And these figures come at a time when budgets are being cut left and right. Recent eMarketer reports predict an 8.2% decline in total media ad spending over 2008. WOM spending’s “double-digit growth in this economic environment is a strong sign of an increasingly prevalent role in the future,” says Patrick Quinn, president and CEO of PQ Media.

What should all these additional dollars spent on WOM be targeting? “The most influential marketer in a consumer’s life is someone they know and trust, such as a family member, friend or colleague,” said Quinn. No surprise there – recommendations from friends and family are still the information source most valued by customers, followed by customer opinions posted online.

Social media has made these influencers more powerful and connected than ever before. So how can a brand capitalize on these opinions? By integrating with social media to help customers help each other.  The first step to getting customers to talk is to give them a voice. In generating word of mouth, amplifying this voice is the key to turning WOM into ROI.

Gartner reports that 50% of brand communities will fail. And by "fail," I believe they mean "shut down." That leaves the other 50% still live. But are they successful? How many “ghost town” communities are out there? Over the past couple years many progressive brands have explored social media and community marketing initiatives — Twitter, Facebook, blogs, viral videos, forums or fully-fledged online communities. With the comeback of the term "community" and the hype and buzz of Facebook, many other brands are likely contemplating everything from establishing a Twitter account to launching a Facebook-like community within their site. The promise is high customer engagement — which the CFO could care less about, but marketers often believe drives sales and loyalty.

I applaud exploration, experimentation and “fail fast” initiatives. But now we’re entering into a time where the key phrase is "show me the results." The focus on measurability is leading many brands to take a hard look at what they launched, and step away from things that didn’t work. It's a critical time for these brands, and for any others considering a move into social media. These failures don't mean that online community-building is a waste of time, or that it can't be done. But it's complex, and the appropriate strategy could be markedly different from one brand to the next. Before beginning the virtual barn-raising in a new community initiative, tread carefully and consider what success means to you.

Jake McKee, chief strategy officer at Ant's Eye View, likens the whole process to personal relationship building. "We date many more people than we marry — i.e. There’s bound to be plenty of failures in our question to create something grand," he says.

The Community Concept Isn't to Blame

You should know I’m not anti-community. I’ve been involved in “community” my entire career. In 1995 wrote a book on marketing with computer user groups (the analog to today’s online communities). In 1997 I launched and managed the ThirdAge.com community (chat and forums for baby boomers), I led product management for Dell Support Forums, and I’ve been a participant in Compuserve, eWorld, AOL, blogs, Facebook, Twitter, etc. From these experiences I’ve concluded that communities succeed if they solve a need, share an interest/passion and/or connect me with people I care about. Facebook works because most of your and my friends are there — it solves the need to connect and stay up to date, thus carrying more weight as a "social resume." Dell support forums work because they allow asynchronous conversations to solve a technical problem for a frustrated computer user. The ThirdAge community (chat and forums) worked in certain topics where there was passion and birds of a feather could discuss that passion.

From a marketer’s perspective, the idea of a brand community sounds great. The expectation is that it will be a petri dish which will virally grow customer engagement, and this type of engagement will lead to sales. The problem is, few customers jump into that petri dish, fewer still will stick around, and the community interaction usually has no contextual bridge to purchasing. That's three strikes. Most brand communities serve a very, very small set of customers (in relation to their customer base or market size) with either a lot of passion or a lot of time on their hands. And let's face it, not every brand has the potential to inspire lasting passion and sustain a Facebook-type community. Exceptions are cult brands that have passion and community built into their product ethos, such as Harley Davidson or Apple. But you can’t create that by putting up a community. That starts way upstream, with the product and the brand.

What's a Community For?

Brand communities are configured to create social interactions between customers, allowing them to share opinions and interact via blogs, wikis, polls, forums and private messages. There are a lot of technological bells and whistles that the product manager can get excited about, but let’s look at it from the customer’s point of view. I'll repeat what I wrote earlier…the reason people participate in communities is to:

1. Solve a problem / need (or help others do so)
2. Share an interest or passion
3. Connect with people of interest (develop social capital)

#1 is the reason support forums exist, and these reduce support costs, but don't drive sales. #2 and #3 are usually what Brands are looking for, expecting community to drive engagement and sales. But when visitors are not passionate about the topic, they are less likely to jump in. If the community audience is small and unfamiliar with one another, a prospective visitor's motivation to build social capital or help others dissolves. In both cases, the vibrance and participation in the community are next to go. This causes the next visitor not to join, which in turn decreases the passion and audience size of the community. This domino effect leads most brand communities to turn into a ghost town.

