More and more evidence shows that the old paradigm of push marketing does not work anymore. The WSJ reported that Allstate used to spend $100 million on network TV advertising. This year Allstate decided to slash it to $10 million and requested an all or nothing bid from the networks.
Marketers have to rethink how to use their money more effectively.
- 9.5 million homes in the US now have TiVo or another digital video recorder.
- 64% of DVR users skip all ads and an additional 26% skip through most ads.
- The number of homes with DVRs is expected to triple in the next five years.
- Every dollar coming out of print advertising revenue for newspapers is replaced by only 33 cents online.
Organizations are demanding an ROI from their marketing initiatives and the old marketing way is just not going to cut it.
Word-of-Mouth marketing is one of the strategies that has been seen as more effective. Word-of-Mouth is when a buyer/investor shares an opinion about a product or service between two or more people. It seems so simple. But in order to achieve this firms have to be able to:
- Differentiate
- Create Relevant Products
- And communicate to a focused audience
Products such as the Mini and Hummer have done that defectively. The Mini is the smallest and the Hummer the biggest car on the market. No other firm can make that claim in the consumer mind anymore. Both are designed for a very specific audience. They don't try to market their product to everyone. But they are one of the few cars that are always sold at the suggested retail price and consumers are on a wait-list to get the car.
In Asset Management only few firms have been able to differentiate themselves. Vanguard, the low cost provider, is probably the best example. They are not only known for having the lowest fees, but also for having the shareholders interest at heart. Vanguard is one of the few firms where the company is owned by its mutual fund shareholders.
But even the leaders in the industry have not fully embraced more progressive marketing tactics such as Word-of-Mouth marketing.
For more information on Word-of-Mouth marketing visit the Word of Mouth Association and on of its pioneers Seth Godin.
