The Impact of Web 2.0 on Consumer Purchase Decisions

Word of Mouth on the Web: The Impact of Web 2.0 on Consumer Purchase Decisions

CATE RIEGNER The internet stands apart from other media in enab[ing its "users" to interact. From Media-Screen, LLC this perspective, the internet will always be, at its core, a tool for interpersonal [email protected] communication. While consumers find emotional and practical benefits in participating in online discussions, these conversations have profound commercial implications as well. Everyday consumers are wielding greater control over their media habits and their role in the commercial marketplace. Moreover, with the growth of online participation, consumers exert greater influence over the products and brands considered for purchase. Based on a study of over 4,000 broadband users in the United States, this article examines consumer adoption of Web 2.0 and the impact those rants, raves, comments, and reviews are having on purchase decisions today.

INTRODUCTION online through various tools and applications. Next, The internet stands apart from other media in we evaluate how they contribute to the content enabling its "users" to interact. From this perspec- that is online, exploring certain segments— tive, the internet will always be, at its core, a tool demographic and psychographic—that tend to par- for interpersonal communication. Even the tag- ticipate more than others. Next, we examine the ging, posting and sharing of popular videos on influence of UGC on purchase decisions, across YouTube are fundamentally community-related pur- various product categories, purchase channels, and suits. Facilitated by countless biogs, forums, chat user groups. Finally, we look at the MySpace rooms, and social networking sites, we now live generation—13 to 24 year olds—to consider what in a 24-hour rolling, emotive, media world where may be in store for online word of mouth (WOM) we can satisfy our indelible need to feel a part of in the years ahead, the events that imfold around us.

While there are practical and emotional benefits RESEARCH OBJECTIVES to participating in online discussions (Piper Jaf- Several objectives led to the research presented in fray, 2007), these conversations have profound this article. First, we were interested in measuring commercial implications as well. Everyday con- the adoption of Web 2.0 tools and participatory sumers are wielding greater control over their activities among broadband users. While the me- media habits and their role in the commercial dia are quick to tout new developments in tech- marketplace. Moreover, with the growth of online nology and online user behavior, we suspected participation, consumers exert greater influence actual usage of these tools to be lower than that Findings presented in this article over the products and brands considered for pur- implied by the press and industry pundits, and in are from July 2006, Data from chase. This article discusses the growth of "user- our own Silicon Valley "bubble," Second, we 2007 zi'ill be available starting in generated content or UGC," and the influence it is wanted to begin tracking the influence of UGC on Septenjber 2007. U,S. Patent bringing to bear on purchase decisions. purchase decisions. Consumer rating and review Application Serial Number First, we explore the extent to which broadband sites have been in use for many years, while less 11/580J8X users of various age groups are communicating formal envirorunents for product feedback (e.g..

436 OF flDUERTISIflG HESEflflCH December 2007 DOI: 10,2501/S0021849907070456 WORD-OF-MOUTH ON THE WEB

Facilitated by countiess biogs, forums, chat rooms, and consumer." As broadband gains mass adoption, the attitudes and behaviors of sociai networking sites, we now iive in a 24-hour roiling, Broadbanders today provide an indicator of where the market is heading. emotive, media world where we can satisfy our indeiible COMMUNICATION, COMMUNITY, AND need to feel a part of the events that unfold around us. CONTENT CREATION Based on a survey fielded in July 2006, the average broadband user spends 27 percent of his/her time online on commu- blogs and social networking sites) have vey in the United States. We refer to re- nication activities. This is commensurate grown in recent years. With a better un- spondents in this article as "broadband with the amount of time they spend on- derstanding of the role these sources play users" or "Broadbanders™'." line for leisure and entertainment, and in purchase decisions, compared to other The study was fielded online in July more than the time spent gathering news sources and across varying product cat- 2006 to a panel-based sample representa- or information, personal productivity, or egories and purchase channels, marketers tive of the U.S. internet population aged shopping (Figure 1). can navigate an increasingly complicated 13 and older. A proprietary online sam- The most basic forms of internet-based media world more successfully. Finally, pling methodology was applied to en- communication, email and instant mes- "always on" access via a broadband con- sure the profile of respondents taking the saging (IM), are essentially one-on-one nection has been sbown to deepen fans' survey was representative of the U.S. in- channels that exist separately from any engagement witb their passions (e.g., video ternet population by age and gender. Re- related web-based content or information. games, movies) (Yahoo/mediaedgeicia, spondents were eligible to complete the Newer forms of internet communication 2005). We wanted to explore how fans survey if they indicated they accessed facilitated by blogs. Forums, and social participate online—everything from post- the internet via a high-speed or broad- ing comments to sharing fanfic—and un- band connection (any connection greater derstand the motivations that prompt them than 56 kbps/sec). We focus on broad- to participate. If passion is a requisite for band users only, excluding those who • Communication participation, wbat are the implications connect to the internet via a dial-up • Leisure or Entertainment • News or Information for WOM marketing around everyday pur- connection. We do tbis for several rea- i=- Personal Productivity chases sucb as beauty products and con- sons: First, over 70 percent of internet Shopping sumer packaged goods? Additionally, users in the United States now connect tracking Web 2.0 involvement among via broadband. Broadband adoption is younger Broadbanders (13 to 24 year olds) growing at a 60 percent compound an- may sbow wbere online WOM is heading nual growth rate (CAGR), while the adop-

