BzzAgent sounds like a great idea if you think about it for two minutes and - then a pile of poo if you analyse it for another two. So I’m pretty surprised to see that they’ve landed $13.75 million in funding from IDG and General Catalyst Partners.
The idea behind BzzAgent is simple enough, tapping into the power of Word of Mouth Marketing. Lots of people have written about it, but Malcolm Gladwell’s Tipping Point remains my favourite “must read” source. The principle is that you’re much more likely to listen to a trusted source known to you than someone you don’t know. This includes the media, which in recent years has declined in trustworthiness, in most people’s perceptions.
So, if I want a new phone, I’m quite likely to canvass Carlo’s opinion as I know him, he has no axe to grind and he’s an expert. If I want a new bike, Carlo wouldn’t necessarily be someone I would consult, but I would talk to Oliver as he’s a world class biking athlete (OK, I’d talk to Oliver about the phone too).
So, if you could find a way of harnessing the power of Word of Mouth Marketing, it would be pretty neat.
BzzAgent claims to have done this. People sign up to become a Bzz Agent and go round telling their friends and family all about new products. The snag is that they’re paid to do this, immediately bringing into question their motivation for telling people about the product in the first place.
Gladwell is very clear that the people who “sell” us ideas must be independent and unpaid, otherwise they instantly loose all credibility - immediately and forever. Clearly, it must be so. If I find out that Oliver is being paid to promote the bike he recommends, I am going to question his motivation for recommending it.
BzzAgent is doubly controversial though. They pay people to hawk products. But those Bzz Agents don’t normally declare their interest. It’s one thing for Oliver to promote a particular bike if he’s open about it and believes it to be the best. But if he’s keeping his motivation a secret too, I’m going to be really pissed off when I find out.
So, how can Bzz Agents possibly be a trusted, independent or honourable source of information?
In VC terms, it’s like me recommending a company to invest in that I have shares in and that I don’t declare at any point to the VC.
Anyway, some VCs have clearly bought into BzzAgent’s schtick, unless the investment is to expand into a new (and hopefully more honest) direction. I can only conclude that this must be the case as I can’t see why they’d need anything like this amount of money, even if their concept wasn’t flawed.
Just to clarify a final thing. This isn’t in any way an attack on the integrity of the management and team at BzzAgent. I’m sure that they believe in their concept and that they think it’s a good way of selling their clients’ products. I happen to disagree fundamentally and don’t think that this idea will work unless it’s changed radically some how.
Opinion leaders are the people who filter the information they gather (regarding their niche of expertise) for friends, with whom they are influential regarding specific issues. I’m not sure if it’s possible “to harness the power of word of mouth marketing” into the business as described, as you said so Russ; Opinion leaders have to be clean from having any kind of hidden interest guiding the tips and advice they give. Moreover, that is the source of their influence - they advice about their field of expertise and they don’t have a hidden agenda (or if they have an agenda, it’s properly disclosed).
Maybe a proper disclosure or a mandatory full description of BzzAgent opinion leader guys would help to set the new service to hit the road…
Russell,
As the director of public relations for BzzAgent, I very much appreciate the interest you are paying to the word-of-mouth marketing sector. You are right that the roots of this industry drew their early water from Gladwell’s seminal book. That is surely an insight that many have overlooked, and I think it’s a valuable addition to your post.
It strikes me that you would greatly enjoy the WOMMA conference, the very site from which I type this reply. If you were attending WOMMA, you would quickly discover the priority the word-of-mouth industry is placing on ethics, vehemently criticizing “shill” marketing (or the practice of paying people to pretend to be consumers). Shill marketing, and its first cousin “stealth” marketing, are practices specifically designed to deceive consumers. Like you, BzzAgent believes strongly that responsible brands should refuse to conduct business with firms that employ such models.
BzzAgent does not pay a single member of its 125,000- person volunteer community. We offer points for involvement with our system (e.g., completing polls or filing reports), and those points can be later redeemed for rewards or donated to charity (which, surprisingly, are redeemed at a rate below 20%), but there never has been any cash compensation. Nor will there ever be any cash compensation. Why? Because we, like you, believe such a practice would “bring into question their motivation for telling people about the product in the first place.”
Regards,
Joe Chernov
Director of PR
BzzAgent, Inc.
Cash vs. points-for-prizes is a pretty fine line there, Joe.
BzzAgent awards points for a variety of forms of interaction with our community. If an agent completes a poll to enrich his or her profile, allowing us to offer the individual access to more relevant campaigns, that interaction is rewarded with points. In other words, while these points can later be redeemed for non-cash rewards, they are not distributed for “hawking products” as the author indicates.
Just to clarify, Joe, you’re saying that your BzzAgents don’t receive these points, or any type of compensation for helping your company “create Word-of-Mouth”? Because that’s certainly not the impression the sign-up page on your site creates:
“Here’s how it works:
1. You tell us a little about yourself, your likes and dislikes, and sign up to become a BzzAgent.
2. When we have a new campaign, we’ll ask you if you want to take part. You only join campaigns for products you like.
3. Once joined, you’ll get a thank you pack with free gifts and your role is simple: help us create Word-of-Mouth.
4. We’ll tell you what the Bzz is, where to create it, and how to let us know what you’ve done. This isn’t homework! You create Bzz when - and if - you want. It only takes a few fun seconds to make the difference.
5. You create the Bzz and we’ll grant you points you can redeem for the coolest products on the planet!”
#5 would seem to directly contradict what you’re saying here.
Carlo,
In each of my messages above, I clearly acknowledged that BzzAgent offers points to its members, and those points may be redeemed for non-cash rewards. I simply stated that I believe the original blog misrepresented the BzzAgent program when the author stated agents are “paid” by the company to “hawk” products.
Although some may interpret our rewards program as tantamount to compensation, the facts do not support this arguement. No agent is required to spread word-of-mouth (positive or negative) about products in the campaigns they join. No agents are paid cash for joining the BzzAgent community. And fewer than 20 percent of our agents ever convert their points into rewards.
Clearly our volunteers participate in campaigns for reasons other than remuneration. Why do everyday consumers participate in word-of-mouth campaigns if they are not cash? That, I believe, would make for an interesting blog topic.
Regards,
Joe
[...] Back in January, I wrote about the controversial company, BzzAgent and how they’d managed to raise $13.75 million in VC funding. [...]