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Is Social Networking the Future of Word-of-Mouth Marketing?

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Now, it's a given that there has been a tremendous amount of buzz around social networking in the recent past. Among all other social media sites and components, social networking is not only the fastest-growing but is being touted by analysts as the "future of the portal" (via a Bear Stearns report). My thoughts veered to this topic around a recent debate/discussion among bloggers (Jason Calacanis, Robert Scoble and others) on the value of marketing on social networking sites like Facebook.

Jason Calacanis' Social Networking Bankruptcy Theory

A week ago, Jason Calacanis in the middle of a blog sabbatical, wrote:

Facebook is a multilevel marketing platform where you agree to pay attention to people's gestures in the hopes that those people will pay-attention to your gestures in the future. It's a gesture bank.
Are we creating a social system to communicate with each other at a distance because the reality of creating and maintaining that social networking face-to-face is, well, scary?

How NOT to network socially?

IMO, Imagine if in real life you'd a chance to make friends and all you did was keep making "friends" and at the end of it, try to market stuff to them. It's kind of like the Pyramid Scheme were your rationale behind making friends was to sell stuff to them.
I know Jason means otherwise. But then the question to ask then is, who among your social network's connections are truly your "friends?" I have around 180 "friends" on Facebook and more than 400 professional colleagues, networkers, etc., on LinkedIn. (I work for LinkedIn as its Community Evangelist.)
I haven't seen even a single sponsored video, haven't clicked on the ad for the movie Superbad that was on my mini-feed on Facebook. Why? For starters, it's kinda like inviting your friends over for a party and then starting it off by running a trailer for Superbad.
And, if I wanted to be marketed to, I'd then go watch TV, not be on a social network. However, if a friend of mine (from my social network) writes a glowing review of Superbad, I may go watch.
Interestingly, I've seen a bunch of my friends announce on the mini-feed that they were going to watch the Bourne Ultimatum this past weekend. Now, that makes my ever-convinced mind that I should watch the film soon. If you belong to my circle of friends, you'll also see a glowing review of the film later tonight from me about the movie (hopefully)? The rationale behind it is that I've an honest opinion that I'm sharing and you may be inclined to take my word for it.
How to network socially? And, the theory of Word of Mouth Marketing.

Well, what I'm trying to say is that never before did we have tools that organically helped spread word-of-mouth as well as social networking sites allow us to do today.
Word-of-mouth promotion is highly valued by advertisers. It is believed that this form of communication has valuable source credibility. Research points to individuals being more inclined to believe WOMM than more formal forms of promotion methods; the receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals) Source: Wikipedia.[1]

There is no more organic way to do this than using a social network. What social networking and professional networking sites do, is replace sales/marketing/advertising with word-of-mouth and replace snake oil salesmen/pyramid scheme peddlers with true customer and product evangelists.
And, maybe that's what Jason's referring to as the gesture bank. I wonder what Andy Sernovitz of Word of Mouth Marketing (WOMM) thinks of that? Or, what Ben and Jackie at the Church of the Customer think. Their most recent book was titled – Citizen Marketers: When People Are the Message.
What should marketers do when that message is now dispersed on a social network? Think about it.
More on this later, but for now I'd love to hear your thoughts as marketers on this topic.

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Mario Sundar has over five years experience in leadership roles both in Marketing as well as in Software Development. Mario currently works at LinkedIn, the World’s largest online professional network, as Community Evangelist. Prior to that, he helped develop & manage marketing initiatives for Fortune 50 high-tech brands. Mario is also on the board of the American Marketing Association (Silicon Valley Chapter).

In May 2006, Mario launched his marketing blog where he discusses customer evangelism, community marketing and social media strategy. Ranked as one of the fastest growing Wordpress blogs in July 06, “Marketing Nirvana” continues to expand its readership each week. The blog currently (as of 04/07) has a Technorati Rank of 7,113 and an Alexa Ranking of 142,830.

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  • by LIEEEEY Mon Aug 6, 2007 via blog

    have you reviewed social network yet?

  • by Spike Jones Mon Aug 6, 2007 via blog

    Interesting perspective, Mario. Online social networks can certainly aid in WOM activities, but let's not lose sight of the fact that research shows that 92% of WOM happens OFFline. I don't think that will change much anytime soon.

  • by Mario Vellandi Mon Aug 6, 2007 via blog

    Agree with Spike. I don't want to discount any of your lines of thinking because it is certainly reasonable. Seeing what other people are doing, interested in, this/that...can be influential in your own actions. But certainly we all carry biases or individual opinions too that won't be shaken quite so easily. With the ease of publishing and sharing, I almost think that online social networks are diluting great WOM. At a certain point, at least for isn't pleasant to be info overloaded.