networking sites depart from the email Email remains the dominant form of oniine conversation model in two key ways; they provide a channel for one person to reach many for a|| gg© groupS, but the Under-25 grOUp iS adding iM, (often anonymous) others, and they are increasingly associated with specific topics chat, discussion forums, blogs, and text messaging to Research shows that Broadhanders regularly use a variety of emerging and es their repertoire. Seventy-three percent of 13 to 17 year tablished digital communication channels. Of course, email is ubiquitous. More in oids and 68 percent of 18 to 24 year olds use IM or chat, teresting is the finding that 4 out of 10 Broadbanders regularly IM or chat Other compared with just 26 percent of Broadbanders 45 and channels, such as voice-over-internet pro- tocol (VoIP), have been around for the older. past 10 years, but are just emerging as viable mass market options. VoIP is one of the most recent examples of the inter- , , , The internet has also brought a partici- But to what extent has this vision become a net s ability to consume older media, es- ,, , . patory quality to any and every online reality for the broader broadband population? sentially movmg 100-year-old telephony r J -t ,> j j j r r ,. . , . , , pursuit. Communities arise, allowing peo- To understand how, and to what extent, to the web, a digital mternet-based proto- , ,,. , . . , . , pie to connect personally, professionally, Broadbanders are using one-to-many on- col. Video conterencmg, a relative staple ^ , . , and culturally with others. Web 2.0 sites line communication tools, we asked users for busmess communication, has yet to ^. , , , „ , like YouTube, MySpace, Wikipedia, Digg, to evaluate a list of 17 different activities rmd a market even among broadband- and Flickr all contribute to this new ba- that couid loosely be defined as "content equipped consumers. „„ ., , ^ , ,, zaar of interests. A base of freely available creation" activities. From this inquiry we While regular users of chats, blogs, text ,,,,„_, , , user-created content, collaborative tools, found that the average Broadbander per- messagmg, and VoIP fail to match the and networked communities create this forms 2.4 content creation activities regu- niimbers who rely on email, these alter- , , , , , dynamic and participatory internet cul- larly. Approximately one-third rate or native channels play an essential role in , ., , ^ , , , ture. The result is fundamental changes in review products online, but regular par- the daily lives of those who use them. ,.,.,, , . , . , , the ability for people to communicate their ticipation in activities that involve contrib- With the sole exception of videoconferenc- , , . , t . ideas and opinions to many people. uting to entertainment content—such as ing, at least two-thirds of regular users engage in each activity at least once a day (Tabie 1). Email remains the dominant form of TABLE 1 online conversation for all age groups. Regular and Daily Use* of Online Communication Tools but the under-25 group is adding IM, chat, discussion forums, blogs, and text Use Daily messaging to their repertoire. Seventy- (Among Those Who three percent of 13 to 17 year olds and 68 Use Regularly Use Regularly) percent of 18 to 24 year olds use IM or Email 95% 88% chat, compared with just 26 percent of , ,^ ^ Instant messaging/chat 41% 70% Broadbanders 45 and older. Text messaging is also popular among those under 40, .^9r^.'7l/^.'.°|s/'?.'.S5.'J.ss|on^.b^^^^^ 19% 67% with use peaking at 40 percent among 18 Text messaging 18 64 to 24 year olds. VoIP and videoconferenc- Volr 8 68 ing remain on tbe horizon with the high- est acceptance among 25 to 34 year olds y'':'^9^°"f^!:^:i^ifl^ 6 43 (Table 2). *Use regularly in typical month: N - 4.190; base: all respondents 438 JfliflflL Of mimm REBEfieCH December 2007 WORD-OF-MOUTH ON THE WEB

