature and review comments before posting proved too expensive, Petco took the board down. BazaarVoice’s outsourced solution solves that problem, according to Lazarchic. BazaarVoice reads the reviews and flags Petco on any trends-and any it does not post. Reviews don’t get posted if they raise potential liabilities for Petco or its vendors, or if they require more information than supplied by the poster to provide an accurate assessment.