People always have and always will talk about companies and brands. What has changed is how marketers can influence these conversations and better measure their impact.

Why is word-of-mouth so crucial now? Patrick Thoburn, cofounder of Toronto WOM outfit Matchstick, says it’s because consumers don’t trust companies. ‘A recent study from North Carolina-based Yankelovich saw that 76% of consumers don’t believe that companies tell the truth in ads. That’s why we’re trying to leverage the conversations that take place among trusted friends within their social networks.’

It’s a given that peer-to-peer, third-party recommendation and endorsement of brands can be more valuable than paid advertising. And while the ways and means we communicate may become less personal, human nature doesn’t change. Whether it’s via message boards or IM, people still share their opinions. Breaking through with mass media continues to get harder. But as cyberspace makes it easier to reach a wider audience via digital dialogue, word-of-mouth (WOM) is attracting big-name followers such as Unilever, Procter & Gamble, Nokia, Philips and AOL. And that’s forcing some science on the process.

‘Any media form at this point has to have direct ROI. WOM has always been considered a viable concept. If you get WOM, that’s wonderful. If you get positive WOM it’s very good. What has changed is the capacity to organize, manage, and measure it,’ says Dave Balter, founder and president of Boston-based BzzAgent (bzzagent.com). ‘What we’re talking about is helping marketers understand that this, as a media form, is able to be done in an extremely measurable way.’

Becky Bolt, AOL Canada’s senior manager of corporate communications, says the launch of its new AOL Radio service late last year was the perfect opportunity to explore the WOM marketing arena and start a conversation with consumers. It also wanted to be one of the first brands to harness WOM in Canada.

AOL’s WOM program is part of an integrated effort that includes advertising, PR, and outreach to music blogs to promote AOL’s free radio service, which offers 200 commercial-free channels. (AOL does place ads on the radio’s onscreen tuner rather than within the content.)

The campaign involves 1,500 buzz agents. Five weeks into the 10-week run, Bolt says 1,600 buzz hits (brand conversations) were reported with 90% of the feedback very positive. In addition to spreading the word, AOL is finding that the WOM effort with BzzAgent is also a great way to fine-tune the new product. ‘It’s also good to read the negative feedback so we can respond to it, or to make sure we’re clearly communicating to the consumer that yes, this is really free – not free with an asterisk.’

Bolt, happy with the results, says AOL will continue to use WOM as part of the mix for other web-based products.

Although many believe WOM is only effective for the introduction of new products or services, Balter says WOM is a strong vehicle for providing continuing support of a brand, as evidenced by BzzAgent’s North America-wide program (November and December 2006) for Philips’ Sonicare electronic toothbrush.

Since opening five years ago, BzzAgent has amassed a roster of 150 clients, conducted 260 WOM programs, and standardized its measurement process. Companies like BzzAgent recruit influencers who choose to take part in various campaigns but are not paid for their participation, although they receive a sample of the product they are evangelizing. They are provided with a guidebook describing the product but are not told who to talk to and what to say. During the course of a campaign agents send reports with their feedback – both positive and negative – and describe who, when, and where they have talked about the product with others. BzzAgent receives roughly 15,000 reports from its agents every week.

The company, which works with both U.S. and Canadian clients, currently has a director of business development based in this country, and is working towards opening a full-fledged office in Toronto. Last year they fielded campaigns in Canada for internationals including Procter & Gamble (Crest Whitestrips and Folgers), Penguin Books and Unilever. The company says their foray into Canada is first and foremost because this country is an important market in and of itself. Secondarily, they are positing that Canada might eventually emerge as a testing ground for European WOM efforts, as it may prove to more closely mirror E.U. diversity than the U.S. and for establishing ROI protocols.

Response factors include test and control scenarios to compare lift between markets with and without WOM. They can also measure and monitor the number of conversations taking place in the marketplace.

A third option is a rapidly growing concept called Net Promoter Score. Created by Fred Reichheld, a partner in global business consulting firm Bain & Company, and discussed in his book The Ultimate Question, the Net Promoter Score seeks to identify the likelihood of customers to recommend a product or service to others (netpromoter.com).

BzzAgent has standardized its measurement to include lift in NPS and a comparison of the client’s post-WOM NPS against the national average NPS.

To illustrate, the agents involved with last year’s Hellmann’s (Unilever Canada) ‘Be Famous For Your Food’ campaign triggered 142,000 conversations about the product. The objective was to change the perception of Hellmann’s from simply being a condiment to also being considered a cooking ingredient. The agent guidebook was designed to help them find ways to cook with Hellmann’s and share recipes with other consumers. The NPS for the Hellmann’s brand following the campaign was 72, considerably higher than the industry average.

These kinds of results are fostering brand bravery. As a test, Nokia Canada staged a WOM campaign that wrapped in October and was the sole medium used to get the word out about the Nokia 6682 model. Mila Mironova, Nokia’s marketing communications manager, says the WOM effort through Matchstick, ‘was kind of an experiment for us. We hadn’t tried this type of marketing before but we were certainly aware that with media fragmentation, it is getting harder to find that elusive consumer in front of a TV, or in front of newspaper. We thought for our products, which are convenient for seeding, we should try to put the control with the consumers. A message coming from a consumer, a blogger, is more attractive than a message coming from Nokia.’

Campaign participants were chosen on the basis of blog popularity and social influence with a wide network of contacts. They were each given a Nokia 6682 phone and encouraged to disclose that fact whenever they mentioned the product.

The campaign resulted in 90% of influencers (bloggers) posting at least one photo taken using the Nokia 6682 handset, 43% posting at least one video taken using the handset, and 83% of the bloggers indicating they would recommend it to others.

The WOM test passed muster as a true brand-building exercise for Nokia, says Mironova, and the phone continues to be a good performer for the company. Consequently, she expects that WOM will become a permanent element in future campaigns.

Andy Sernovitz, founding CEO of U.S.-based industry association WOMMA (womma.org), says most companies already have proof that WOM works, they just don’t realize they’ve been tracking it all along.

‘They probably have a report that tells them where their business is coming from – TV ads, print ads, sales and other categories. Everything else is WOM. I call it the hidden statistic. It’s always been there in your existing sales. You forget to put it on the spreadsheet because you’re not spending any money on it. When you start understanding and tracking it, you realize you’ve always been getting 20%, maybe 30% of your business from WOM.’

Doug Walker, interactive strategist at TBWAToronto, got his feet wet in WOM when he launched the World Rock Paper Scissors Society with his brother about five years ago. The fifth annual world championship held this past November in Toronto attracted attendees from around the world.

‘All the buzz and interest has been generated solely through WOM. At this point we’re now selling out all of our events with people travelling from the four corners of the globe for what it is in essence a tongue-in-cheek, fun event.’

He says one example of how to do things right was when Boeing, for the launch of its 777, invited influential bloggers to their facility to see the plane. They treated the bloggers like press and as a result a lot of the buzz they received was positive for Boeing as well as the product.

Walker says he’s doing a lot of internal evangelization about WOM at TBWA. He’s heard of clients including WOM as a line item on their 2007 budgets, but that’s not really the way Walker would approach it: ‘With each tactic or strategy, consider the WOM applications as each one rolls out, rather than treating it as a separate channel. WOM should permeate everything you do so it has to be taken into consideration every single time you’re communicating to people.’