We found that the average Broadbander performs 2.4 (50 percent) and male Broadbanders aged 18 to 24 (48 percent), Participation among content creation activities reguiarly. Approximately Broadbanders aged 55 and over falls to 23 percent (Figure 3). Active participation one-third rate or review products oniine, but reguiar among women in online conversations suggests techie guys are no longer the rulers participation in activities that invoive contributing to of the web. But the disparity between younger and older users suggests a stub- entertainment content—such as upioading an audio or born generational divide in Web 2.0 invoivement. video fiie—is stiii in the singie digits A PSYCHOGRAPHIC VIEW- PARTICIPATION BY BROADBAND SEGMENTS 2 Based on a segmentation analysis of the Online Communication Tool Use* by Age "••"*"'' population, two segments we refer to as the "Online Insiders" and "So- 13-17 18-24 25-34 35-44 45-54 55+ eial Clickers" are particularly immersed ^^ 81% 90% 95% 97%^ 98%^ 99%^^ ^ communication activities on the web. As discussed below. Online Insiders are I?:^.', 9B.', ^9% 38% 30% 23% ^^^y ^^^^^ ^^ t^^ .^^^^^^^ ^^j ^.ghly Forum/blogs/discussion boards 33%^ 29%/^ 26% 19% 12% 9%^ influential online shoppers. Social Click- Text messaging 28% 40%^^ 29% 18% _ 12%_ 5%_ ^'^ ^'^ ^^^^ communicators online, but the most participatory ones tend to be VoIP 6% 6% 13%^ 9% 6% 6% j , .^ TU younger and less affluent. These younger Videoconferericing _5%_ 7% 10%^ 7% 5%_ 3%_ Social CHckers may not be influencing 'Use regularly m typicnl moulh; N = 4.190: base: all respondents purchase dedsions today, but COuld become

Uploading an audio or video file—is still in the single digits (Figure 2). Findings 0% 5% 10% 15% 20% 25% 30% 35% suggest text-based participation related to Review a Product e-commerce activities have gained a foot- Post to Forums hold among broadband users, while the Publish a Personal Page •••HH creation and sharing of multimedia re- Express Opinion ^^^^^M^^^H15% mains low. Ratings and review sites have been available for a number of years, while Post to Journal h^HI^^H^^^^14% a tendency to "mesh media" is still on the Share via P2P Network ^^^^^• 9% horizon for the vast majority of users. Publish a Website •••^^^• 8% When we isolate users of four collabo- Use a Wiki ^H4% rative dialogue tools (i.e., message boards, Create/Share Audio File chat rooms, listservs, and wikis), we find Create/Share Video N = 4,190 that young Broadbanders are participat- Base: All respondents ing in greater numbers. The heaviest users Create/Share Podcast ^2% *Activities done in typical month of online communication channels in- clude female Broadbanders aged 13 to 17 Figure 2 Content Creation Activities*

