WoM Spending to Top $1.3 Bil., Per Survey

BOSTON Spending on word-of-mouth marketing is projected to rise more than 37 percent this year to $1.35 billion and reach $3.7 billion in 2007, according to a report issued today by PQ Media, a research firm in Stamford, Conn.

Driving that growth is the continued consumer shift to alternative media and the need for marketers to improve brand engagement and their returns on investment, according to PQ.

The findings of the Word-of-Mouth Marketing Forecast 2006-2011 are being presented in detail today at the Word-of-Mouth Marketing Summit 2007 in Las Vegas.

“Major brand marketers are moving from just testing word-of-mouth marketing to including it as a growing component of fully-integrated marketing campaigns,” said PQ CEO Patrick Quinn. “The continued advancement of new word-of-mouth technologies is creating crosscurrents among alternative media strategies, as evidenced by Facebook’s recent attempt to bridge the gap between social networking and WoM marketing.”

Agencies have been expanding their WoM capabilities. Last month, for example, Interpublic Group formed a partnership with BzzAgent to use that firm’s WoM services and conduct research in the area. The next step, Bant Breen, president of IPG’s Futures Marketing Group, said at the time, is turning those insights into action. WPP and Aegis Group entered the space last year via acquisitions of M80 and Ammo, respectively.

PQ does not break out WoM spending in specific product categories, but said data suggests that food and beverage, media and entertainment and sports and recreation are among the heaviest users of WoM strategies. (PQ notes that Procter & Gamble owns one of the leading WoM media companies, Tremors/VocalPoint, which targets the youth and female audiences.)

According to PQ, spending on WoM content, services and products grew at double-digit rates every year from 2001 to 2006, hitting $980 million last year, though that equals less than half of 1 percent of the overall $250 billion-plus marketing-services segment (which also includes direct marketing, branded entertainment and public relations).

For the survey, PQ used data collection and algorithmic methods to analyze the current U.S. media and outsourced WoM marketing expenditures of about 100 companies. PQ excluded in-store sampling, events and sponsorships, PR not associated with WoM and social-network and consumer-generated initiatives.