  • by Elaine Fogel Mon Aug 6, 2007 via blog

    Isn't the whole point of branding to organically create brand evangelists for your product/service? If that's the case, then people will spread the word in their communication channels of choice. Some may choose face-to-face and others through social networks. The value of social networks is that they can help friends stay connected even though many miles/kilometers separate them. So, face-to-face WOM isn't always feasible. Perhaps, as Web 2.0 grows, that 92% of offline WOM will decrease.

  • by Lewis Green Mon Aug 6, 2007 via blog

    Mario, Good food for thought. I still think the majority of us get our word of mouth over coffee or a glass of wine. Although I am linked to lots of people in my social networking, I can't remember being impacted by WOM except for music recommendations. And, I'm unlikely to purchase an item over $100 (an arbitrary number) based on information from someone who I know based only on their profile.

  • by Dave Brown Mon Aug 6, 2007 via blog

    I agree to the notion that effective Social Media Marketing adds value to your social media experience. You noted that you would be more apt to listen to a movie review from a friend than an advertisement for the same movie. This is a perfect example of effective social media marketing. I think that SSM is more effective than traditional WOM in many instances. Effective WOM comes from friends or people you trust to some extent. If I get a MySpace message from one of my real life friends suggesting a product, I'm already online making it easy for me to research the product further or purchase it. When I hear about a product from a friend at the gym I'm nowhere near a computer to buy it on. I often forget the conversation. Also. Social media marketing can be done on a much larger scale and in a shorter amount of time.

  • by Vikram Rajan Mon Aug 6, 2007 via blog

    social media, web 2.0, etc. helps us showcase our word-of-mouth networks. I don't believe the traditional (off-line) world of w-o-m marketing will die in our generation... but our friend-based on-line networks has helped to capitalize and automate our networks. ~ Vikram

  • by Ben McConnell Mon Aug 6, 2007 via blog

    I suggest we dismiss the idea of a "gesture bank." It sounds like a Frankenstein measure, like "most valuable brands." A fundamental value of social networks for marketers is that it consolidates listening. When marketers listen, they can amplify what's being said via pointers on their own sites or their own social networks. That seems like a better idea than going overboard with anything else, lest you create an appearance of astroturfing.

  • by J Perez Tue Aug 7, 2007 via blog

    Mario, Check this great Entrepreneur Social Networking Site!

  • by Tim Jackson Tue Aug 7, 2007 via blog

    Mario, I think I might fall somewhere in the middle of this crowd. I totally relate to your point about the ad for Superbad- I'm just gonna skip right past it. But, if the same movie gets a mention by one of my peers/ friends or even one of me connections on Facebook or LinkedIn, I'm far more likely to either just go see the movie or simply click on the trailer link. The WOM experience is changing dramatically. But it depends on who you are talking to. Folks like many of us here- online and connected- might have a different perspective than those folks who are not online as much or as comfortable with the Social Network phenomenon. In the end, I think that the big 92% that Spike mentions is going to become much smaller. But that might still be a long time from now. I'll be looking for your movie review, by the way.

  • by Mario Sundar Tue Aug 7, 2007 via blog

    Wow, a lot of great responses. Spike, 92% of WOM may currently happen offline, but more and more we're going to find the ease with which WOM can work within social networking quite effective. For e.g. I've been raving about movies all along to my close circle of friends whenever I watch one, but right now, I've the possibility to broadcast the same to a larger social group, culled from my college, high school about these movies. What was possible from "one to ten" has now just expanded to "one to two hundred" or many more. All I'm saying is that social networks makes it easier to spread word of mouth. It's this same ease that Vellandi says, dilutes great WOM. I somehow don't see how?

  • by Mario Sundar Tue Aug 7, 2007 via blog

    @Dave and @Lewis: I presume IF you'd your entire circle of friends (even the close friends) whose WOM you trust in, on your social network, then wouldn't you agree that it makes it much easier to spread when you see their latest raves/rants whenever you log into your network as opposed to when you actually meet them in person?

  • by Mario Sundar Tue Aug 7, 2007 via blog

    @Ben, From the point-of-view of marketers, I agree that social networks provide a great way to study trends and buzz, similar to what groups, discussion forums and blogs do, but much more effectively since this is all related to your immediate circle of friends/professionals as the case may be. @Tim, Hope you'd a chance to read my Bourne Ultimatum review. Great movie! I agree that social networks are currently not YET mainstream, but a recent Bear Stearns report suggested that social networks could be future portals given their phenomenal growth over the past few months. Just food for thought.

  • by jennifer jones Tue Aug 7, 2007 via blog

    Mario, interesting post. The Bear Stearns report intrigues me as well. I do think that WOM is more powerful offline. I know I still listen harder offline than online despite the growth of social media. Maybe it is because I am not swept in by what I read as much as what i hear from friends telling me face-to-face.

