DISCLOSURE DOESN'T HAMPER WORD-OF-MOUTH MARKETING

New Study Presented at Orlando WOMMA Conference

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NEW YORK (AdAge.com) -- As the Word of Mouth Marketing Association kicks off its conference today in Orlando, Fla., one hot topic is sure to be the issue of disclosure: Should the ordinary Joes enlisted to spread buzz about products and services tell others that they’re part of a marketing program?
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800 WOM agents
The answer is a resounding yes, according to new research, from Northeastern University assistant professor Walter Carl, that culled data from more than 800 word-of-mouth agents and the people to whom they talked up brands.

Rather than being put off by the notion of a friend or relative was engaging them with a commercial message, many participants didn’t seem to care. More than three-quarters of respondents called the affiliation a “non-issue.” And, Mr. Carl found, people who knew of an agent’s commercial affiliation were more likely to register positive feelings toward both the agent and the company he or she was working for.

Moreover, he concluded, the rate at which messages were passed along was 70% higher when that relationship was disclosed. Mr. Carl chalked that up to a feeling of being in the know when engaged by an organized campaign.

“There’s a sense if there’s an organized word-of-mouth marketing program there must be something interesting about it,” he said. “There’s a sense that a company wouldn’t do this unless there was something interesting or new about the product.”

Industry controversy
At today’s WOMMA conference, Mr. Carl will discuss the study, which comes at a crucial time for this growing discipline. While marketers and agencies are trying to figure out how to harness the power of consumer endorsements and use it to promote brands and services, consumer-advocacy groups and government regulators are considering whether and how to regulate programs that turn ordinary people into marketing channels.

A number of legal authorities have said that word-of-mouth initiatives that don’t use disclosure likely violate Federal Trade Commission regulations. WOMMA’s ethics code mandates disclosure and many of its better-known practitioners are also advocates of disclosure, despite the common assumption that word-of-mouth efforts are more effective when the commercial relationship is concealed.

BzzAgent consumer network
Mr. Carl conducted the study with BzzAgent, a Boston-based firm that maintains a network of consumers willing to engage in word-of-mouth programs on behalf of agencies and marketers. BzzAgent didn’t initially require disclosure, but its leadership learned that it is more effective and more ethical to do so and eventually changed its policy.

“When we started the business in 2001, everything we read told us that in stealth and anonymity there is power,” said Founder-President Dave Balter in a interview with Advertising Age last year. “Are there cases where if people didn’t disclose they would influence somebody else? Yes. But it’s not appropriate and disclosing doesn’t hurt the process."

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