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Word-of-Mouth Spending Soared 36 Percent in ‘06

Spending on word-of-mouth marketing jumped 35.9 percent in 2006 to $981 million and is expected to top $1 billion in 2007, making it one of the fastest growing alternative media segments.

Driving the growth is the continued consumer shift to alternative media and the marketer’s need for increased brand engagement and ROI, according to an analysis of the word-of-mouth marketing industry released today by PQ Media.

Word-of-mouth marketing is the fastest-growing segment of the $254 billion marketing services sector of the media industry, which includes branded entertainment, direct marketing and public relations, among others. WOM marketing grew almost five times faster than the overall marketing services sector in 2006 and more than six times faster than the overall media industry and nominal GDP.

Total WOM marketing expenditures are projected to climb at a compound annual rate of 30.4 percent in the 2006-2011 period to $3.70 billion as brand marketers take advantage of dedicated word-of-mouth strategies for improved return on investment, according to PQ Media’s Word-of-Mouth Marketing Forecast 2006-2011.

Helping to fuel this growth are a projected 3.5 billion brand-related conversations per day in the U.S., according to Keller Fay Group, with nearly 80 percent of consumers trusting recommendations from family, friends and “influential” persons over all other forms of advertising and marketing.

PQ Media defines word-of-mouth marketing as an alternative marketing strategy, supported by research and technology, that encourages consumers to talk about products and services.

While no breakout is currently available on spending by product categories, data from various sources on the number of conversations held by category suggest that food and beverage, media and entertainment, and sports and recreation are among the heaviest users of WOM.