NEW YORK, 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 here.

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”.



Advertising Spend Around CPG Product Launches
Segmented By Products With Highest Blog Buzz Volume

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”.

Distribution Of Total CPG Blog Buzz

By Products with Highest Buzz Volume
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 or to download our free whitepaper click here.


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 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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Press Contact: Sandra Parrelli; Sandra.Parrelli@nielsen.com; 646-654-7772

Sales Inquiries: sales@buzzmetrics.com; 1.877.999.7335

About Nielsen Online:

Nielsen Online, a service of The Nielsen Company, delivers comprehensive, independent measurement and analysis of online audiences, advertising, video, consumer-generated media, word of mouth, commerce and consumer behavior, and includes products previously marketed under the Nielsen//NetRatings and Nielsen BuzzMetrics brands. With high quality, technology-driven products and services, Nielsen Online enables clients to make informed business decisions regarding their Internet, digital and marketing strategies. For more information, please visit www.nielsen-online.com.

About The Nielsen Company:

The Nielsen Company is a global information and media company with leading market positions 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.