  • by Majd Awary Tue Aug 7, 2007 via blog

    Mario, using social media to boast the WOMM is taking a lot of interest from marketers those days and I think your post is an opportunity to discuss and examine the real potential. If we try to examine recent products which the WOM had a big role in increasing awareness and demand (e.g. the iPhone, Harry Potter book and movie –) the WOM was backed up with so many factors (a genuine product, a huge marketing campaign –) and the buss was basically created by users themselves. Don't you agree with me that the role of marketers in generating the buss is near to zero? Just like the traditional WOM. It is generated and adopted by the community itself. From a marketer's prospective, online social networks help to consolidate all channels of thought about an industry or a product. Moreover, web 2.0 tools used in conjunction with a corporate web site tremendously spur the communication between the customer and the producer.

  • by Dan Neely Tue Aug 7, 2007 via blog

    I think the WOMM is interesting unto itself, but is it not more interesting to develop a platform by which these conversations and recommendations can be heard by companies on a mass scale, where by the conversations are the ingredients for real time insights. Combining Community/web 2.0 tools with the consumer facing website, will create a platform by which consumers can interact with each other around something they already have in common (the company), the shift from 92% offline to WOM online will happen more rapidly because a pseudo relationship and commonality that already exists. The advantage for a company of providing their customers with a place for them to interact is they will learn in real-time about the WOM conversations their customers are having and use those insights to understand how the relationships between customers are as important as the transactional data about what they buy.

  • by Mario Vellandi Tue Aug 7, 2007 via blog

    Mario, What I mean by the ease of publishing/subscribing perhaps diluting great WOM is this. How many people can be talking about what they like, don't like, are doing, etc...before the it becomes too much? Too many people in the room adds clutter. And with clutter, there is a lack of concentration. I'm not downplaying the influential factor; I just wanted to show the flip side of the coin. I'll add this though. I find recommendation engines like those from Amazon and IMDB still very relevant and important indicators of product/service quality because of the large number of votes, and the readiness they can be called upon for a quick analysis when I'm interested to know.

  • by Mario Sundar Wed Aug 8, 2007 via blog

    @Majd, Exactly. WOM is always auto-generated by communities. The role of marketers is simply to: "Listen-Be Aware-Measure-Participate", much the same approach towards social media in general. Social networks greatly help with that. @Jennifer, WOMM is definitely powerful offline but where social networks step in is in maximizing this potential online due to ease-of-use.

  • by Steve Hoffacker Thu Aug 9, 2007 via blog

    Mario, The whole concept of WOM is that it is personal and relational. If your social network is made up entirely of your personal network - the people that you normally would see face-to-face and interact with - then social media outlets can be a tool for getting WOM viewpoints and opinions out faster. For many businesses, however, and circles of influence, the social media outlet just isn't the same and it won't have the same powerful results as in-person, one-at-a-time WOM messages. In many cases, only a virtual relationship exits in the social media realm. There is no history, no actual shared experience where the WOM opinions could be valued and acted upon. In my opinion, and for the types of businesses that I work with, social media does not have much of a role. Personal contact and retationships - that's the key. Steve

  • by Ryan Turner Thu Aug 9, 2007 via blog

    Feels like I've heard this conversation on another channel, but I understand what you're asking now. I disagree that never before have tools or means existed to the degree available at present to accomplish what you've asserted, and that there's no better means of accomplishing what you've posited than through "social networks" given the purpose you've laid out. There's this idea of "social networking" as mirroring real-world activity that is true, but to say it filters out the "true believers" from the "schemers" is a false distinctions. At any time, it's hard to determine what moves a person to form a connection, or what needs anyone has after a connection is made. You never know the value of your ties until they're tested in the real-world, why should it be different online? There's also more incentive to commoditize-- through sheer volume or frequency-- the activity within social networks to the point that content takes a back seat. It would matter less that I say something "true" so long as I am "active", "connected" and "participating" in one or more networks. This transforms the nature of an organic activity into something more transactional, requiring more thought, more engagement, and selectivity in choosing where, when, and with whom to engage my words of mouth. Yes, the tools and systems increase the speed, reach, and efficiency regarding all of this. But ever since there has been communication and groups, I would never say "never"...

  • by Gretchen Anthony Fri Aug 10, 2007 via blog

    Just take a look at this series of comments. Let's not overlook the social network that we've each engaged in, just on this topic alone. Mario's original question, who we consider "friends," is at the crux of this social networking debate. As much as I'd love to have a conversation over a glass of wine with many regulars, that won't happen. But I do read, consider and often follow the advise of those who I have not met, but for many reasons consider peers. Networks, regardless of form or forum, serve countless purposes. And influence can be felt in all of them.

