Call it buzz or viral marketing...citizen marketing...or creating customer evangelists. By any name, word of mouth is the oldest, most trusted and, now, the fastest growing segment of last year's $254 billion marketing-services category.

Word of mouth marketing is anticipated to reach $1.3 billion this year, up almost 33% from $981 million in 2006, according to this study by PQ Media, an alternative media researcher. Spending on this emerging discipline was $76 million in 2001, PQ reports, and is expected to approximate $3.7 billion by 2011.

PQ Media defines Word-of-Mouth (WoM) marketing as "an alternative marketing strategy supported by research and technology that encourages consumers to dialogue about products and services."

Brand marketers have begun increasing their WoM media budgets, and are moving from test phase to implementations that support their integrated marketing campaigns.

Trends Driving Growth

How your customers feel about you and what they say to others about you impact your business -- perhaps even more than what they buy from you.

The key to maximizing the value of your customer base -- and wisely appropriating your marketing dollars -- is to estimate how much of each customer's value stems from purchases (lifetime value) and how much from referrals (referral value), says this Harvard Business Review piece. Order this paper ($6.50) to find out how to identify customers who bring in the most referrals, and capitalize on that knowledge. For a preview, go here.

A global study from Nielsen this month finds that "'Word of Mouth' is the most powerful selling tool," with 78% of respondents completely or somewhat TRUSTing the recommendation of other consumers.

Compared to various flavors of paid (vs. earned) media, the online study of 26,000+ consumers revealed that 63% of respondents trust newspaper ads, 56% trust TV spots and magazine placements, 34% trust search ads and 26% trust banner ads.

If you're seeking to integrate word of mouth (WOM) marketing into your plans, you may also find helpful this summary of the webinar "7 Key Insights for Joining America's Conversation," from the Keller Fay Group. Founded in early 2006 by two long-time senior execs of Roper & NOP World (now GfK), The Keller Fay Group is the first market research outfit to conduct a continuous study of both offline and online word of mouth from a nationally representative sample. Highlights from the session are below -- with our commentary in italics.

1. Decisions are Conversations

A humorous, spot-on take on the state of the Advertiser-Consumer relationship these days. Created by Geert Desager for Microsoft Digital Advertising Solutions, it's well worth two minutes to view.

Millions of people across our planet are connecting with each other to create a shift toward a more unified world.  The SHIFT clip below is a hopeful piece that features Archbishop Desmond Tutu, Deepak Chopra,  Afghan Human/Women's Rights Activist Fatima Gailini, Indian Youth Activist Anand Shah, Marianne Williamson and others. 

 You can help complete the film here. 

One of the better Web 2.0 primers that helps set the stage for the current new frontier of business and marketing, is here at O'Reilly.   This snapshot nicely unites a slew of related concepts that all contribute to today's business climate:

For lots more explanation, and a comparison to the preceding web, read the full article.

This post is a follow-up to a word of mouth marketing presentation I gave yesterday to a combined meeting of IABC and PRSA.  By the way, if you were in attendance, your feedback -- positive and negative, of course -- about the session is very much welcome.  Please feel free to leave a public comment at the end of this post or drop me an email.  Your comments will help us enhance the value for the future.  On to Resources...

If you are new to thinking about word of mouth marketing, here's my Top 8 List of personal "getting started" favorite resources. Of course there are so many great blogs and discoveries being made and written about in this field, it's hard to choose just eight.

For a more comprehensive list -- including great blogs than those listed in the Blogroll on this site, go to Andy Sernovitz's resource page.

My Top 8:

Word of Mouth Marketing Association - (WOMMA) is the word of mouth marketing industry association. It's a terrific organization: members are some of the more progressive-minded marketers and business people I've come into contact with in years. Their events are enlightening, practical and good fun. WOMMA walks the talk: they're all about education, make lots of great materials available to non-members and make them easy to pass along. At WOMMA.org, you'll find:

• case studies
• research
• educational resources
• much, much more about ethics, and
• word of mouth measurement

Why not sign up for some of their free newsletters?

Word of Mouth Marketing: How Smart Companies Get People Talking - If you are going to own just one book about word of mouth marketing, it's this one. It's an uber-practical guide for understanding and applying the word of mouth philosophy to any size or type business. Written by Andy Sernovitz, former CEO of WOMMA (and once duped by Ali G in a previous life), it's chock full of tips and techniques. Don't miss the Word of Mouth Marketing Manifesto on page 59; I would post it here but don't want to be a spoiler. Haven't we had enough of that with Harry Potter this week?  Buy it.  Copy it.  Paste it to your wall.

The Ultimate Question: Driving Good Profits and True Growth - Looking to make a significant, measureable across-the-board cultural shift in how you do business? This book is for you. With lots of anecdotes and industry benchmarks, this book can help you make the distinction between good profits and baaaaaaaad profits -- those derived from any activity that makes your customers feel icky and spur them to go out and justifiably bad mouth you. The book's elegant Net Promoter Score metric can help you begin to isolate touchpoints where your organization may be falling short, and create internal accountability around customer loyalty. Nice!

Duct Tape Marketing - Are you a small business? This is the one marketing book for you. It's exactly what it promises to be: the world's most practical small business marketing guide. Word of mouth -- and specifically how to use social media tools like blogs and RSS (really simple syndication) -- are just a subset of author John Jantsch's overall marketing system. Still, this book gives a timely context to small business marketing, and lays out a simple, streamlined, disciplined process to grow your business. I tell every small business owner I encounter, don't spend a dime on any agencies or consultants -- including us -- until you read this book.

Something By Seth (Godin, that is) - Purple Cow and / or Unleashing the Idea Virus - The former is teeming with real-world, simple stories about differentiating yourself in remarkable ways. The latter will give you the framework and background to counsel clients when they say, "Oh, yeah, and give me something viral!" Quick reads. Fabulous inspiration.

The Influentials: One American in ten tells the other nine how to vote, where to eat, and what to buy - To think we Americans aren't all created equal! Penned by former GfK/NOP execs Jon Berry and Ed Keller, now founders of Keller-Fay Group, the only company that measures offline word of mouth, this book will have you look at your social circle differently, as will...

The Tipping Point - Malcom Gladwell's landmark book that may have just been the tipping point for the birth of "new" marketing. A classic. A must.

Should you want to accelerate learning about word of mouth or adapt/integrate word of mouth strategies to your particular goals, let's talk.

This one's a must-see for my marketing friends.