Should CNN and ESPN Be So Excited About Word-of-Mouth?

(MoneyWatch)  To hear many people in marketing tell it, there is no marketing more powerful than word-of-mouth, the phenomenon in which a friend recommends a product or service to a friend. So, with that in mind, It's probably little wonder that some TV networks are trying to capitalize on word-of-mouth as a way to value their ad time. In other words, the more people who talk about products they saw advertised on TV, the more their ad units should be worth. Theoretically, anyway.

Ad Age's, Brian Steinberg says that both CNN and ESPN are working closely with Keller Fay, a social media company that tracks a total of 36,000 people a year who use a diary-based format to record what products they've talked about. Keller Fay then circles back with them to track what they've talked about and tries to tie the information back to the media outlets where respondents first heard about it. There are two examples in the story about how this data works in practice.

• CNN says more of its viewers talk about the Lexus than any other cable network, and that multi-platform users of CNN product were four times as likely to chat about a Lexus.
• ESPN reports "brands advertised during its NFL and college-football telecasts had what it said was a consistently higher level of word-of-mouth among users of ESPN media compared with non-users."

Interesting, but there's an essential flaw in the logic here. Advertisers have always used their advertisements to generate not only viewing of a commercial, but also buzz about the product or service being advertised. They would pushback if a network used this data to expect them to pay more, which the story doesn't come out and say, but is certainly hinted at; the only difference for the networks now is that they are actually measuring what used to be unmeasured, but understood. Meanwhile, the networks, which are under pressure to pump up the value of their inventory, would argue back that advertisers buy based on the number of viewers, and have not previously been sold ad time based on audience plus word-of-mouth.

The other flaw with using word-of-mouth to value advertising is that it isn't a bulk measurement practice the way that Nielsen numbers are. It's extremely nuanced, and can be positive or negative. If you follow the logic that ad placements that generate positive word-of-mouth should be worth more, they should be worth less if the chatter about them is negative, and that's territory TV networks probably don't want to dive into.