December 2007 JDURnHL OF HDUERTISIOG HESEHRCH 439 WORD-OF-MOUTH ON THE WEB

municators online, spending over half (57 60%- - Male percent) of their time online doing com- 50%- munication and community-oriented activi- • Female ties. Older Social dickers rely strictly on 40%- email. Younger Social Clickers are avid 30%- text and instant messengers. They are also actively engaged in content creation activ- 20%- ities, for example, creating personal pages 10%- and posting comments on blogs, message boards, and chat rooms. With a natural interest in connecting with others. 13-17 18-24 25-34 35-44 45-54 55-f Social Clickers are poised to emerge as 148 a key influencer group for the products Base: Users of message boards, chat rooms listservs, and wikis they care about. They may not be the first to adopt, but they vocalize their prefer- Figure 3 Online Talkers by Age and Gender ences more readily than other users, influencing friends and family indirectly through their personal pages, posts, and strong influencers in the future (Table 3). Social Clickers rely on the internet to chats. The following section provides a descrip- maintain relationships with friends and Online Insiders are more holistic in tion of the attitudes and behaviors that family, and to seek out new ones. While their use of the internet and spend just as characterize their orientation to the activ- a generational divide runs through this much time on communication activities ities that foster WOM online. group, all Social Clickers are active com- as Social Clickers and sometimes more. Insiders do not IM as frequently as Click- ers, but the two groups match in other TABLE 3 communication activities. Online Insiders are more inclined than other groups to Content Creation by Segment* assume an online "voice" or persona and

Online Social Content Everyday Fast express themselves online. In fact, this Insider Clickers Kings Pros Traciiers group dominates every content creation activity measured in our study. Online Review products 40% 31% 24% 35% 25% Insiders are also avid online shoppers wbo Chat in chat room 18% 15% 15% 8% 9% frequently add their opinion via product Post to forums 35% 24% 26% 18% 18% ratings and reviews. They are very influential, the first to adopt new products Express opinion 13% 7% 6% 5% 7% and to vocalize their preferences. Offer advice on listserv 19% 15% 12% 11% 14% Content Kings tend to be young, male, Use a wiki 7% 3% 3% 2% 3% and addicted to online entertainment. They Post to journal 18% 17% 14% 10% 10% also spend the least amount of time communicating online, aside from activities Publish a blog 21% 19% 17% 10% 8% that support their interest in entertain- Share via P2P network 12% 8% 11% 6% 6% ment, i.e., peer-to-peer file trarisfers, per- Create/share audio file 6% 3% 2% 3% 3% sonal web pages, and posting comments to message boards and chat rooms. Wben Create/share video file 5% 4% 4% 3% 4% Kings communicate, it is to achieve their Create/share podcast 2% 1% 1% 2% 2% ultimate goal of finding more ways to *Do in typical month; N = 4,190; base; all respondents have fun on the web.

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Everyday Pros participate in activities such as checking tbe news, weather, or INFLUENCE ON PURCHASE that relate to online shopping. For exam- sports—to spend much time communi- BEHAVIOR—EXPANDING BEYOND ple, we find the Everyday Pro rating or cating or participating with others. This THE EARLY ADOPTERS reviewing products, but not publishing a is a group tbat wants to "get on and get If UGC is still being promulgated primar- personal page or blog. In fact their orien- off" quickly, acting primarily as receivers ily by younger users and an elite group tation toward the web in general tends to of information rather than creators or of "netizens," wbat, if any, impact has be more practical and focused. They are producers. it had on purchase decisions? To help heavily involved in online banking and To summarize, we find Web 2.0 involve- answer this question, we analyzed over investing, and spend an average of $97 ment primarily among younger Broad- 1,300 broadband shoppers, a subset of per month online ($10 more tban the av- banders (13 to 24 year olds), and the "early tbe total Netpop sample, and over 100 erage). Consequently, they are more likely adopter" segment we call tbe Online In- different types of products purchased in to participate in areas tbat support tbeir siders. We do find some activity among the last tbree montbs. Respondents primary interest in money management older users around e-commerce related were asked to identify a product they and e-commerce. activities, specifically product reviews, but had purchased in the last three months, East Trackers are too interested in using it is unclear whether their participation either online or offline, and were then the internet to meet tbeir immediate needs— will expand into otber areas. asked to answer questions about the

0% 5% 10% 15% 20% 25% 30% Browsing Retail Stores !27%

Recommendations from Family/Friends 17%

Search Engines 15%

Retail Sites 15%

Brand/Manufacturer Sites

TV Advertisements

Coupons

Magazine Advertisement/Article Office Sources User-Generated Sites* HnlinP ^niirrpQ User-Generated Catal ogs/ B roch u res

Store/Distributor Sites

Comparison Shopping Sites Online Advertising** 7% Radio Advertise ment/Mention Outdoor Advertisement 2%

