Management Blog

AIM Whitespace: Enterprising avatars - virtual reality in the workplace

It's official. James Cameron's Avatar is now the highest grossing film in Australian box office history. Clearly the story of a wheelchair-bound former solider taking on a virtual reality personality, or avatar, to fight the bad guys has captured the nation's imagination.

While Avatar is a clearly work of science fiction, what if the possibilities it so elegantly presents spilled over into the business world? Could lead character Jake Sully not just shape the future of the fictional world of Pandora but also influence the real-life world of work?

This month's Whitespace investigates the adoption of avatars in business-focused virtual worlds, a development some believe is a workplace eventuality.

AIM Whitespace: The future has arrived - 10 trends for 2010

After experiencing an eventful 2009 many would agree with the quote widely attributed to Greek philosopher Heraclitus that 'nothing endures but change'. With this in mind the first Whitespace of 2010 looks impending developments you need to know about today.

From tourism experiences to workplace behaviours, consumer behaviour to corporate social responsibility, 10 game-changing trends are offered to keep you ahead of the curve and connected to innovation opportunities.

1. The rise of GPS everything
The year 2010 will be all about location, location, location. Companies of all sizes will start using GPS (global positioning system) tools to help customers find their bricks and mortar location and track product or service reviews via omnipresent smartphones. Foursquare and Loopt are two applications in this space that are predicted to go mainstream in the near future.

2. Personalisation presence
A growing number of enterprises will start offering 'design your own product' services. In the US, niche websites like Zazzle and TasteBook are connecting consumers to personalised products like clothes, homewares and cookbooks. And this trend isn't confined to start-up or micro businesses with Mars in the US pushing ahead with customised M&M chocolates.

3. Older gamers, younger readers
A recent US study found adults over the age of 75 are spending considerably more time playing video games while teens are reading more books. More older gamers means greater profits for Australia's $2 billion games industry. And with a greater number of younger readers emerging, 2010 could be the year of Amazon's Kindle and Apple's new e-reader (which may or may not be named the iSlate) changes publishing in a big way.

AIM Whitespace: The promise and perils of measuring online chatter

When Kraft wanted to better understand what Australians thought about its iconic spread Vegemite, the company didn't request the assistance of focus groups or branding gurus, it sought the help of artificial intelligence.

More specifically, it engaged the services of IBM and its brand sentiment software program CoBRA (Corporate and Brand Reputation Analysis) to sift through over 1.5 billion pieces of user generated online content – a process that identified nearly half a million mentions of Vegemite.

What CoBRA found took even Kraft by surprise: Australians don't just like Vegemite... we love Vegemite. In fact, the research project suggests Vegemite is the most loved brand on the Internet.

This kind of insight could only have occurred in the Web 2.0 age. Never before have consumers had so much opportunity to speak their minds via online reviews, ratings and rants. And never before have companies had access to such a large amount of feedback.

As a result of this development a new industry is quickly emerging. Brand sentiment software is currently big news in marketing circles as companies seek to make sense of web chatter at a time when reputations can be made and broken at warp speed.

To Twit or not to Twit?

In the tradition of new media tools like Facebook, YouTube and Google, the microblogging application Twitter has gone from being an esoteric geeks' toy to the 'next big thing' pretty much overnight.

In a nutshell, Twitter consists of individual social media users (as well as a number of brands and organisations) all answering the question 'what are you doing now?' by publishing online status updates of less than 140 words.

These mini-messages are then read and often commented on by other social media users who have decided to 'follow' a Twitterer via the Twitter website or by SMS updates. (A video of how Twitter works can be found here.)

This might all sound like a bit of a yawn to the uninitiated but Twitter's explosive growth speaks for itself. According to The Times, Twitter has attracted 1.2 million active users since its 2007 launch and currently publishes over 2.25 million tweets (Twitter messages) every day.

Capturing the sweet smell of success

In a world saturated by non-stop imagery, noise and activity, could scent be the edge marketers need to more effectively communicate their brand messages?

There can be little doubt scents make us think of particular images or feel certain emotions. Even just reading about the smell of a spring breeze, biscuits baking in the oven, lavender scented linen or freshly ground coffee can trigger a joyous reaction.

Now imagine if you could associate your product or service with a smell that made people feel better about themselves, that harnessed scent in a positive, meaningful way. Well, apparently the technology and expertise to do so is already with us.

