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

• Consumer connectedness via the Internet, jet-fueling speed and dispersion of ideas through social networks
• Continued shifts to alternative media: blogs, photo- and video-sharing sites like YouTube, social networking sites like Facebook or MySpace and other user-generated media
• Fragmented and cluttered media environment which has made reaching the "masses" -- barring the likes of Super Bowl and Oscars -- a thing of the past
• Marketers' desire for increased brand engagement and measureable ROI
• Recognition that Word of Mouth is a practice -- separate from advertising and public relations -- that requires a different mindset, strategies and toolkit
• Word of mouth marketing is relatively cheap
• Most importanly, Word of Mouth is trusted
• The Word of Mouth Marketing industry's advancements in building an infrastructure of "integrated strategy, technology and measurement from its inception to prove a measurable return-on-investment for marketers.

The Keller Fay Group, the only company that analyzes word of mouth in all its forms (face-to-face, phone and online), projects that approximately 3.5 billion brand-related conversations per day ocur in the U.S., with nearly 80% of consumers trusting recommendations from family, friends and "influential" persons over all other forms of advertising and marketing. Study after study asserts that WOM is more effective than other forms of advertising in shaping purchase decisions. The Nielsen Global Survey of over 26,000 people found that 78% of respondents trusted "recommendations from consumers," a total 15 percentage points higher than the second-most credible source, newspapers.

Although Keller Fay Group research indicates 90% of WoM marketing still takes place offline, brand marketers have become actively involved in online WoM marketing via new media, metrics and WoM specialists. PQ Media credits the word of mouth marketing industry for capitalizing on "the new media industry axiom, that 'only what gets measured gets bought,' [which] has led to a discernible shift in media spending from traditional to alternative advertising and marketing strategies."

A study by Outsell, Inc. of the Social Media Market Intelligence (SM-MI) industry estimates growth at more than $80 million in 2007. Outsell evaluated companies that provide turnkey systems to harvest social media content from blogs, message boards, websites, social networks, product review sites, consumer review sites, and online public forums. Outsell reports: "the top players represent approximately 80% of the market with Nielsen Online ranked first, followed by TNS Media Intelligence/Cymfony, Biz360, Factiva, LexisNexis, Umbria, and Collective Intellect."

The market is segmenting with new, automated, lower-priced offerings from companies like Radian6, BuzzLogic and Andiamo Systems.

Outsell makes the point that social media (also known as consumer-generated media and user-generated content) "is influencing the startup of new search, tracking, software, and analysis products and having an impact on traditional product areas such as media monitoring, PR, and media management software." The report is available for purchase here.