N = 1,397 Base: Purchased product in last three months *lncludes rating/review sites, blogs, forums, discussion boards, social networking sites **lncludes search advertisements, banner/rich media advertisements

Figure 4 Percent Saying Source Influenced Purchase

December 2007 JDUIlllIlL OF flDUEflTISlOGRESEflflC H 441 WORD-OF-MOUTH ON THE WEB

sources that influenced their purchase 0% 5% 10% 15% 20% 25% decision. First, it is noteworthy that online sources Online j^H 1 14% (e.g., websites, search engines, and com- Kurcnases P^^ • parison shopping sites) compare favor- ably to traditional sources in terms of Offline ^B their influence on recent purchase deci- Purchases ^^H ^^H 8% sions: fully balf (50 percent) of all recent purchases among Broadbanders were in- N = 1,397 fluenced by at least one online source, Base: Purchased product in last three months whereas 61 percent were influenced by offline sources. Half of the top 10 sources Figure 5 Influence of UGC by Purchase Channel are based online—noteworthy given tbat only one-third of the purchases were even- tually made online (Figure 4), With regard to the influence of WOM, one source measured in our survey influ- Electronics products such as DVD players nine percent of Broadbanders link at least enced more than 20 percent of purchases: and computers. In fact, they are the second one user-generated source to a recent pur- browsing in retail stores (27 percent). Rec- most influential source for purchasing these chase decision. (User-generated source is ommendations from family and friends items, influencing 24 percent of the prod- defined as a blog, rating/review site, fo- influenced 17 percent of purchases. Find- ucts purchased in this category. Search en- rum, discussion board, and/or social net- ings suggest consumer influence is dis- gines are most influential and manufacturer/ working site.) Consumer review and rating persed, or "splintered" as many would brand sites are third most influential. Retail sites, blogs, and discussion boards are say, across a multitude of online and off- stores still play a major role in the pur- more likely to be a source of influence line media channels. chase decision, but browsing in retail stores than IM or chat rooms. We suspect IM However, findings suggest that online is fourth in influence behind tbe aforemen- and chat to be less helpful in tactical on- WOM is still in an "early adopter" phase, tioned online sources. Our research shows line shopping sessions (Table 4), while influencing particular types of products the more expensive and valuable an item, consumer ratings and review sites remain and certain purchase channels more than tbe more it is researched. The fact that these the most efficient way to obtain consumer others. For example, products purchased technology and electronics items tend to be feedback. online are almost twice as likely to be more expensive, more complicated, and Thus Ies5 than 1 in 10 purchases is influenced by UGC as products pur- highly coveted by their buyers contributes influenced by online WOM. The percent- chased offline (i.e., retail stores or over to the time corxsumers' devote to research- age may seem low (9 percent), yet only tbe pbone) (Figure 5). Our research shows ing them and considering the views of other that online purchases tend to undergo bm/ers prior to purchase. greater scrutiny on tbe web, increasing the likelihood that buyers would seek con- High Touch Retail TABLE 4 sumer input on UGC sites. While offline sources dominate the pur- Influence of UGC Sources An analysis of four separate product chase of High Touch Retail products, such categories—Pricey Tech-Electronics, No as clothing, appliances, and furniture, UGC sources (any) Touch Services, High-Touch Retail, and online sources also play a surprisingly Consumer reviews/ratings sites 5% Household Staples—illustrates the rela- important role in this category. Over half tive importance of UGC sites and online (58 percent) of High Touch Retail pur- Blogs/discussion boards 3% versus offline sources in general (Figure 6). chases are influenced by the internet— Instant messaging/chat rooms 2% specifically, an average of 2.3 online Social networking sites 1% Pricey Tech-Electronlcs sources. Yet only 8 percent of purchases

Note: N = U97; base: purchased product in last three User-generated content sites play an im- in this category are influenced by UGC. months portant role in the purchase of Pricey Tech- The percentage may increase as retail sites

442 OF flEUEBTISIflG llES[fiRCII December 2007 WORD-OF-MOUTH ON THE WEB

items includes the personal and confiden- 0% 5% 10% 15% 20% 25% tial nature of many financial and travel Pricey Tech-Electronics ^| • 24% decisions.

