The Word of Mouth Web Concept, Times 2

By: Steve Outing Remember The Cluetrain Manifesto of a couple years back? It started out as a Web page
defining a new way of customer-company relationships, and then expanded to a popular
printed book. The premise was that in the Internet age, companies must listen to, talk
and interact with their customers. Business today is a two-way conversation because
of the Internet; talk at your customers instead of with them at
your peril.

One of the Cluetrain authors, Rick Levine, later founded a company, Word of Mouth, that
took the philosophy and turned it into a business. (Based in Boulder, Colo., the company
also had been known as Mancala Inc., though its product was named Word of
Mouth.)

Now, in an interesting turn of business events, another startup company has emerged to
try its hand in a similar space - with the name Word of Mouth Technology. That company is
based in Phoenix, Ariz. The Boulder-based Word of Mouth started out targeting
news media Web sites as customers - but that turned out to be a tough sell,
and the company recently changed directions (though it still considers media
sites as a target clientele) and now calls itself a customer relationship
management (CRM) company. Meanwhile, WOM Technology (the Phoenix company) has
entered the marketplace and is in its early days specifically courting newspaper
Web sites as customers. (Are you confused yet?)

Marketplace confusion

The near-identical names of the two companies have confused some people in the
media world. At last month's E&P Interactive Newspapers conference in
Dallas, WOM Technology hosted a booth in the exhibit hall. Word of Mouth did not
exhibit. Some news attendees who knew that Word of Mouth had sold its services
to the Star Tribune (Minneapolis) and the Denver Post were
initially confused when seeing the WOM Technology booth.

WOM Technology vice president of sales Mark Fisher admits that some of
the people who visited his booth in Dallas went back to their offices and
promptly called up the other Word of Mouth's Web site. Oops.

Word of Mouth executives say they are looking into the Phoenix company and its
name, but had no comment about what action they might take, if any. WOM
Technology's Fisher says the executive team is concerned about the name
confusion and is discussing options, though no decisions have been made.

What do they do?

While both companies have different business models, they do both share a
similar business premise. Each develops tools to allow consumers to rate,
review, and comment on products, services and businesses - to engage in a
direct conversation with companies. In that latter respect, both companies
adhere to the basic principles laid out in the Cluetrain Manifesto.

A core concept component (for WOM Technology, and for the old model of Word of
Mouth) is that if a person is looking for, say, a plumber, or a good Italian
restaurant nearby, instead of just looking in the print Yellow Pages or asking
friends for referrals, there can be a system that aggregates consumer reviews
and ratings of local plumbers and Italian eateries.

This model really replaces the need to call friends for referrals. The systems
make the whole community "your friends," and they let you know how they felt
about a particular business, product, or service.

It's no doubt a great idea. Of course, the challenge comes in turning this
customer-company conversation into a business. Each of the "Word of Mouths" is
tackling the job.

Word of Mouth Technology (the new one)

WOM Technology is the newcomer to this space. The company, which has 12
employees and is self-funded, is about a year-and-a-half old and has only
recently completed its core technology. There are no active Web sites hosting
the technology, but four newspaper Web demonstration sites are due to go live in
April, May, and June, according to Fisher. Those companies willing to try this
concept out include "the largest online property of a major U.S. media chain,"
Fisher says. The company's technology should be available commercially in late
summer.

WOM Technology operates as an ASP (application service provider), licensing its
technology to Web sites and staying in the background. What it provides are
mechanisms and systems to allow Web site users (consumers) to rate a variety of
things - from restaurants and businesses, to bike trails and ski runs, to
local music groups, to whatever a site wants to establish a reviews-and-
recommendations community around.

The idea is that a Web site utilizing this technology will create a variety of
user communities. A news site might incorporate the user reviews into, for
example, its restaurant guide area; entertainment listings (how good is that
band you've never heard of?); its health-care section (which doctors or dentists
are the best?); an online trail guide; etc. While consumer reviews are certainly
useful for finding a highly rated local business, the concept also works for
non-business things.

