Word-of-Mouth betr than Advertizing?

from Author Jonah Berger on Linked IN, 05 May 13, enhanced by Peter@ Wiz4biz

Most Research finds that “word-of-mouth” is more effective than other types of marketing. Whether compared to traditional Advertizing, Media Mentions or Promotion events, “word of mouth” is more useful in creating new users and customers. Indeed, studies show that WoM generates more than twice (2x) the sales as paid advertising in categories as diverse as new apps & mobile phones.” Why is word of mouth more effective? Two main reasons.

1. Trust. Not surprisingly, we trust our friends more than we trust ads. Ads always say the product is great. (ie, 9 out of 10 dentists prefer new Shiny White toothpaste. Critics agree that Dud #6 is the best movie of 2012) But because ads always say the product is wonderful, we tend not to believe them. Our friends, however, will tell it to us straight. They’ll tell us if the product is good, or bad, and as a result, we’re more likely to believe their recommendation.

2. Better Targeting. Word-of-mouth is also more targeted to who’s interested. Say your company sells golf clubs. To target your message at potential customers, you might advertise in a golf magazine. But while some of the magazine’s readers might be in the market for clubs, most will not be. So in the end, most of the ad dollars are wasted.

Word-of-mouth is much more focused. No one’s going to talk to you about a great baby clothes website, if you don’t have a baby. People only tell you about things that they think are at least somewhat relevant to your interests. WoM is like a searchlight that goes through a social network, finding the most interested receivers for a given piece of information.

So is Word-of-Mouth always better? Not always. Why not?

1) WoM is slower. Think of a long line of people playing a game of telephone. Social media & Online communication have definitely sped the diffusion of information. But word of mouth still moves from person to person, sequentially, so it takes time to spread. #1 tells #2 & 3 (+), #2 or 3 (etc) tells the next level. It takes a while for information to go from one level to the next to get to all the levels.
2) Advertising, however, tends to be more simultaneous. It’s like a broadcast that reaches everyone at once. It is less persuasive than word of mouth, sure, but if the goal is to quickly increase broad awareness, advertising can be a better way to go.
3) Effectiveness of Word-of-Mouth depends on getting people to talk. Word of mouth can be highly effective, but whether it is or not, depends on whether people actually spread the word. It’s not enough just to be on Social Media or post things once in a while. To get people to talk about you, your business, or your product, you need to understand why people talk and share in the first place – how to make yourself part of the conversation.
4) Advertising & WoM can also work together. Ads remind people about the brand – which encourages them to talk about it. Someone hears about a product from a friend and then sees an ad which seals the deal. The two can act as complements rather than as substitutes.

So which is better, word of mouth or advertising? It depends on how much $$ you have and how fast you want to move. You choose.

Want to get more info about WoM or Advertizing? Check out Jonah Berger’s New York Times bestseller: “Contagious: Why things catch on”

Comments: So, you have anything to add?