Friday, July 18, 2008

ChatThreads tracks word of mouth for markets

By Christopher Calnan

Advertising and marketing firms naturally want to know if their ad campaigns are working. A year-old Brookline-based company has technology designed to help them do that.

ChatThreads Corp. offers services based on technology developed at Northeastern University to measure the effect of word-of-mouth marketing. Marketing firms use the software platform to quantify the success or failure of ad campaigns.

ChatThreads aggregates data with an application that monitors independent web content, verbal communications tracked by ChatThreads team members and online surveys of consumers, said CEO Walter Carl, an NU assistant professor of communication studies.

The technology is the result of 15 years of work in which Carl studied conversation patterns and the frequency in which research subjects mentioned brands and products, he said. During the 2005-2006 academic year, Carl teamed up with MIT Sloan School of Management visiting professor Barak Libai to develop a platform to measure consumer discussions called a “conversation value model.”

Libai, a senior lecturer on the faculty of management at Tel Aviv University, said interest in word-of-mouth marketing is growing because consumers have grown to rely more on what they’re told by friends and family than from advertisers and the media.

Since consumers are electronically connected more than ever, marketers are turning more frequently to web-based tools, he said. “With the Internet, the ability to (track consumer sentiment) becomes a reality,” Libai said. “The Internet enables that.”

The four-employee ChatThreads has received an undisclosed amount of funding from friends and family, Carl said.

Last year, marketers were projected to spend more than $1.35 billion on word-of-mouth marketing, a nearly 38 percent increase over the previous year, according Stamford, Conn.-based PQ Media LLC. The spending figure is expected to increase to more than $3.7 billion in 2011 as consumers shift away from traditional media to digital media.

Companies using technology to track behavior of consumers has risen sharply in recent years. ChatThreads customers include Boston-based BzzAgent Inc., which uses the service to do word of mouth marketing itself. The rise is being attributed to marketers seeking more and better data about consumer behavior online, said Jeremy Crane, director of online media for Boston-based Compete Inc.

“A lot more people are starting to turn to these tools to see how they’re doing — and how they’re stacking up against the competition,” he said.