Study: Marketers Can ‘Buy’ Online Buzz

A high level of blog interest, or online buzz, around new product launches is tightly linked to paid media spending, according to a new study by The Nielsen Company that analyzed blog buzz volume, ad spending, purchase intentions and actual product sales for newly launched consumer packaged goods (CPG), writes MarketingCharts.

The study found that a large advertising budget is the best predictor of buzz, prompting Nielsen to conclude that marketing strategies that separate advertising and paid media from pure word-of-mouth tactics may be severely misguided.

According to the CPG buzz study:

• On average, the top 10 percent of products with the most buzz spent nearly $20 million on paid media for the launch.
• In contrast, the companies that generated the next 40 percent of blog buzz spent an average of $15 million.
• Companies that generated the bottom 50 percent spent an average of only $5 million.

The study evaluated nearly 80 new CPG products across several subcategories, launched in the US between 2005 and 2006.

Additional findings:

• CPG buzz precedes sales: In the launches studied, buzz tends to occur very early in relation to a new product launch, with peaks in buzz preceding peaks in sales two-thirds of the time.
• High-volume buzz drives sales and improves forecasting: For the select products that generate substantial buzz, this study provided evidence that buzz volume can positively influence sales. In a regression-based sales forecasting experiment, incorporating actual buzz levels results in a meaningful accuracy improvement to forecasting models - as much as 20 percent.
• Brand ubiquity and distinctiveness help predict buzz: While a formal model for predicting buzz is not yet available, some factors appear to have predictive value: Beyond media spend and distribution, category familiarity (as indicated by higher purchase frequency) and product distinctiveness show value when attempting to anticipate or predict buzz.

MarketingCharts offers up some more data from the CPG buzz study.