The process is called 'scent marketing' and it could be coming to a nose near you.

Whitespace: Innovation - by the people for the people

Lots of people have good ideas. In the shower over the years you've probably conjured up a new invention or product enhancement you believe could shake up an entire market. But you've never acted on this brilliance because it's not your industry, not your normal field of expertise, or simply because you've forgotten all about the idea a few minutes later.

You're not alone. Every moment across the globe millions of consumers have bright ideas that go nowhere. An avoidable waste? Perhaps not.

Imagine if you could tap into this rich mine of creativity and incorporate it into your company's innovation strategy. It's more than possible, argue proponents of the innovation trend known as crowdcasting… it's already happening. And it could be just what your business needs to achieve faster, more effective innovation.

It's all about passion

Crowdcasting proponents believe traditional models of product development rely too heavily on the belief that "our experts are smarter than our customers". A better approach, according to consumer experience consultant Patricia Seybold, is for companies to work shoulder to shoulder with passionate customers to harness, adapt and commercialise their ideas. [1]

The crowdcasting process revolves around the recruitment of lead consumers. These people are not your biggest spenders. Lead consumers are the most passionate end users or would-be end users of your product or service. They might be parents (in the case of nappies), Generation Y men (body spray deodorants), or teachers (educational toys). Different product categories would have very different lead consumers, however the common link between all lead consumers is an unassailable passion for a particular product.

According to crowdcasting advocates, these passionate consumers will not replace on-staff designers, scientists or other experts; they work with your team to co-design new ways of achieving a desired outcome, a process that can generate new ideas, shorten R&D timelines, reduce development costs and foster a direct emotional connection with consumers. Ultimately, the big promise of crowdcasting is a reduction in the failure rate of new products – estimated at 80% for the US market in 2005. [2]

While involving consumers in the innovation processes isn't particularly new, the strength of crowdcasting is new media facilitated instant feedback. In a short space of time companies can collect the ideas of lead consumers via private online communities, development toolkits and online games. Fast feedback means fast innovation, a distinct advantage in response to ever decreasing product lifecycles.

Community affairs

Once you've found your lead consumers you need to engage them. Online communities connect consumer to company as well as consumer to consumer via private chat rooms and instant messaging. By monitoring this communication and measuring the results firms are able to directly tap into the concerns and creativity of their customers.

Hallmark's 'Ideas Exchange' offers an example of a successful private online community. The greeting card and gift company regularly asks its lead customers to offer their ideas, value add to other people's ideas and discuss gift giving or lifestyle related topics. And the pay-off? Hallmark says its online relationship with consumers delivers 10 to 15 usable new concepts each month. [3]

Members of Hallmark's online community don't receive payment for expressing their ideas, they receive incentives such as small gifts. And nobody's complaining. It appears members of this and other online communities are more in interested in helping a brand they are passionate about than being directly paid for their input.

Tools of the trade

Online toolkits are another way to harness customer innovation. Toolkits generally feature easy-to-use design software that enables lead consumers to create, test or modify products. Whirlpool recently estimated it could reduce new product research time by a month and cut expenses by 30 per cent as a result of asking its online community to make design changes to images of household appliances. [4]

When BMW added a toolkit to its website that allowed customers to design cars featuring advances in online information delivery services it received 1,000 responses. According to BMW, the results were impressive with 15 participants brought to Germany to meet with engineers. Several of their suggestions have been utilised in new car prototypes. [5] 

Other online toolkits offer consumers the opportunity to develop the next generation of LEGO toys using 3D design software or the chance to select burrito ingredients for Taco Bell using an animated programme. Or you might want to take your toolkit into Second Life. Sportswear band adidas currently allows Second Life residents to design concept shoes in a 3D virtual environment.

Avoiding the pitfalls

Crowdcasting is not without its risks. Pioneers in the field Stefan Thomke and Eric von Hippel warn that far from being easy ride, companies seeking to take advantage of customer involvement must carefully develop and maintain their online community or toolkit. Creative consumers are smart consumers; they will see through an unfocused approach. Firms should also be prepared to revamp their existing business model and adjust their managerial mindset when equipping customers with the tools to build their own products. [6]

Ignoring the power of consumer creativity is another risk. The stock photography business changed dramatically after iStockphoto enabled 23,000 amateur photographers to sell digital images up to 99% cheaper than the offerings of existing players. [7] Industry heavyweight Getty Images has since purchased iStockphoto for US$50 million to protect their market share.

