Take five...with David Smith

In this latest edition of “Take five,” we’re talking with our VP of research and analytics, David Smith, about the state — and the future — of word-of-mouth measurement here at House Party and in the industry at large.

 

Broadly speaking, how would you describe the state of word-of-mouth (WOM) measurement practices today?

WOM measurement is finally progressing toward standardization. Historically, WOM companies have been too free to measure KPIs in whatever way they see fit — which frequently means in whatever way makes them look best. We’ve heard from clients and seen at conferences too many examples of campaign results being compiled and reported as a marketing tool rather than as a hard analysis of performance. The industry is now recognizing a need for consistency in measurement, though, and major players are coming together with this shared goal in mind.

What are a few of the biggest recent developments in WOM measurement?

The Word of Mouth Marketing Association (WOMMA) has recently launched two important initiatives:

  • Return on WOM study: In 2014, WOMMA brought together some of the world’s largest brands and researchers to measure the true value of WOM marketing far more comprehensively than had ever been done before. Using years of sales and marketing data and cutting-edge marketing mix modeling (MMM) techniques, they found that an offline WOM impression has at least 5x the impact of a paid media impression, and that WOM drives $6 trillion in annual sales. This study was just the first step, and WOMMA has further research planned, but it was a crucial milestone in helping to establish WOM’s rightful place in the marketing mix. We’ve written more on the results and what they mean here.
  • Standardization: WOMMA is partnering with other industry associations to establish a set of standard metrics around WOM and social media. Succeeding in this would bring an enormous and much-needed boost of measurement credibility to the industry; with established standards, brands can be clear on exactly what metrics are being reported and confident that they were derived using reputable and recognized methods.

 

As House Party continues to advance our measurement capabilities and processes, what are the guiding principles that shape our decisions?

First and foremost, our clients’ needs drive every aspect of the business, including measurement. If a client needs something measured that's not part of our standard deliverables, we’ll work with them to figure out a way to measure it or to bring in a third-party partner who can. (We regularly work with Nielsen, Datalogix, and others to measure sales and ROI.)

Additionally, we uphold two principles that we feel are essential to maintaining client trust in a relatively new industry: conservatism and transparency. By measuring conservatively — especially when working with survey data or metrics that are impossible to know with certainty, like exactly how many people saw a given social media post — we can be confident that we’re not over-selling the results. And through complete transparency of how everything is calculated, we ensure our clients’ continued trust in what we’re reporting.

 

Compare House Party’s analytics offerings to those of the industry at large. Are there areas you haven’t mentioned where what we do stands apart?

House Party’s measurement practice is first class in the industry (and has been recognized as such). For example, while everyone reports on various measures of reach and engagement— impressions, tweets, etc. — we’ve long reminded clients that those are just means to the ultimate end: sales. That’s why we partner with companies like Nielsen and Datalogix to measure the sales impact and ROI of our campaigns, through (for instance) matched-market studies and shopper-data studies. This allows clients to compare the return of their House Party initiative to the return they’re getting on other marketing and media and clearly assess how their marketing dollars are best spent. Of course, we always measure reach and engagement (the means) as well, but we believe that focusing on the sales and ROI (the ends) is what sets us apart from the industry at large.

 

What’s next for House Party’s measurement practices? How will they look different six months from now?

There are two main areas of focus for House Party measurement in 2015/2016:

  • Automation and real-time data: This year, we launched a fantastic client dashboard that provides access to key metrics and great user-generated content (UGC) in real time, throughout an entire campaign cycle. We’ve gotten great feedback thus far and plan to roll out new dashboard capabilities throughout the coming year.
  • Sales measurement: As noted above, measuring sales is a key differentiator for House Party in an industry too often focused on reach and engagement. While continuing to offer partnerships with companies like Nielsen and Datalogix, we’re also exploring ways of measuring sales and ROI in-house, making it more affordable for clients who don’t have the budget to work with a major research firm but still want to understand the impact of their House Party campaigns.