A study from Deloitte reports that two of the top three obstacles to making communities work have to do with getting people to engage or visit — and the remaining issue doesn’t help solve this problem:

1. Getting people to engage
2. Finding enough time to manage
3. Attracting people to the community

The solution may lie in reframing the objective. A fully-developed Facebook-like community with thousands of regular participants is probably an unachievable — and in some cases undesirable — goal for many brands. I say undesirable because the resources required to build and maintain such a community may not be in line with the returns that they produce. Something smaller scale may not be as glamorous or provide as many opportunities to brag to your digirati friends on Twitter, but it may be just right for your brand and your customer base.

There are a few potential ways to go small. Ask yourself some questions. If you have a million customers and there are 100 community members posting occasionally, is that success? Or is it a ghost town? Gartner may be reporting that the community sticks around, but how much impact can those 100 people, or the few thousand that "watch" the interactions, have on your business? And even if those few thousand are more engaged, is the conversation related to your product or service leading to sales influence? Or is it unrelated?

Research from Communities

There's nothing wrong with creating a community with the purpose of interacting with the few. A hundred or a thousand participants in a community may not make a sizeable impact on your sales, but they can provide valuable insight. If your objectives are for research or product co-creation, then a community that facilitates that interaction between your brand team and your customers can be very successful. Customers are much more engaged when they know the purpose of the community is for the company to listen to their ideas. A very focused version of this is Dell IdeaStorm or MyStarbuckIdea.com, where customers post an idea and others vote it up or down. Simple. The measures of success there are insights gathered in a much more scaleable and frequent way than traditional market research.

Communities like this have their place, but they don't necessarily have a direct impact on sales. At least until that product co-creation happens — and most marketers probably have a shorter time-horizon to show ROI, especially in the current economy.

Sales from Social Commerce

To build a boom town — community features with a direct impact on sales — marketers need to pursue a strategy that creates interactions and contributions around the product or service they're trying to sell. This Social Commerce model fosters opportunities for the creation of content that helps others make purchasing decisions, driving more sales and resulting in a quicker ROI. This type of strategy needn't require a person to register or become a full-fledged member — they should be able to write a product review, ask or answer a question, or write a story without feeling like they have to make a commitment. Whether that contributor feels like they’ve joined a community by participating is not the point. Their contribution is useful for the visitors to the site, who came to learn more about the brand and get their questions answered — not to "friend" people or help others. And yet, once a critical mass of content is shared, a community of shared interest will start to form. People will write the 101st review because there's a community around a product! This "accidental community" starts to form, which amplifies the engagement to the content and profiles.

It's a challenging time in the social media world. Marketer interest — fueled by hype over Facebook and Twitter — in community-building is rising, just as consumers begin to tire of joining yet another social network. Rather than spending time and energy developing something that's destined to be the next brand ghost town, consider smaller ways to use social media techniques on behalf of your brand. Perhaps you want to build a community of brand loyalists to act as a focus group for product development. If you're looking to drive immediate sales, incorporating a user contribution system — reviews, Q&As, and storytelling – around products on your own Web site is the path to success (especially in the eyes of your CFO!). The trendy Facebook-clone route, however initially exciting and attention-getting, may lead to crickets and tumbleweeds, while a more measured approach may result in a thriving little settlement.

TurboTax is undoubtedly one of Bazaarvoice’s most innovative clients.  Not only do they do a fantastic job of acquiring user-generated content, they’re also constantly discovering new and creative ways to leverage the content they’ve collected.  They recently launched a national campaign promoting Ratings & Reviews in brick and mortar stores, using our new MobileVoice product.  This allows in-store shoppers to read reviews of TurboTax software on their cell phones.