The way the system works is that Web users are invited to record their opinions
about something. The reviews can be quite in-depth or shallow. A consumer who
records his opinion about a grocery store might do little more than give it
three stars out of five, or (preferably) rate the store on a variety of criteria
(cleanliness, friendliness of staff, completeness of wine selection, etc.), and
even write a few words describing his reaction to the store.

The result of a site populated with such user reviews is a searchable database
that's quite useful. Looking for a pizza place? Specify neighborhood and price
range. Results will show categories for each restaurant, each rated numerically.
(E.g., Food quality, 4; Quality of service, 3; Recommended, 2; etc.) And there
will be a list of brief comments from some user reviewers.

An important component of the service is opt-in e-mail, where users specify
their interests and agree to receive relevant e-mail - which might be
notice that another user has contributed a review of a new bike trail, for
instance, or a promotion from a bicycle shop.

Getting such a service going will take significant promotional work. Fisher says
there are three main tasks in getting a WOM Technology-based review service
going: 1) encouraging consumers to fill out the review forms and building a
large amount of user-generated content; 2) promoting the service once the data
is well populated; and 3) working to generate revenue from the consumer-review
databases.

WOM Technology charges publishers a one-time licensing fee to use its software,
then a hosting fee is charged on a cost-per-thousand-impressions basis. 100% of
revenue from sponsorships and advertising that the client publishers sell around
the user-review content is kept by the publishers. And for WOM's system that
allows local businesses to include photos and other content to be attached to
their listings (which include the user reviews), revenue from that is split
60/40 between the publisher and WOM Technology, with the publisher getting the
bigger chunk.

The company is very much focused on newspaper Web sites right now - the
local focus of newspapers makes for an ideal application of the technology
- but down the road this is likely to broaden. The technology will be
relevant to any Web site that operates around a community of users in the
consumer space - and possibly even business-to-business Web sites.

Word of Mouth, the original

Word of Mouth (the Boulder company) was the first to ply this space. Founder
Rick Levine initially steered his company, founded in 1999, toward working with
media companies - and early on he targeted newspaper Web sites. Its first
customers were the Star Tribune and the Denver Post - and
they remain the company's only clients other than KUSA-TV, Channel 9 in Denver.
Those sites have Word of Mouth-powered user review and recommendation content,
overlaid on a yellow pages business directory.

Word of Mouth went through a rough period, and just over a month ago brought in
a new CEO, Dennis Ford, to help turn the company around. In an interview,
Ford indicated that the company found it exceedingly difficult to sell into
media companies, despite having newspaper sites demonstrating the technology.
(The Star Tribune's Word of Mouth-powered shopping directory was a
finalist in the E&P EPpy Awards category of Best Directory Application in a
Newspaper Online Service, though it didn't win.)

As a result, Ford arrived earlier this year to change the business model in an
effort to survive the dot-com downturn. He says that the company continues to
seek out media companies as customers, but the focus has changed to courting a
much broader customer base. (And that partly explains the absence from the
Interactive Newspapers exhibit floor this year.)

As Ford explains the shift, Word of Mouth has moved to become a player in the
customer relationship management (CRM) space - providing tools to
measure customer feedback and deliver custom information and services to
consumers. CRM generally is expensive and utilized by larger companies that can
afford it. But Word of Mouth's vision is to provide a suite of CRM services that
are affordable to smaller companies as well as large.

The most likely companies that will use Word of Mouth's interactive-feedback
offerings will be those that communicate with large customer audiences -
firms like Intuit, or L.L. Bean, or Schwab, and of course, media companies
operating Web sites.

Ford says that for media sites, Word of Mouth is currently seeking out a
strategic partner to go after the media market on its behalf. So while actively
courting media companies is no longer the company's top priority, they remain
logical users of the company's technology.

