In a 44-page study of word-of-mouth based on Internet chat room participation, Professors David Godes (Harvard Business School) and Dina Mayzlin (Yale School of Management) define buzz as the transfer of information from someone who is in the know to one who isn't. This is something that most of us understand intrinsically- buzz is about the “next” big thing, the one that hasn't hit yet. We hear about, and want to get in on the ground floor, so to speak.

This phenomenon is the bread and butter of marketing people. Creating buzz about a product is the goal of ever advertisement, every marketing campaign, and every ad-man. In many ways, the creation of buzz is the original alternative marketing scheme, as it is often done outside of the traditional marketing venues of television and print ads. While television and print ads may sustain buzz, they are unlikely to produce it. Buzz is created by word of mouth- it is the personal transferal of information from those in the know to those not in the know.

The study by Godes and Mayzlin compared chat room buzz about new television shows with Nielsen ratings to determine if a statistical correlation existed. The researchers found that such a correlation did, in fact, exist. The study also found that for buzz to have a significant effect, word of mouth must reach across multiple communities or newsgroups with differing demographics. Further, as any trend-watcher could tell you, buzz, like so many other phenomena, is relatively short-lived. At least in the case of television shows, buzz about a particular show had faded into background noise after about six weeks.

Everybody's Doing It

Word-of-mouth now influences two-thirds of all consumer product sales, according to a May 2001 report by a reputable marketing firm. Once the exclusive province of renegade boutique agencies bringing counterculture products to market, viral marketing has literally spread like a cold, becoming a staple in even the most traditional provinces.

One driving force behind this shift in advertising techniques is the emergence of ad-blasting technologies like TiVo. Personal video recorders (PVRs) and digital video recorders (DVRs) enable consumers to block out the commercials that were once the bedrock of consumer product advertising by recording a show for later viewing, and fast forwarding through commercials. PVR users willingly opt out of commercials some 72.3 percent of the time, a rate ringing alarm bells among advertisers.

Another factor is pure, simple economics. The cost of a 30-second television spot is now pushing $450,000 for a single airing during prime-time viewing hours. That is a very large chunk of change, and it includes nothing but the airtime. It does not include production costs of the ad itself. Manufacturers are becoming game to try an alternative that boasts a price tag just a fraction of that amount. No expensive media buys, pricey location shoots or costly creative sessions.

Then there's the powerful punch of a viral message delivered in a seemingly personalized, one-to-one manner. When people feel that they are personally important to a company, they are more likely to get excited about the product. This excitement will generate more buzz, because the receiver of this personalized, one-on-one “advertisements” will be more likely to talk about them to their own friends and family, coworkers and acquaintances. The network of contacts for passing along the buzz gets larger.

These surprise, spontaneous encounters prove particularly appealing to the media savvy cohort born between 1979 and 1994. It's no accident that "word," as deployed by rappers everywhere, is synonymous with truth. So too is the perception of word-of-mouth. The personalized and personal approach appeals to Generation Y, particularly their sense of importance. Gen Yers are convinced of their special place in the world, and marketing that speaks to that egoism is particularly effective. This is only natural.

Every culture and subculture, and every generation, has a specific set of icons that define them. Advertising seeks to manipulate and play upon these deep-seated psychological threads. Good advertising manages to do so, bad advertising does not. Really good advertising manages to do so without the person who is being marketed to realizing exactly what strings have been pulled.

Word of mouth is an advertising technique that has a much higher rate of achieving this subliminal delivery. When the marketing pitch is being delivered in a one-on-one, personal setting, or by a trusted, personally known acquaintance, that rate of success goes up even more. This is why generating buzz is so desirable to marketers: it is the epitome of advertising, without advertising. It is the ultimate psychological assault. It is the best form of advertising available, because it is almost guaranteed to work. A good buzz is worth more than the most expensive, expansive television or print campaign.

Why Word-of-Mouth Works

Complexity gives rise to confusion, confusion to isolation, and isolation to immunity. Gladwell believes that word-of-mouth works because, in the face of complexity, "people embrace more primitive social bonds and turn to the very personal networks run by Mavens and Connectors."

The initial response to complexity is confusion. As people seek more information for clarity, it merely adds to the data overload. A second response to complexity is isolation-the need to limit social connections and media options to the trusted few. Eventually, people become immune to media influence, responsive only to known influentials.

According to Gladwell, "A great example of media immunity is the telephone. In the beginning, when the phone rang, it was a friend calling. Now we need caller ID to filter out the telemarketers. When e-mail first arrived, we'd rush home to open all four or five of them. Today we cringe at the thought of wading through hundreds of e-mails, many unsolicited."

One way to circumvent built-up media immunity: reduce market complexity by simplifying the product offering, from fewer SKUs to more versatile products. Combining conditioner with shampoo in a single product was liquid genius. So too was the convenience insight that converted the cap on a bottle of laundry detergent into a measuring cup for the product.