High-Touch Retail H•!• • 8% To summarize this analysis of separate product categories, UGC is more likely to Household Staples H|••5 % influence items that are more complex, higher priced, and highly coveted—such No Touch Services WM ^•4% as technology and consumer electronics. But it is less likely to influence low- N = 1,397 involvement products and/or those pri- Base: Purchased product in last three months marily purchased in stores (e.g., CPG), products that buyers want to see/feel/ Figure 6 Influence of UGC by Product Category try-on (e.g., furniture, apparel), and products that are personal or confidential in nature (e.g., travel, finance). Findings from offer more participatory features and youn- a product's virtues, the average customer Netpop 2007, available starting in Septem- ger Broadbanders gain more disposable is unlikely to engage. ber 2007, will identify any shifts in the income and settle into new homes. But results presented here. the need to see and touch these items No Touch Services An "early adopter" phase is also evident physically, rather than evaluate them more The internet dominates the purchase of in the types of users who say they are in- intellectually, may limit the potential for No Touch Services, such as travel and fi- fluenced by UGC. Older consumers (45 and WOM to influence the purchase of these nancial services—industries that stimu- over) are less likely to turn to UGC sites types of items. lated the growth of e-commerce a decade (Figure 7) than younger users (under 45). ago. No Touch Service buyers rely heav- And using the Netpop segmentation model, Household Staples ily on search engines and recommenda- we find that Online Insiders are almost twice Not surprisingly, only 5 percent of House- tions from family and friends, suggesting as likely to be influenced by UGC as other hold Staples, like beverages and pet sup- a desire to balance the ability to pick broadband user segments (Figure 8). plies, are influenced by UGC. Yet there is and choose from multiple options online Heavier Web 2.0 participants to begin with. some evidence that other online sources with trusted advice. Yet UGC is less im- Online Insiders are the ones driving cur- are playing a small role; 17 percent of portant in these decisions (4 percent of rent WOM marketing. As Online Insiders Household Staple purchases were influ- all purchases). Buyer age likely dampens grow in proportion to other segments, a enced by a shopping site, 7 percent by the influence of WOM for No Touch Ser- trend we are already starting to see, the in- online coupons, and 7 percent by search vices. Another factor that may limit the fluence of online WOM should logically in- engines. Like High Touch Retail products, use of UGC in the purchase of these crease. However, this assumes Online the influence of WOM on Household Sta- ples is likely to increase as retail sites offer more participatory features and re- tailers such as Safeway learn how to suc- UGC is more likely to infiuence items that are more com- cessfully combine bricks-and-clicks, taking grocery orders online and then fulfilling plex, higher priced, and highiy coveted—like technoiogy those orders through existing supermar- kets. But a factor limiting the potential for and consumer eiectronics. But it is less likely to influ- online WOM in this category is passion, i.e., an emotional attachment to the prod- ence low-involvement products and/or those primarily ucts. Though every CPG brand has a core group of "Passionates" who actively tout purchased in stores (e.g., CPG).

December 2007 JOUflllfiL OF IIOUEIITISIIIG RESEflflCfl 443 WORD-OF-MOUTH ON THE WEB

reference to a new form of entertainment 0% 5% 10% 15% 20% 25% that combines communication, community, and entertainment online. Commu- Content Kings • 9% nitainment is certainly an important trend for media companies to embrace—both in Fast Trackers l^^^^l 8% defense of declining traditional media hab- Social Clickers Iji^^^^g^6% its and to discover new ways of engaging audiences. But Corrununitainment carries Everday Pros I^^^^H profound commercial implications as well, especially as the MySpace and YouTube N = 1,397 Base: Purchased product in last three months generation enters adulthood. Our study shows that one-third of fans Figure 7 Influence of UGC by Segment learn about new entertainment through UGC, specifically blogs, social networking sites, community sites, and podcasts Insiders will retain the usage characteris- tent or information that is available on the (Table 5). While television remains an im- tics they share today. It may not be the On- web.) A natural synergy exists between UGC portant channel for learning about new line Insiders, but rather a subset of this and online entertainment, given that enter- entertainment, the numbers of 13 to 24 year group, that act as the primary influencers tainment represents the cultural meme— olds influenced by UGC (48 percent) is on the web. the "water-cooler talk"—that draws people far greater than the percent influenced by together. From a marketing perspective, the television (31 percent) (Figure 9). LOOKING AHEAD—PREPARING FOR THE relationship between WOM and online en- Findings also suggest that Broadband- MYSPACE AND YOUTUBE GENERATION tertainment is even more powerful when ers who use these UGC sources rank their In consideration of what might lay ahead we consider how indistinguishable enter- influence fairly high. For example, while for online WOM, it is useful to examine tainment and media have become online. blog and social networking sites are used the role of UGC in online entertainment. Take short online videos or movie trailers, by just 19 percent of Broadbanders, fully This is an area where 13 to 24 year olds, for example: are they marketing or free di- two-thirds of these users find these sources the heaviest purveyors of Web 2.0, are versions from the daily grind? Most would influential in deciding what to watch or highly engaged in online conversations argue both. play. The influence of UGC is fairly strong today. (Online entertainment is defined as In point of fact. Piper Jaffray recently across all genres of entertainment, with movies, music, games, and television con- coined the term "Communitainment" in the exception of movies where it dips to

