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Online word of mouth efforts are effective

Cyberbiz Brief

According to a new study from Internet analyst firm Forrester Research, entertainment companies that devote just 1% of their Web budgets to fund online word-of-mouth campaigns can boost a film’s B.O. by $15 million and double the sales of a book.

The numbers, from the report entitled “Bigger Hits With Net Marketing,” are some of the first to quantify the benefits of online advertising and comes at a time when one third of entertainment companies have decided that Internet marketing isn’t important.

“Marketers understand that the Internet and word of mouth can help generate buzz, but they don’t know how to foster it to extend awareness of a product beyond its initial release,” said Eric Scheirer, analyst at Forrester Research.

Forrester estimates that of a film’s $35 million marketing budget, $200,000 is spent on a Web site and $100,000 on banner ads, while $150,000 is spent to push a TV show online during a season, $75,000 on a new record album and $5,000 on a new book.

Forrester recommends that companies should instead budget money for features including online discussion boards and promotional giveaways. Campaigns should also accelerate word of mouth by using ads on fan sites to extend a product’s reach and refocus Web sites as information sources.

“Traditional word of mouth is sluggish and limited to the number of people each individual knows,” Scheirer said. “But a single Internet post has the potential to instantly reach thousands of people worldwide who can respond online in addition to telling their friends.”

Cambridge, Mass.-based Forrester said that it polled 21 entertainment companies in the film, publishing and vidgame arenas, including NBC, Universal, Sony, Nintendo, EMI, Simon and Schuster, Capitol Records, HBO and HarperCollins.

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