But the social network’s advertising revenue grew 18.4% during the quarter.
A study by The Nielsen Co., which evaluated nearly 80 new consumer products launched in the U.S. in 2005 and 2006, found that high blog interest, or buzz, around new product launches was tightly linked to paid media spending.
Marketing strategies that separate advertising and paid media from word-of-mouth tactics often are doomed from the start, according to a new study by media market researchers The Nielsen Co. The study, which evaluated nearly 80 new consumer products across several subcategories and launched in the U.S. between 2005 and 2006, found that high blog interest, or buzz, around new product launches is tightly linked to paid media spending.
After analyzing blog buzz volume, ad spending, purchase intentions and actual product sales, Nielsen found the best predictor of buzz for newly launched consumer-packaged goods is a large advertising budget.
The study found the top 10% of products with the most buzz averaged spending nearly $20 million on paid media for the launch. In contrast, the companies that generated the next 40% of blog buzz spent an average of $15 million and the companies that generated the bottom 50% spent an average of only $5 million.
“Our analysis shows that traditional mass media continue to play a critical role for most CPG brands,” says Robert Mooth, vice president of product development for Nielsen’s Bases and a study author. “What has changed is that online buzz and consumer expression have entered the fray, resulting in a complex yet inseparable relationship within the overall marketing mix for many types of products.”
The study, “The Origin & Impact of CPG New Product Buzz,” was conducted by Nielsen BuzzMetrics Inc., which focuses on buzz analytics, and Nielsen’s Bases, a provider of new product forecasting and consulting.
Not all CPG subcategories and products generated buzz at the same level. “Most CPG products are ‘everyday’ items, lacking in distinction and therefore propensity for buzz,” says Kate Neiderhoffer, director of methodology at Nielsen BuzzMetrics. “However, there are some exceptions to the rule, as evidenced by brands like Red Bull, Altoids, Crystal Pepsi and Viagra. The CPG industry should challenge itself to bring more innovative products to market, cultivated with more innovative marketing. The buzz will follow.”