Fad or future?

Wikipedia, citizen journalism, YouTube… the emergence of user created content has been swift and influential. Is innovation its next frontier? While the practicalities of crowdcasting are still unfolding, one thing cannot be challenged: companies must work intimately with their consumers to gain a deep understanding of their context and motivations. They must pull experiences from consumers, rather than push product at them. Your smartest customers are ready, willing and able to share their ideas. Are you prepared to do more than just listen, but to invite them into your company's innovation inner sanctum?

Six tips for effective crowdsourcing

1. Maintain focus – don't ask vague questions or have ill defined goals
2. Create an 'in crowd' – only recruit the smartest consumers
3. Community matters – build solid, rewarding relationships
4. Tool up – provide easy-to-use tools that bolster creativity
5. Be open – be prepared reveal your business processes
6. Filter effectively – you will receive an abundance of ideas, good filters are essential

Notes

1. Seybold, Patty, Outside innovation: How your customers will co-design your company's future, HarperCollins, New York, 2006
2. Wells, Melanie, "Have it your way", Forbes, 2006
3. Seybold
4. Wells
5. "The rise of the creative consumer", Economist, 2005
6. Thomke, Stefan & von Hippel, Eric, "A toolkit for customer innovation", Working Knowledge, 2002
7. Howe, Jeff, "The Rise of Crowdcasting", Wired, 2006

Whitespace: Are you ready for Second Life?

You're standing next to a floating neon Christmas tree talking to a colleague as she proudly displays her gossamer wings. Another nearby co-worker has ankle length green hair and is wearing a red tutu. A fat little elf with robotic hands joins the conversation. It might sound like you're at a fancy dress Christmas party. You're not. You're not even in the same room as these people. You're at your desk conversing with colleagues in Helsinki, Sydney and Johannesburg via the 3D online experience known as Second Life. Some claim it's the future of the web. Others believe it's an over-hyped geek enclave that shouldn't be taken too seriously. Differing viewpoints aside, one thing cannot be disputed: innovation-focused companies large and small across the real world are watching Second Life very closely. Should you?

Imagine it, create it

Second Life is the offspring of San Francisco-based new media developer Linden Labs. Since going live three years ago over 1.8 million people have joined this startlingly beautiful animated world where members, referred to as residents, are free to participate in a virtual economy, buy virtual land and create virtual homes, offices and objects. Second Life is not a game; there is no overriding objective. According to its website: "Second Life is a 3D online digital world imagined, created and owned by its residents". Each resident is represented by a 3D personalised avatar, a human-like form that can be personalised to look like you or somebody completely different. Navigating the Second Life universe is as easy as walking, flying or teleporting to whatever location takes your fancy.

Creation and reinvention define Second Life. You'll discover everything from ancient Egyptian ruins to interactive jukeboxes, S&M parlours to ice skates that glide perfectly across any surface, all of which have been created and are owned by residents. To achieve this, residents are given access to online software that enables them to build any object imaginable. These 3D modelling applications are as simple as to use as desktop publishing software (although a degree of design savvy will help). Soon after joining Second Life you'll be able to create simple objects like a floating sphere; it might take a little longer to design and build a modernist townhouse. And if you don't want to create an object yourself, you can buy it from somebody else using Second Life's currency Linden dollars or L$ which can be earned or exchanged for real world currency.

The business end of Second Life

There is real world money to be made in Second Life. It's estimated several thousand residents earn over US$20,000 a year (1) by creating and selling residences, objects and experiences; a virtual form of cottage industry. The next – and currently evolving – stage in the commercial evolution of Second Life is the sale of products online that are subsequently delivered to a resident's real world address. Dell is blazing a trail in this area by allowing residents to build customised computers in the company's Second Life store; once the purchase is complete a manufactured version is delivered to the buyer's first life home. A host of other companies, including adidas and Toyota, are encouraging residents to develop (but not purchase) personalised products as part of an engaging brand experience that has considerable product development and market testing value. (2)

Other value adding services that suit Second Life include online technical support featuring 3D product demonstrations or retail stores in which avatars with a resident's real body measurements try on clothes for size. Or how about an optometrist's shop that enables you to see how glasses look on your face from all angles. With relatively low overheads and the promise of immersive experiences, Second Life could be a dream come true for retailers. And don't assume this virtual world is limited to a market of spotty teenage males; the average age of Second Life residents is 32 years old and the gender balance is roughly 50/50. (3)

