Sarah Marston, a student in Dr. Robert Brown’s “Writing for Public Relations and Marketing” class at Harvard University, had an assignment to profile an executive whose accomplishments could grab the attention of a general audience.

She chose Dave Balter.  Sarah did such a great job capturing the story behind Dave’s personal journey as the founder of BzzAgent, we thought we’d share her article here. Great job Sarah, you have a brilliant future as a journalist!

 

Through the Grapevine: Dave Balter and the ‘Bzz’ of Word-of-Mouth Marketing

By Sarah Marston

How do you get 2,000 marketing campaigns to reach more than 400 million consumers, using mostly volunteers to spread the word? If you’re Dave Balter, it takes a village of 800,000.

Balter is the founder and CEO of Boston-based BzzAgent.com, an ethically conscious, international network of consumers who voluntarily participate in word-of-mouth programs to promote a variety of products and services.

Companies and manufacturers – including the likes of Dunkin’ Donuts, Nestle, Procter & Gamble, Johnson & Johnson, Disney, Kraft Foods, L’Oréal and Dove – hire BzzAgent to market specific products through social media. BzzAgent then deploys its “Agents,” a network of more than 800,000 volunteer marketers, to try the products and share their honest opinions online.

“If you’d said to me 10 years ago, ‘Hey, what about creating a company to help retailers to get real people [as marketers]?’ I would have said, ‘What are you talking about, that’s crazy,’ ” Balter reflects, sitting at his desk in BzzAgent’s South End office. “But business has evolved.”

BzzAgent was founded by Balter in 2001 with no capital and initially had to offer its services for free. Since its humble beginnings, it has used innovative marketing strategies and old-fashioned resourcefulness to become a pioneer in the word-of-mouth marketing industry. The company was acquired last year by dunnhumby Ltd., a subsidiary of giant U.K. retailer Tesco, in a deal valued at approximately $60 million.

The company’s trailblazing spirit extends beyond its marketing strategy. When BzzAgent launched, there was no ethical code in place for word-of-mouth marketing. Balter has since co-founded the Word of Mouth Marketing Association, a non-profit organization dedicated to the responsible development of such marketing practices.

It all started with Balter’s simple marketing idea: That great things happen when you give people the chance to talk.

‘Like a Lightning Bolt’

Balter worked as a marketer in corporate America for a few years before venturing out on his own in 1996 and founding two promotional agencies, Retro-Fit Merchandising and 360merch. After selling both companies in 2001, he was ready for a new challenge. He was reading about mobile companies when a colleague came into his office, gushing about a book he had just read.

When the colleague left his office, Balter wondered: Why would this guy rave to me like this? “He ran into my office, he pitched me the book like a product,” Balter recalls. “And it just struck me like a lightning bolt: If companies could do this, harness a bunch of people to [pitch like this], it would be amazing.”

He put his research book on mobile companies in a drawer that same day, and started to create BzzAgent. After approaching nearly 200 investors with his word-of-mouth marketing idea and not securing a dime of capital, Balter decided he needed to take a different approach.

He threw the $30,000 he had from the sale of his old companies into the new project, and adopted a new strategy. “We went out to a whole bunch of companies and offered the service for free,” he says, smiling.

Out of the five companies he approached, only one said yes: The Penguin Group. And so BzzAgent took on its first marketing campaign for the 2002 novel, The Frog King.

“We had no money, we had Penguin as a free client, and so we proved to them that this could actually work,” Balter says. “We got 400 buzz agents to try the book and tell others about it.”

BzzAgent grew slowly but steadily, building up its client base. Nearly three years later, with about $3 million in sales under its belt, the business began to make profit.

“The way people build companies now, at least in the start-up world, is really different,” Balter explains. “Then, it was: We’re not going to take any money, we’re actually going to sell stuff to clients, and if they buy it, then we’ve got a good company. This isn’t how it happens today. Today, it’s: We’ve got a great idea, who are we going to raise money from? If we can’t raise money, there’s no company.”

