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Study: Marketers Can 'Buy' Online Buzz

A high level of blog interest, or online buzz, around new product launches is tightly linked to paid media spending, according to a new study by The Nielsen Company that analyzed blog buzz volume, ad spending, purchase intentions and actual product sales for newly launched consumer packaged goods (CPG).

The study found that a large advertising budget is the best predictor of buzz, prompting Nielsen to conclude that marketing strategies that separate advertising and paid media from pure word-of-mouth tactics may be severely misguided.

According to the CPG buzz study:

• On average, the top 10% of products with the most buzz spent nearly $20 million on paid media for the launch.
• In contrast, the companies that generated the next 40% of blog buzz spent an average of $15 million.
• Companies that generated the bottom 50% spent an average of only $5 million.

The study evaluated nearly 80 new CPG products across several subcategories, launched in the US between 2005 and 2006.

Some CPG subcategories and products generated more buzz than others, according to the study:

• Some 10% of brands accounted for 85% of total CPG buzz in the study.
• Over-the-counter (OTC) drug brands have higher buzz, partly driven by consumers’ higher level of involvement with them.
• Edgy brands were also among the top 10% of products with the most buzz.

“Most CPG products are ‘everyday’ items, lacking in distinction and therefore propensity for buzz,” said Kate Neiderhoffer, director of methodology, Nielsen BuzzMetrics. “However, there are some exceptions to the rule, as evidenced by brands like Red Bull, Altoids, Crystal Pepsi and Viagra. The CPG industry should challenge itself to bring more innovative products to market, cultivated with more innovative marketing. The buzz will follow.”

Additional findings from the CPG buzz study:

• CPG buzz precedes sales: In the launches studied, buzz tends to occur very early in relation to a new product launch, with peaks in buzz preceding peaks in sales two-thirds of the time.
• High-volume buzz drives sales and improves forecasting: For the select products that generate substantial buzz, this study provided evidence that buzz volume can positively influence sales. In a regression-based sales forecasting experiment, incorporating actual buzz levels results in a meaningful accuracy improvement to forecasting models - as much as 20%.
• Brand ubiquity and distinctiveness help predict buzz: While a formal model for predicting buzz is not yet available, some factors appear to have predictive value: Beyond media spend and distribution, category familiarity (as indicated by higher purchase frequency) and product distinctiveness show value when attempting to anticipate or predict buzz.

About the study: The collaborative research was led by researchers from two Nielsen services - Nielsen BuzzMetrics (buzz analytics) and BASES (new product forecasting and consulting). The full report - “The Origin & Impact of CPG New Product Buzz” - is available via BuzzMetrics.