Collaboration is king

While Second Life's potential as a marketing conduit is substantial, its impact as a tool for workplace collaboration is likely to emerge as this virtual world's most valuable commercial benefit in the short term. Numerous advertising and media companies are setting up offices that allow staff from across the world or across the hall to meet in creatively engaging private meeting spaces. Could there be any better incubator for innovation that an environment built on the tenets collaborative creation? Multinational advertising agency Leo Burnett thinks so. The company is in the process of establishing a Second Life presence that will allow its 2,400 creative workers from around the world to collaborate in an 'ideas hub'. (4)

Second Life offers an inclusive communication channel for interaction with home-based or Third Place staff members that, unlike video conferencing, does not chew up large amounts of bandwidth. It may also lessen the occurrence of mundane or convoluted meetings; Second Life is said to force people to get to the point quickly as communication is predominantly text-based, although expect this to change as voice over Internet protocol (VoIP) starts to make its presence felt. (5)

The jury is still out on whether it's a good idea to meet with clients in Second Life. More suited to brainstorming than formal presentations, there is, as yet, no easy way to display work or deliver reports in virtual form. It can be more difficult to organise Second Life meetings with external parties than staff and the acceptance of this form of interaction depends on the type of company you're dealing with; some clients might see Second Life interaction as cutting edge and in tune with online developments, others may see it as an irreverent gimmick.

Climbing the learning curve

Universities are taking note of the collaborative aspects of Second Life with as many as 60 US institutions establishing virtual presences where academics and students can meet in informal surroundings. (6) Many believe Second Life interaction will give distance education students a greater sense of community and introduce valuable cross-cultural perspectives into course work. Expect to see more academic research being carried out in Second Life. Researcher Professor Peter Yellowlees from the University of California, Davis has recently unveiled a 'schizophrenic' experience in Second Life to give psych students greater insight into mentally illness. (7)

Staff training and professional development are other growth areas. Multinationals American Express and Intel as well as the US retail giant Wal-Mart have plans underway to train staff in Second Life. (8) You can imagine cost efficiencies of conducting a training session with staff across the country in a virtual environment. The innate creativity, informality and role-playing opportunities of Second Life are also a good foundation for coaching and mentoring.

The trouble with virtual

Rushing into Second Life is not without its risks for businesses. Where there's commerce there's crime with con artists and hackers setting up shop in Second Life just like everyone else. Applications known as copybots are currently roaming through Second Life replicating virtual possessions without permission. While relatively harmless, this application may be a precursor of things to come.

It's a mistake to think any organisation is safe from real world issues in Second Life. Some companies have been boycotted or experienced protests in their virtual store or office over their actions in the real world. (9) Security is another concern. While you can restrict who enters parcels of land you own, security measures should always be top of mind when discussing confidential topics.

Nefarious activities aside, size is an issue for this online community. Despite the hype over its popularity, not that many signed up residents visit Second Life on a regular basis. At any one time there are only between 10,000 and 15,000 people (10) – a community the size of Dalby – logged onto Second Life. Of those residents who are logged on, many are more interested in social than commercial pursuits, including virtual sex (although you will need to buy genitalia first) and gambling.

Where to from here?

Prepare yourself for a deluge of predictions that Second Life is the next big thing. You'll soon start hearing how it will replace the Internet as we know it with avatars wandering through visually rich 3D worlds to fulfil the majority of our shopping and information gathering activities. At this point in time there is very little evidence one way or another to suggest Second Life will transform into a commercial powerhouse. However, it must be remembered that this online world is a work in progress. While there are many unknowns, it's safe to say that being part of an environment built on sustained creativity will foster creativity within innovation-focused enterprises. For that reason alone it's worth putting your toe in the virtual water and experiencing Second Life. Who knows what ideas will come to mind while you're talking to your gossamer-winged CIO.