Before the Super Bowl kicks off on Sunday, TurboTax is kicking off an amazing event of their own.  They’ve launched a groundbreaking interactive banner that uses review quotes and photos submitted by reviewers as part of a larger Super Bowl campaign.  This ad was front and center on Yahoo!'s home page until midnight last night, and you can see it archived here.  Take a look (be sure to click the “click here for full experience” link).  You have to see it to believe it!

1. 21 Case Studies of Social Commerce Impact (yes…real $$)
2. How to Stop Losing Market Share to Amazon
3. Introducing BrandVoice — The First “User Generated” Channel Marketing Program
4. Internet Retailer Study: Reviews Top Priority for Retailers in Tough Economy
5. Mary Meeker’s June 20 Technology Trends Report
6. Bazaarvoice Summit Cliffnotes #16: Negative Reviews: Loving the Ones Who Hate You
7. Wal-Mart Goes Multichannel with User-Generated Content
8. Best Buy Using Reviews in Advertising
9. How Jet Blue is Turning Negative Word of Mouth into Positive
   
10. Here’s the Wrap on Bazaarvoice 2008 Social Commerce Summit

Two years ago, we were honored to win ClickZ's Marketing Excellence award for Ratings & Reviews, and last year we were recognized by Austin Business Journal for most innovative software award for Ask & Answer. And this morning I was greeted with a pleasant Google alert that Ask &  Answer just won ClickZ's 2008 Marketing Excellence Award for Social Media Marketing!

We pride ourselves on building innovative social software and services that drive measureable results, and are honored to receive recognition like this. The judge's comment reads: "User-generated content is the killer app for all Web sites, and Bazaarvoice is the hands-down leader in driving innovation in this space. Social networking is only viable for the few. Rating, reviews, and comments are there for all to capitalize on, and Bazaarvoice has made it easy for all to get in the game."

We've wrapped ourselves under the term "Social Commerce" because social media marketing programs should impact the P&L (now, more than ever). Whether through measurable client case studies or awards, we're thrilled to see Ask & Answer recognized for making a difference.

Ed Keller, CEO of the Keller Fay Group and author of The Influentials, is an expert on measuring word of mouth.

Based on his research, Ed made six points about America’s word of mouth conversations:

1. WOM spans categories and industries
2. WOM is mostly positive (63%)
3. WOM has impact – people are very likely to believe and pass along recommendations, and customers are more likely to buy or seek additional information because of word of mouth
4. Customer-based WOM leads to better outcomes – people on the “receiving” side of WOM are more impressed by advice given by a true customer of the brand
5. Marketing and media are a key part of WOM – nearly half of brand conversations refer to marketing or media (advertisements, etc.)
6. When it comes to conversation, not all consumers are created equal – 10% of the population (influencers) account for one-third of all WOM

Ed pointed out that there is a misunderstanding that influencers are all elite members of society. In fact, influencers are actually those who tend to both listen and talk a lot. They exist across countries and socioeconomic groups. Influencers are well-connected, well-informed individuals who possess:

• An active approach to life
• Enthusiasm for learning and keeping up
• Connections to many people and groups
• A clear set of priorities
• A strong belief in growth & change
• Impact and the ability to create change

• Recommendations from family and friends trump all other consumer touchpoints when it comes to influencing purchases, according to new data from Publicis media network ZenithOptimedia. The data comes from ZenithOptimedia's Touchpoints ROI Tracker, a comprehensive project comprising over 300,000 interviews across 34 countries and covering more than 4,000 brands in 126 product and service categories.
• Consumer touchpoints were each given a "contact clout factor," a number on a scale of 1 to 100 that indicates the relative influence of the touchpoint on purchasing.
• Recommendations from family and friends led the pack with an average score of 84. TV ads and Internet search were next, with an average score of 69 and 67, followed by magazine ads at 60, newspaper ads at 55, outdoor ads at 45, radio ads at 42, and Internet banner ads at 41.

Here's an interesting quote:

• Though word-of-mouth may be one of the greatest influences on brand choice, marketers still face a great challenge is making it scalable, said Bruce Goerlich, ZenithOptimedia's president of strategic resources, North America. "Word of mouth is incredibly powerful, but we as an industry are not doing as good a job as we could do in generating it," he said.

Maybe he hasn't heard of Bazaarvoice