WordSpreadsQuickly.com

Charlottesville, VA – February 13, 2006

The announcement today by BzzAgent.com that the word-of-mouth firm has morphed their closed community into a media channel for word-of-mouth marketing was not unexpected. The firm had been using the word media in boilerplate descriptions of the company in recent months. A likely framework for the private label media offering may look similar to the page the book publisher Penguin’s customer page:

One likely question looming in the minds of advertisers is whether the announced WOM media offering is solely a word-of-mouth play or is the channel offering perhaps a new and revamped affiliate marketing model.

One expert in the affiliate marketing field who runs a major merchant program, and who asked not to be identified, viewed the offering as the “tip of the next iceberg.” The affiliate industry expert went on to say “It is taking affiliate marketing to the next level, we are already seeing blogs, podcasts, and other things of that ilk make their mark on affiliate marketing. I think there is definite overlap.”

This observation wasn’t shared by other affiliate industry leaders who view results tracking as a key differentiator. Jim Kukral, publisher of ReveNews, strongly disagreed with any connection. “As a merchant, if I had to pay out half a million dollars to an affiliate, I want exact metrics on leads/sales, no way I’m going into a relationship where I “might” not be able to see ROI,” noted Kukral. “I don’t care how you swing it, WOM is powerful, but is not affiliate marketing. In the end, you’re talking about an advanced PR campaign.”

It may be too soon to apply the affiliate stamp on BzzAgent’s new offering, however, the media label alone brings with it baggage from a traditional mass marketing approach that is tired and oh too familiar to customers. Regardless, I have a few thoughts and opportunities, including:

Affiliate marketing systems in general often drive entrepreneurial spirits as participants look to achieve the next highest payout levels. Maintaining a high ethical standard is going to be challenging.

Participant affinities will remain strongly connected to the third-party that pays them. Advertisers that outsource community to third-party vendors are not as likely to be the winners in WOM. Advertisers need a hands-on approach to management and accountability.

Increasing individual referrals is likely to decrease the referral power of individuals in their own personal networks and potentially the entire BzzAgent community. Commercial email list owners experienced this first hand in 2001 with the introduction of pay-for-performance buying methods.

We’re likely to see groups of agents spinning-off from BzzAgent to create their own network so that they can command additional economic incentives. Perhaps ValueClick – the owners of Commission Junction – will add this offering to their portfolio much in the same way as Isobar.

The self-regulated reporting by agents who participate in WOM campaigns is subjective and tighter reporting metrics need to be implemented to capture all treatment types.

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TAGS: BzzAgent, Affiliate Marketing, Jim Kukral, ReveNews, ValueClick, Commission Junction, Word-of-Mouth MarketingPenguin