Notes

1. Newitz, Annalee, "Your Second Life is ready", popsci.com, September 2006
2. Jana, Reena & McConnon, Aili, "Second Life lessons", Business Week, 27 November 2006
3. Newitz, Annalee
4. Steel, Emily, "Avatars at work", Career Journal, 16 November 2006
5. Wilson, David, "Weekday warriors", The Age, 24 November 2006
6. Wong, Grace, "Educators explore 'Second Life' online", cnn.com, 14 November 2006
7. Hutcheon, Stephen, "Visual hallucination is all in the mind", The Age, 5 December 2006
8. Newitz, Annalee
9. Jana, Reena & McConnon, Aili
10. "Brands show a lust for Second Life", Brandweek, 20 November 2006

Whitespace: Remote control - the benefits of fostering a Third Place culture

Remote working, telecommuting, flexi-working: whatever you call it, working from home is on the rise, but does it suit every employee?

As some of us are naturally more social than others, the answer has to be no. That's why an alternative, known as the Third Place, is emerging. And it's coming to a coffee shop near you. That is, if it's already not there.

A Third Place isn't a home or company office. It's a physical location - a café, shared office, perhaps even a 'work club' - that gives your staff greater flexibility in a world dictated by speed and rapid change.

The term itself was popularised by urban sociologist Ray Oldenberg in his 1999 book The Great Good Place which described the essential community building role of informal public spaces such as cafes, coffee shops, bars, bookstores and hair salons. (1)

The corporate world has since commandeered the phrase to label the concept of allowing staff to choose to work where they feel most comfortable, versatile and creative.

But before you start visualising a people-free office with tumbleweeds blowing through the corridors, it's worth noting that the adoption of a Third Place culture does not signal an end to the company workplace.

Some staff may work from a Third Place once a month, some might work remotely once a week, others might always work from their Third Place. Certain employees might not feel comfortable about the Third Place option at all, preferring to work exclusively from the company office or remotely from home.

Whatever the mix, working from a Third Place is an alternative that can help you foster and hold onto talent in the face of ever-increasing skills shortages. It can also lower overheads, broaden labour market opportunities and bolster productivity.

It's all about job satisfaction

The benefits of remote work were recently quantified by the European Union's Sustainable Telework survey (2), a study that measured the economic, environmental and social impact of off-site employment in five countries.

While this research did not look specifically at Third Place workers, it found remote workers in general exhibited higher productivity, recorded less sick days and enjoyed greater job satisfaction than their cubicle bound colleagues.

In the UK, the absentee rate of remote workers dropped by around 70% with nine out of 10 employees saying they enjoyed a better work-life balance despite actually working longer hours.

The survey also found that remote workers went about their jobs more creatively with 90% of BMW's remote workers suggesting their take up and implementation of new ideas had improved.

Remote work is fast becoming a mainstream practice. Research conducted in the US by AT&T estimates that over one quarter of American companies allow more than 50% of their employees to work from home on a regular basis. (2)

Home and away

While working from home is a perfect fit for some, it leaves many feeling isolated and in desperate need of a daily dose of social interaction.

Neither home nor office, Third Places can offer the best of both worlds. They deliver on environmental buzz and social contact yet are free of household distractions. And because these remote work destinations are chosen by the worker themselves you can be sure it will be an environment they like.

An employee's Third Place will generally be close to their home, perhaps a healthy walk or bike ride away. This proximity diminishes unproductive commuting time, lessens our reliance on fossil fuels and reduces greenhouse gas emissions.

Encouraging staff to participate in your Third Place culture can also help alleviate the burnout inducing problem of overworking that often occurs when the distinction between home and work is blurred. (3)

And as much as you'd probably prefer not to think about it, a Third Place offers a contingency plan for your business to continue running in the aftermath of a natural disaster, terrorist attack or pandemic.

Making Third Places work

Communication is the key to developing a successful Third Place culture at your company. That's why you'll be visiting your workers' Third Places on a regular basis... not physically, but virtually.

Technological innovation and the roll-out of ubiquitous wi-fi broadband will enable video calls to provide the physical presence managers need to adequately engage and support their staff.

Video calls will be the communications tool of choice as they offer an enhanced sense of 'being there' with face-to-face interaction enabling you to quickly and succinctly read non-verbal cues.

While video calls aren't particularly impressive at their current stage of development, they will become a powerful communications alternative as image quality and software interfaces improve.

A word of warning: You will need to be mindful of how confidential issues are communicated. One solution is to give Third Place staff plenty of warning regarding sensitive topics thereby enabling them to move to a 'safe' area if necessary.

In the US, some shared Third Place workspaces or 'work clubs' feature dedicated 'cone of silence' areas and quiet rooms. (4) Perhaps these will be standard features of future Starbucks outlets or even the pub down the road.