‘There Was No Standard’

BzzAgent Senior Vice-President Malcolm Faulds describes Balter as an innovator: “Dave has a unique talent for identifying new market opportunities and energizing teams to pioneer those opportunities.”

Balter’s groundbreaking efforts also extend to ethical concerns. When he embarked on BzzAgent, there was no ethical code in place for word-of-mouth marketing. Many marketing companies sent people out to push products without disclosing their affiliations.

“There was no standard, and the previous way of thinking about businesses like these was to actually fool people,” Balter says. “As this business started to take shape, there was a lot of negativity towards us. We weren’t doing that, but … we were lumped into that. But we take real opinions, and let people talk about them.”

Early on, it became clear to Balter that a code of conduct was needed for the industry. It started as a non-legal code of ethics on the BzzAgent website, with such transparency rules for buzz agents as: “You will always be authentic.”

As the BzzAgent code of ethics began to grow, Balter joined forces with Pete Blackshaw, chief marketing officer of Intelliseek, and Jonathan Carson, president and CEO of BuzzMetrics, to formalize industry standards. Together, in 2004 they founded the Word of Mouth Marketing Association (WOMMA).

The non-profit organization works to develop and maintain appropriate ethical standards for marketers and advertisers engaging in word-of-mouth marketing practices, identify meaningful measurement standards for such marketing practices, and define “best practices” for the industry.

“WOMMA took our code and made it much more industry-encompassing, strengthened the words, made it feel real,” Balter says. “Now you had a governing body saying, this is the way to do things. … That totally reset the stage for the industry because now you had some other company that was saying what to do, and how to do it right.”

‘Aren’t We a Start-Up?’

Just as ethical guidelines fortify BzzAgent’s culture of transformative thinking, the company’s physical office space nurtures innovation through creative collaboration.

In 2009, when a lot of people were getting laid off during the economic recession, BzzAgent opened its doors to people who wanted space to work on their own projects. Since then, the office’s extra workspace has evolved into a sort of “mini incubator” for several Boston start-up companies. Current companies sharing BzzAgent’s space include: Smarterer, ProctorCam, Help Scout, Alphabet Arm Design, Eat Boston, PromoBoxx, the Artist in Residence and, launching in April, a new business called Intelligently.

“In the early days, we were this young, crazy up-start,” Balter says. “And then as we matured, as we raised capital, I felt this pull. Why are people going home at 6 p.m.? Aren’t we a start-up? We have so much work to do. As my way of holding onto the idea that we were a start-up culture, we started letting other companies spend time here.”

The result has been very symbiotic. Start-up companies see BzzAgent in action, and get a glimpse of what it’s like to grow into a mature business. In return, Balter’s employees are motivated by the start-up workers’ energy, work ethic and new ideas.

“Every day is different!” quips Marie Bova, Balter’s executive assistant.

‘That Retail World’

Today, BzzAgent continues to adapt as the word-of-mouth business keeps pace with social media channels, translating online discussion of products into purchasing power.

“In the past year, we’ve been pioneering the intersection of retail marketing and social media,” Faulds says. “This is huge territory and tremendously exciting.”

“Like any industry, this one has evolved,” Balter says. “We’re now owned by dunnhumby. I can now engage a variety of real consumers to have brand experiences, and then they share that with their peers [online] and offline. … Those people are now purchasing products in store at retail [prices]. Where we really evolved to is right into that retail world.”

In other words, by working with dunnhumby and Tesco’s other manufacturing partners, BzzAgent has become part of a major retail playground. Combine that retail advantage with inventive promotional techniques, moral high ground and creative office space, and BzzAgent becomes a serious marketing player.

“We’ve taken this idea of real people talking to others and creating impact, and we’ve tied it right to in-store purchase and to retail,” Balter says. “Retailers need to use social media to create return, and we live in that space.”

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