I am often challenged by marketing people over this.

Is Web 2.0 useful or a distraction? Should we bother? How much should we spend?

From my experience of working with clients leveraging Web 2.0 tools and techniques certainly does work and is worth every penny.

But you would expect me to say that!

So it is always nice to have some independent academic research on the power of Web 2.0 and online crowd buzz/conversations. Thanks to Podcasting News for highlighting this research.

To quote from the academic paper overview...

'...the study provides some preliminary answers for marketing managers interested in assessing the relative importance of the burgeoning number of “Web 2.0” information metrics that are becoming available on the Internet, and how looking at interactions among them could provide predictive value beyond viewing them in isolation. The study also provides a framework for thinking about when user-generated content influences decision making.'

What they found was that

• The volume of blog posts about an album is positively correlated with future sales 
• Greater increases in an artist’s Myspace friends week over week have a weaker correlation to higher future sales
• Traditional factors are still relevant – albums released by major labels and albums with a number of reviews from mainstream sources like Rolling Stone also tended to have higher future sales.

The 'take-away' for marketing and PR people is

• Join in the blogosphere and online conversations
• Use social media networks BUT
• Don't ignore traditional marketing and PR

OK but how much to spend?

My suggestion. Take 5% of your marketing budget, 5% of your web site development budget and 5% of your PR budget and try a 6 month campaign.

Test and be flexible. Be open and listen. Monitor and react. All the most successful campaigns I have been involved in have been adaptable.