The Third Place checklist

To make a Third Place culture work for your organisation:

1. Carefully evaluate which positions and people are suited to remote work

2. Invite participation, don't order it

3. Schedule in regular face-to-face time to ensure remote staff feel supported

4. Make sure workers have access to reliable, secure communications tools

5. Regularly monitor and evaluate the productivity of Third Place workers

6. Make communications training available to avoid lapses in confidentiality

7. Keep your team connected with a combination of real world networking and new media facilitated contact (e.g. instant messaging and blogs)

8. Ensure your organisation has a strong sense of corporate identity that is continually filtered through to remote workers

The Third Place trend is worth keeping an eye on. Next time you walk past a coffee shop on a workday afternoon see how many laptops and business meetings you can count. This time next year that number will probably be double or more as organisations come to realise that even a small injection of workplace flexibility can prove the odd adage 'a change is as good as a holiday'.

Notes:

(1) http://www.pps.org/info/placemakingtools/placemakers/roldenburg

(2) http://www.teleworkconsortium.org/the_remote_working_revolution.pdf

(3) http://www.careerjournal.com/columnists/workfamily/20060828-workfamily.html?cjpos=home_whatsnew_minor

(4) http://www.networkworld.com/net.worker/columnists/2004/0614kistner.html

Whitespace: Is MySpace your space?

By Mark Fowler

It's better than even odds that you use Google as your primary Internet search engine. And as a reader of AIM's Whitespace it's also likely that you are a Baby Boomer (aged between 42 and 60).

It is also possible that you haven't yet picked up on the stratospheric global ascent in popularity (and importance) of MySpace.com, the Internet social networking site for younger (than us) people.

The typical model for social networking sites has been that an initial set of founders invites members of their own personal networks to join their site. New members repeat the process, growing the total number of members and links in the network. These sites offer features such as automatic address book updates, viewable profiles, the ability to form new links through "introduction services", and other forms of online social connections. (1)

In May, Jon Gibs, senior director of media, Nielsen//NetRatings described the rising phenomenon. "Social networking sites are the reality television of the Internet. The content is relatively inexpensive for publishers to produce, and social networking is not a fad that will disappear. If anything, it will become more ingrained in mainstream sites, just as reality TV programming has become ubiquitous in network programming." (2)

MySpace co-founders Tom Anderson and Chris DeWolfe launched the site in July 2003 from Santa Monica in Califomia. Their intent was to grow beyond the existing social networking models into a one-stop web portal, combining the most popular features with Generation Y (aged 6 to 25) from other social-networking portals: the instant-message capabilities of American Online, the classifieds of craigslist.com, the invitation service of Evite.com and the come-hither dating profiles of match.com. (3)

As of the 23 September 2006 MySpace had a whopping 112 million registered users. (4) MySpace had nearly 45.7 million unique visitors in June, with users spending an average of nearly two hours on the site at a time. Australia alone already has 2 million MySpace members, many of whom sign in from an Australian MySpace home page at http://au.myspace.com/.

The business opportunity to reach and 'own' this highly web-active market of global youth prompted Rupert Murdoch's News Corporation to buy MySpace for US$580 million in July 2005. Already this looks like a bargain. The Australian recently reported that RBC Capital analyst Jordan Rohan estimates that MySpace could be worth around US$15 billion (AUD$20.02 billion) within three years, measured in terms of the value created for shareholders of parent company, News Corporation. (5)

Marketers and advertisers are hugely attracted to the possibility creating personal relationships with millions of young people.

"What we really struck upon is the power of friendship," said Michael Barrett, chief revenue officer for News Corp.'s Fox Interactive Media and overseer of these deals, in a recent Wall Street Journal Interview. (6)

So what?

It is clear MySpace has achieved a spectacular resonance or connection with young people worldwide generally, and specifically with young Australians. If you or your organisation are looking to understand or connect with this demographic, it's probably time to jump into your own MySpace and find out what's going on. If you have kids, ask them if they use MySpace. And if they do, ask them to take you on a tour. You might be surprised.

Notes

1. Internet social networks - Social network, Wikipedia.org, 3 October 2006
2. Social networking sites grow 47 percent, Year over year, reaching 45 percent of web users, Nielsen//Netratings, 11 May 2006
3. Do You MySpace, The New York Times, 28 August 2005
4. List of social networking websites, Wikipedia.org, 3 October 2006
5. MySpace tipped to top $20bn worth, The Australian, 28 September 2006
6. On MySpace, Millions of Users Make 'Friends' With Ads, The Wall Street Journal, 7 August 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century.