TABLE 5 0% 5% 10% 15% 20% 25% How Fans Learn about 13-24 ^^H Entertainment

User-generated conent sites (any) 33% 25-44 ^^H^H Blog and social networking sites 19% 45-H ^^H^•< 5% Community review/ratings and 16% fan sites

N = 1.397 Video-sharing, online radio, and 14% Base: Purchased product in last three months independent podcast sites

Note: N = 1,41]; base: online movie, game, music, anil Figure 8 Influence of UGC by Age television fans

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0% 10% 20% 30% 40% 50% 60% 31% Television 42%

48% UGC 25%

13-24 25% Oniine Advertisement 25+

Magazines

Newspapers 23%

Radio

N = 1,411 Base: Online movie, game, music, and television fans

Figure 9 New Entertainment Sources by Age

49 percent (Table 6). This may be a reflec- TABLE 6 ^^'^^ f^riging from being directly asked tion of the relative strength of other soxirces llcp ptnd pprrPiVPfi InfllJPnPP ^^^ '^^^ opinion, to wanting to ask a or the control Hollywood exerts in the specific question, to wanting to let release of its movies. other people know about something So how are fans participating in the Percent Percent Who "^^- ^^ found that many factors encour- entertainment that is online? Despite the ^j,^ Learn Say UGC is ^8^ 4 or 5 out of 10 fans to contribute ability to create mash-ups and fanfic, ^^^^^ ygQ Influential ^° content surrounding a favorite enter- most of the sharing comes in the form of tainment title or artist. Younger fans (13 1 J ,. rr^ .1 • . c • J Games 32% 67% L n^ ij\ i^ •. j u text-based posbngs. Talking to friends to 24 years old) are motivated by more about a favorite title or artist is by far Movies 34% 49% factors across the board—everything from the most popular activity, with 33 per- Music 36% 70% wanting to ask a question, to wanting cent of fans 13 to 24 years old regularly to let people know about something ^ ^ ^ Television 30% 67% ^ taking part. Other activities generally fall- new. Younger Broadbanders are actually out in accordance with the amount of Note: N = 282-285 per genre; base: online movie, ganw, t^i^e as likely to participate in online music, and television fans ,./•,, \ time and engagement required to do them. WOM because they are (quite frankly) For example, other general discussion or "bored and have nothing to do," support- community-oriented activities rank sec- application-intensive activities, gamer the ing the view that communitainment has ond in popularity, followed by writing lowest participation rates (Figure 10). already displaced other forms of media reviews or summaries. Creating mash- What motivates fans to post? We asked and content consumption (Figure 11) ups and fanfic, the most time- and Broadbanders to rate a variety of fac- (Piper Jaffray, 2007). December 2007 JOUROflL OF HDUEOTISIflG RESEflflCH 445 WORD-OF-MOUTH ON THE WEB

0% 5% 10% 15% 20% 25% 30% 35%

Talk to friends oniine about H •^^^^^^^^^ 33%

Send/forward emaiis about H ^^^^^^^^^^^^^^•18%

Talk about in chat room/forum H ^^^^^^^^^•^•^^^19%

Meet other people online who like titie/artist H ^^•^•i^l^^HI 14% • 13-24 • 25+ List/write about on personal page, biog, or website H

