Social media has been called “the world’s most effective, yet least understood marketing strategy” (Misner 1999). Marketers have become particularly interested in better quantifying the effects of word-of-mouth communication, as traditional forms of communication appear to be losing effectiveness and new digital channels continue to emerge. Additionally, the inundation of consumer touch-points has created an ability to ‘tune out’ messages, making it even harder to break through the clutter. With the advent of blogs, Facebook, Twitter and other forms of online social communities, understanding and measuring the impact of word-of-mouth is more important than ever.
Academic research, since the 1950s, has demonstrated that consumers respond more favorably to word-of-mouth communication than to a marketer’s paid advertising. However, these studies have historically relied on self-reporting through surveys. With the Internet now the most measurable medium we have ever witnessed, opportunities abound to measure actual word-of-mouth communication on in-market behavior.