Whitespace: The power of word of mouth

By Mark Fowler

There has been a recent flurry of consumer research published which signals the accelerating importance of Word of Mouth (WOM) marketing in shaping brand perceptions and purchasing decisions.

WOM promotion is the passing of information by verbal and written means, especially recommendations, but also general information, in an informal, person-to-person manner, rather than by mass media, advertising, organised publication, or traditional marketing (1).

It's about the importance of trust as a determinant of the credibility of market messages.  People are now more inclined to believe word of mouth over more formal forms of promotion because the communicator was satisfied by the goods or services provided and is unlikely to have an ulterior motive (1).

Show me the numbers

• BIGresearch's US release of their Simultaneous Media Usage Survey (SIMM VII) in December showed that WOM is the most influential media for all ages. The respondents ranked the media as follows (2):   

1. Word of Mouth
2. TV
3. Coupons
4. Newspaper Inserts
5. Read Article
6. Direct Mail
7. Magazines
8. In-store Promotion
9. Cable TV
10. Internet Advertising 

• 76% of US people don’t believe that companies tell the truth in advertisements. (3)
• 68% of US people trust other people "like themselves", up from 22% in 2003. (4)
• 92% of US customers cite WOM as best source for product ideas, up from 67% in 1977. (5)
• Friends and family are considered either an "extremely" or "very" credible source of information by 58% of US respondents (up from 42% in 2005), second only to articles in business magazines. (4)
• The stated impact of known contacts is twice as important to people than the impact company led info. (6)

Why the shift?
The decreasing power of the traditional top down messaging, and the rapidly rising importance of consumer word of mouth marketing is being driven by two main factors:

• As broadband becomes ubiquitous, the Internet is enabling connected individuals to move from merely consuming information to social networking and content creation. Customers can now and do readily share their opinions and ideas about product and service experiences in a trusted peer-to-peer communications environment.
• The deluge of corporate and government scandals over the last five years has seriously eroded citizen and consumer trust in the credibility of the communications from business leaders and politicians. Just mention of the acronyms HIH, AWB and WMD and you know what we mean. For instance, PR company Edelman’s Trust Barometer 2006 research has just reported that people who lose trust in a company do not simply internalise their doubts, they talk to others and spread distrust – with up to 33% now using the web to post their views.

WOM starter pack
So where might you begin developing a WOM strategy? The Word of Mouth Marketing Association (WOMMA) recently held their second basic training conference in San Francisco. At one of the workshops several expert panellists discussed a series of possible WOM strategies and approaches. (7) A sample of these ideas is listed below:

• Make it easy for people to find you and tell people about you.
• Create a market advisory council which includes customers.
• Use interesting stories to bring your word of mouth topics to life.
• Encourage your brand champions to tell two friends about you, not just one.
• Do something unexpected and generous for your customers - send a free product (include an extra for them to pass along to a friend) just for being a valued customer.
• Identify and engage with ‘influentials’ using online social networking sites.
• Create experiences around your products and services.
• Be an evangelist for your evangelists.
• It's not just marketing: embed WOM into your sales culture.
• Use humour or "did you know" language to help consumers feel like they have something funny or unique to add to the conversation.
• Hide it. Discovery is a trigger for WOM, so make your tool or marketing message hard to find and you'll create something people will want to talk about and share.
• Leverage provocative content to make everyday product talk-worthy. 

Bottom line
We have reached a significant tipping point, a shift in where individuals, citizens and consumers go to get credible information and advice about brands, products and services. The trust equation has changed, so the way if effective promotion and marketing must change.

Notes

1. Definition: Word of mouth, Wikipedia.org, 4 September 2006
2. BIGresearch Releases SIMM VII -  Word of Mouth Most Influential, BIGresearch, 20 December 2005
3. Yankelovick, 2005
4. Edelman Trust Barometer 2006 [PDF]
5. GfK NOP/Rop
6. Millward Brown, WOM Influence Study, 2005
7. Practical Word of Mouth: 43 Word of Mouth Ideas You Can Implement Tomorrow for Not Much Money, Word of Mouth Basic Training 2, 20 June 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.