SOURCE: Nielsen BuzzMetrics

July 17, 2007 12:58 ET

Marketers Can Buy Blog "Buzz," Nielsen Reports

Top 10% of New CPG Products Accounts for 85% of Total Blog Buzz; Buzz Can Increase CPG Market Forecasting Accuracy

NEW YORK, NY--(Marketwire - July 17, 2007) - Marketing strategies that separate advertising and paid media from pure word-of-mouth tactics can be severely misguided, according to a just-completed study by The Nielsen Company, which found that high blog interest, or buzz, around new product launches is tightly linked to paid media spending.

After analyzing blog buzz volume, ad spending, purchase intentions and actual product sales, Nielsen found the best predictor of buzz for newly launched consumer-packaged goods (CPG) is a large advertising budget. The collaborative study was led by researchers from two Nielsen services -- Nielsen BuzzMetrics, the leader in buzz analytics, and BASES, the leading provider of new product forecasting and consulting. The full report -- "The Origin & Impact of CPG New Product Buzz" -- is available at no charge at the BuzzMetrics Web site.

The study evaluated nearly 80 new CPG products across several subcategories, launched in the U.S. between 2005 and 2006. 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 and the companies that generated the bottom 50% spent an average of only $5 million.

"Splintering media sources along with emerging consumer-generated media are challenging one-way, mass-media advertising models," said Robert Mooth, vice president of product development, for BASES, and an author of the study. "However, our analysis shows that traditional mass media continue to play a critical role for most CPG brands. What has changed is that online buzz and consumer expression have entered the fray, resulting in a complex yet inseparable relationship within the overall marketing mix for many types of products."

A Minority of Brands Dominate CPG Buzz

Not all CPG subcategories and products generated buzz at the same level. In fact, 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:

--  CPG Buzz Precedes Sales: 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 in the launches studied.
    
--  High-Volume Buzz Drives Sales and Improves Forecasting: For the select
    products that generate substantial buzz, this study provided the first-ever
    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, by as
    much as 20%.  As more cases are available, further work will be done to
    adapt BASES forecasting models to accommodate buzz.
    
--  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.
    

For more information, write to the team at sales@buzzmetrics.com.

About The Nielsen Company

The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), online intelligence (NetRatings and BuzzMetrics), trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA. For more information, please visit, www.nielsen.com.

About Nielsen BuzzMetrics

Nielsen BuzzMetrics, a service of the Nielsen Company, is the global standard in measuring consumer-generated media and word of mouth. Nielsen BuzzMetrics helps more than 100 leading global companies interpret and leverage the buzz surrounding them -- clients like Canon, Comcast, General Motors, HBO, Kraft, Microsoft, Nokia, P&G, Target and Toyota, as well as the top 15 pharmaceutical concerns. Partners include the world's largest marketing-services firms, and innovative new-marketing agencies. The company has also collaborated with distinguished research organizations such as the Pew Internet and American Life Project. For more information, visit www.nielsenbuzzmetrics.com.

About BASES

BASES, a service of the Nielsen Company, helps its clients achieve growth through successful new product innovation. BASES is known for analytical and forecasting expertise, its extensive database of experience (65,000+ new product initiatives studied), and global coordination and consistency. BASES has offices in 22 locations, partnering with most of the world's leading consumer goods companies and other select sectors. For more information, visit www.bases.com.

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