Write reviews/stories or rate online H ^^^^^^^^^12%

Create/share mash-up H ••14%

Create/share fanfic S

N = 1.410 Base: Online movie, game, music, and teievision fans

Figure 10 How Fans Spread WOM Online

0% 10% 20% 30% 40% 50% 60% 70% Peopie specifically ask me for my opinion

When a titie is much better than I expected

1 know a lot about the topic

When a title is much worse that i expected

To ask or post a question 13-24 25+ i am bored and have nothing to do

Disagree with a review or rating

Friends are taiking about it

I want to meet other people who share my interests 43% 30%

A/= 810 Base: Fans who contribute to UGC sites

Figure 11 Why Fans Spread WOM Online

446 JOyRflBl OF flDUERTISIDG HESERBCH December 2007 WORD-OF-MOUTH ON THE WEB

CONCLUSION ing the web more holistically. But as the 2006 was the year that "Web 2.0" made the segment of Online Insiders swells in num- CATE RIEGNER is a founder and research director of leap from being a marketing buzzword to ber, it may consequently lose some of Media-Screen, a San Francisco-based market re- creating an out-and-out revolution in how their "early adopter" edge. Thus it may search firm that focuses on online shopping, advertis- users make use of the internet. Websites be a subset of this segment that ulti- ing, and entertainment. Since 1996, she has worked have reinvented themselves to transcend mately promulgates WOM online. with numerous internet-based companies, including Google, eBay, Excite, Plaxo, Netfiix, and ABC.com. the format of a static publication, and suc- It is also unclear whether the small As director of market research for ThirdAge Media, cesses in features that facilitate one-to- percentage of Broadbanders who cur- she designed strategic market research programs one and one-to-many communication have rently contribute multimedia content (e.g., to guide online marketing programs among corporate sharply altered consumer behavior online. audio, video) will grow. The ratio of peo- partners including CBS Networks, eTrade, Procter What does this mean for online WOM ple who read blogs to people who actu- & Gamble, and Merrill Lynch. Earlier in her career, marketing? ally publish them may always reflect the Ms. Riegner worked as a research analyst for Foote, Research shows that while UGC is al- "80/20 rule"—with roughly 80 percent of Cone & Beiding Advertising, Lai Venuti & Lai Advertis- ready wielding influence over some prod- Broadbanders consuming content and only ing, and National Analysts, a fomier division of Booz uct categories and segments of broadband 20 percent producing it. Allen & Hamilton. She holds a B.A. in history from users, its influence is still in an "early We already see the impact of UGC on Smith College and an M.A. in communication from adopter" phase. The most influential con- the selection of technology and consumer the Annenberg School of the University of sumers on the web today are 24 to 44 year electronics products. While its influence is Pennsylvania. olds who embrace the internet, not just as likely to expand to other, less tech-oriented, a tool, but as a way of life. These Online products in near future, higher-involvement Insiders are on the vanguard of online WOM categories are likely to progress faster than REFERENCES and represent a group that stands to grow low-involvement ones. While makers of considerably in the next five years. CPG products can offer online coupons, so- NIELSEN//NETRATINGS. 61.6 percent CAGR be- Younger users, characterized by the Con- licit feedback, and provide environments tween December 1999 and May 2006. tent Kings and Social Clickers segments, for collaboration, the challenge is not so are focused on entertainment and commu- much one of stimulating online WOM as PIPER JAFFRAY. The User Rczvluthn: The Nem nication activities, respectively. They may identifying the "passionates" of their prod- Advertising Ecosystem and the Rise of the Internet he talking online in significant numbers, uct who are most likely to spread the word. as a Mass Medium, 2007: [URL: http://www. but their discussions are geared to enter- Findings from the fielding of Netpop piperjaffray.com]. tainment or talking for talking's sake. 2007 will give some indication on how When these younger segments enter adult- fast the influence of WOM online has YAHOO/MEDIAEDGE:CIA. It's a Broadband Life. hood, we expect many to move into the grown over the past year and in what Summit Series, 2005: [URL: http://advertising. Online Insider segment and begin embrac- sectors. yahoo.com /central / sumitseries / ].

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