Word of Mouth's new strategy is a variation of the original model for media
sites - the Cluetrain Manifesto remains as the core principle. As an
example, a clothing retailer's Web site like Land's End might include some of
the interactive tools on its online catalog pages - or as part of an e-
newsletter. A catalog item like a new red women's vest might have a "Do you like
this?" or "Rate this" feature, where potential shoppers can rate how well they
like or dislike the vest by answering yes or no or rating it 1-5 stars, or even
leaving written comments about the garment's design. (Results are in real time,
so Land's End might know that the majority of people who took the mini survey
disliked the vest, then know to remove the item or redesign it.) For a more
substantial product, say a particular model car being touted on an auto site, a
discussion forum might be attached to the promotion - where consumers talk
about the pros and cons.

All this customer feedback on a product or service is integrated into databases
of a company or publisher's customers. One Word of Mouth product is called a
"Dashboard," which is a way of showing a company's customers all of the
relationships they have with the company - such as subscriptions to
newsletters or other e-mail services. The consumers decide what they want to get
from the company, and can control it from this "dashboard" page. Again, this is
an example of a customer interacting directly with a company - not just
being a passive buyer of the company's products or services. The actively
engaged customer is more loyal, the theory goes, than the passive customer.

Word of Mouth operates under a couple different models - either as an ASP
that leases its services and integrates them into a customer's site, or it will
provide its services on a software licensing fee basis.

Which way to go?

I think that the user reviews and recommendations concept is the basis for a
useful service that news Web sites should investigate. But this may be a
difficult space to operate in successfully, as Word of Mouth found as it tried
and failed to crack the media Web market. Some newspaper sites have expressed
fear of antagonizing advertisers who, with the review concept, are subject to
possible bad reviews on the same site they're advertising on. Since the Boulder
company has cast off its focus on news sites, you have to wonder if WOM
Technology will fare any better.

WOM Technology's Fisher says that he's gratified at the reception he got from
newspaper Web executives at the Interactive Newspapers conference. He claims
that the product was designed with newspapers in mind, with the guidance of
outside newspaper industry consultants Howard Finberg (a former Central
Newspapers executive) and Leah Gentry (former editorial director of
LATimes.com). Fisher suggests that the other Word of Mouth may not have designed
its model with newspapers enough in mind.

These two companies do demonstrate a couple of important points about online
media sites. 1) A news site would do well to get users involved in a reviews and
recommendations system. An online yellow pages service is only so useful; much
more handy is the ability to see what other people think is the best pizza
place, bike path, aerobics instructor, or dentist. 2) It's important to get a
Web site's users involved - to interact with a site rather than just
passively receive information and news from it. That's how to make users "stick"
to a site and keep coming back.

Both Word of Mouths can be classified under the area of "customer relationship
management." Word of Mouth is embarking on a pure CRM path, while WOM Technology
skirts on the edge of the CRM model. (Fisher says his company could be
considered as working the CRM space, but it's really something a bit
different.)

Both companies do have something to offer news companies. It's a pity, though,
that they share a common name which confuses the marketplace.

Other recent columns

In case you missed recent Stop The Presses!, here are links to the last few columns:
o Alternatives to the Banner Ad, Wednesday, March 14
o Can News Content Save e-Books?, Wednesday, February 28
o How To Make Money, Not Enemies, Online, Wednesday, February 21
o Archive of columns


Get Stop The Presses! by e-mail

If you would like to get e-mail delivery of the Stop The Presses!
column, there are two options:

1) Text e-mail. I send out a text e-mail message containing a
brief description of the current column, along with a URL link to the
actual column on the E&P Web site. To receive these regular
reminders, sign up here.

2) HTML e-mail. If you prefer to receive the entire column, you
can have it delivered to you as an HTML e-mail message whenever a new
column is published. Sign up here.

Steve


Got a tip? Let me know about it If you have a newsworthy item
about the online news/interactive news media business, please send me a
note.

---

This column is written by Steve
Outing for Editor & Publisher Online. Tips, letters and feedback
can be sent to Steve at steve@planetarynews.com


Copyright 2001, Editor & Publisher.