  • by diversity production network Sat Aug 11, 2007 via blog

    There was an article about plogging which focuses on WOM, for more info check out I found it helpful and amusing now I can plogging, to blogging and vlogging. I agree with the previous comments about the validity and the reach WOM can have online over word or click of mouse marketing strategies. Yours, diversity production network

  • by Maurice Stewart Wed Aug 15, 2007 via blog

    Other social networking online communities (MySpace, YouTud FaceBook) will make you lots of friends. DirectMatches will make you lots of FRIENDS AND LOTS OF MONEY? aN INCOME POTENTIAL CAPPED AT $48,000 MAURICE STEWART www.MyDirectMatches Go

  • by Mario Sundar Thu Aug 16, 2007 via blog

    Steve, "For many businesses, however, and circles of influence, the social media outlet just isn't the same and it won't have the same powerful results as in-person, one-at-a-time WOM messages." In that case, I'd recommend professional networks (Disclosure: I work for LinkedIn) since these are crafted with the sole purpose of including your colleagues (past & present), business school friends, etc... Any connection who'll help you be a better professional and whom you've had the chance to work or study with in the past. Ryan, "I disagree that never before have tools or means existed to the degree available at present to accomplish what you've asserted, and that there's no better means of accomplishing what you've posited than through "social networks" given the purpose you've laid out." Although, I may have overstated the case due to my enthusiasm for the subject, I still wonder what other tool have we been presented with that has furthered the cause of organic networking (social or professional) in the past? Feel free to share.

  • by Mario Sundar Thu Aug 16, 2007 via blog

    I think Gretchen raises an important point about the very definition of "friends" from an online social networking's perspective. The Dunbar rule states that: "Dunbar's number, which is 150, represents a theoretical maximum number of individuals with whom a set of people can maintain a social relationship, the kind of relationship that goes with knowing who each person is and how each person relates socially to every other person.[1] Group sizes larger than this generally require more restricted rules, laws, and enforced policies and regulations to maintain a stable cohesion. Dunbar's number is a significant value in sociology and anthropology." (Source: Wikipedia) By that count, anyone w/ more than 150 (give or take) is actually adding more "friends" than friends to their network :) I think there are varying levels of influence within a social network, which definitely affects word of mouth. So, in summation, word of mouth definitely has been given a boost to the growth of social networks, but it'll be interesting to see human behavior evolve accordingly.

  • by purnima Sun Mar 16, 2008 via blog

    I was reviewing a few viral marketing service and came accross something pretty intresting called WideCircles. They seem to work by sending viral messages to various websites like forums, blogs, wiki's and so on. My friend signed up for the account the other day after running a small but successful campaign ( targeting very specific niche ) and told me about it. It seems like a nice idea to gather highly relevant traffic and help with the SEO process at the same time while paying very small amount of money compared to pay per click. In any case, I am going to give them a try today. In case you are intrested here is the site.

  • by Dinu2008D Tue Mar 18, 2008 via blog

    The new distributed viral forum/blog/wiki/classified/etc viral advertising engine is here. Spread the word about your product or service in short amount of time to millions of people. Get residual traffic and increase search engine visibility by using long lasting backlinks. Low cost, no pay per click fraud issues and great ROI.

  • by kumarithennakoo Sun Mar 23, 2008 via blog

    Has anyone out there heard about It seems like a way better service then wasting money on PPC. Apparently they are using refering websites ( forums, blogs, wiki, etc. ) and have a viral word of mouth distributed approach to it. My friend told me he got around 100 visits from single post which cost him $0.40c. I am going to give them a try today . In case you are intrested here is it.

  • by Sam Milby Sat Apr 5, 2008 via blog

    That is great! That is very helpful. -------------- Sam Milby Did anyone out there give a try to Wide Circles or WideCircles. They are new word of mouth advertising platform, apparently they can push massive amount of messages through social network mediums like forums,blogs,wiki's and so on. They say that they only bill for posts active for minimum of 5 days and price seems pretty affordable. I am going to give Wide Circles aka WideCircles a try since I am tired of PPC fraud.

  • by mahe Tue Apr 15, 2008 via blog

    So, face-to-face WOM isn't always feasible. Perhaps, as Web 2.0 grows, that 92% of offline WOM will decrease.Maybe it is because I am not swept in by what I read as much as what i hear from friends telling me face-to-face ================= jack Put The Message Where It Matters! WideCircles aka Wide Circles represents relevant, distributed, highly targeted and efficient internet word of mouth marketing using entertaining or informative messages that are designed to be passed along in an exponential fashion using social network mediums such as blogs, forums, wikis and so on.

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