Updated May 22, 2023
Introduction to Word of Mouth Marketing vs Advertising
Word-of-mouth marketing (WOMM) is the voluntary spread of a constructive marketing message from one person to another. This takes place directly using physical human interaction. Alternatively also gets transmitted via a transmission mechanism like the internet and/or social media. WOMM is the frank sharing of views from one customer to another and the pivotal stage in the customer decision journey which provokes people to purchase a product. However, such an answer is inadequate in today’s hyper-digitized, uneven media environment.
People are often curious to know if word-of-mouth marketing is better or advertising is. Well, all we can say now is that word of mouth is often better, but not always. There has been vast research on this topic, and we have based our hypothesis on such results. Compared to other forms of traditional advertising, promotional campaigns, or media shows, word of mouth has been found to be more beneficial in drawing new customers. McKinsey proposes that word of mouth can generate twice as many sales as other forms of marketing, such as advertising for as diverse products as skincare and mobiles. Now, this must start to make you wonder what makes ‘word of mouth’ click.
Main Reasons
Essentially, there are 2 main reasons.
1. Trust
We trust our friends and colleagues more than advertisements, and this does not need to be emphasized. This is because advertisements always project a brand to be truly great. We always come across taglines such as “9 out of 10 dentists recommend the XYZ brand of toothpaste” and “Critics approve that Blastoids 5 is the most liked movie of 2011”.
However, we still don’t like to believe them because of the simple reason that ‘all ads are the same! ’. On the contrary, our friends we know won’t misguide us. We often rely on the word of our friends and colleagues to know if a product or service is really useful, and they let us know to the point.
2. Superior Targeting
Word-of-mouth marketing is more targeted. Let’s suppose a company sells golf equipment. You would most likely place an ad in a golf magazine to advertise your message to prospective customers. But, since many of the golf magazine’s readers do not buy golf products, thus your investment in these ads goes worthless.
Conversely, word-of-mouth marketing is much more directed. If people know you don’t have kids’ apparel on your website, they won’t discuss it with you. People only talk to you about things that they know would interest you. ‘Word of mouth’ is just like a torchlight that browses over a social network, finding in its course the most actively engaged recipients for a said piece of information.
This again forces many of us to ponder if word of mouth is always better than traditional advertising. We once again reinforce that this is not the case. Why? Need not worry! We’ll tell.
As a starter, word of mouth is a very slow form of marketing. In this age of rapid digitization and online communication, word of mouth seems irrational and worthless. Word of mouth takes a lot of time to spread and take the desired effect. In this process, person x tells about a product to person y, who tells it to z, and the chain continues. But it takes a long time for the information to spread amongst a large sample of probable customers.
Word of Mouth Marketing (WOMM) vs Advertising
Advertising, on the other hand, is a much more simultaneous process. It takes the form of a broadcast transmitted to one simultaneously. Although it is less persuasive than word of mouth if the goal is to generate awareness about a brand rapidly, this is a much more effective way.
Next, for word of mouth to happen, there must be at least one mouth (and an ear!). We are trying to suggest that it requires significant verbal interaction among people. It would surely not be sufficient to post once in a while on Facebook or Twitter. It needs continuous efforts from either party. Thus, it would also be essential to study social media trends and understand why and when people talk. You must involve yourself as a brand in the conversation and be as active as possible on social media platforms.
Advertising and word of mouth can also go hand in hand. Ads make people talk. When someone hears about a nice product from a friend and then watches it on the television the same evening, it does make an impact. Thus, the two forms of marketing can and should complement each other and not be substitutes.
Word-of-mouth marketing is considered the best form when it comes to influencing customers. According to a study by Nielsen in 2009, approximately ninety-two percent of people tend to completely believe their friends and relatives over other traditional forms of advertising whilst making a buying decision. This recent figure was a steep rise compared to nearly twenty percent in 2007.
These results depict the changing advertising patterns. This research by Nielsen also reveals that less than half of all people deem traditional advertising methods such as television ads, newspapers, and magazines as credible sources. Shocking, isn’t it? And the interesting part is that these numbers are only declining with the passing of time.
Randall Beard of Nielsen also stated that although brand marketers are constantly striving for different and unique advertising patterns to lure customers, the truth is that customers are getting smarter by the day and no longer take everything to be true. He agrees that television is undoubtedly the most used source of effective advertising. Still, the credibility of word of mouth is increasing at an ever-increased pace due to its better goodwill and availability of consumer feedback.
A growing medium of advertising is the online channel. In a study, an astonishing result was that consumers who find online advertising banners authentic rose from just 26 percent in 2007 to around 33 percent today. Moreover, 40 percent of people who view ads on social networking sites and search engines find them trustworthy. Consumers also perceive ads viewed on mobile, text messages, and tablet mediums to be reliable, which rose to 61 percent since 2007 from the previous one.
Nowadays, many creative forms of advertisements are gaining credibility as well. Word-of-mouth marketing research also says that approx. 60 percent of consumers respond to company website ads and 50 percent like to respond to company emails. Quite amazingly, around 40 percent of people did, in one form or another, get influenced after seeing advertising products in television shows, movie ads, or radio.
According to Mr. Beard of Nielsen, with the witnessed increase in the potential of online search and advertising display for the past few years, marketers now have more confidence in investing in them. Some of the major advertising companies of the world have already invested quite a lot in making their presence on social networking mediums due to the increased level of trust consumers have placed in them. He further emphasizes that brands should be on the continuous lookout for this upcoming ad channel, as it has a lot of potentials. The information provided by Beard was based on a recent survey by Nielsen that involved response patterns from 28,000 people from 56 countries all over the world.
So, since it has been clear that word-of-mouth marketing is usually the better option when it comes to advertising, it is now also worth knowing some of the significant facts about it. It is also worth mentioning that word of mouth is an optimum choice for advertising online brands, and we say some important stats back this. These are as follows:
- 85% of Facebook users recommend a product to their friends after they like it.
- 43% of consumers are very likely to purchase a new product once they learn about it through social media platforms.
- 77% of consumers are highly likely to buy a new product after learning about it from family or friends.
- In the U.S., 81% of all online users make purchase decisions based on their friends’ Facebook posts. And 78% of them are influenced by the posts of their favorite brands on social media.
- In total, 49% of all U.S. consumers prefer word of mouth as their topmost source of brand awareness, which was 43% in 2009.
Thus, what are the benefits? The pattern in which most brands prefer to communicate with customers rapidly alters in both manner and strategy. Since traditional advertising methods have almost become obsolete, word of mouth is now the best choice for engaging loyal customers, meaning more customers and revenue for the brand. Enough praising word of mouth! Did you know that even today, more than 72% of marketers still have not realized the significance of this marketing medium and hence fail to use customer referrals?
Companies like to use advertisements or word-of-mouth marketing to promote their business, products, and services. Ads and word-of-mouth marketing are forms of business marketing. Both forms share a few features, but they have their own fixed characteristics that set them apart. These characteristics typically are:
Function
Advertisements and word-of-mouth marketing both serve the function of promoting the business, products, and services offered. Advertisements are specialized commercials that require strategic planning and production before being aired on television or radio channels. On the other hand, word-of-mouth marketing is informal and involves existing customers conversing about your brand, product, and service with others.
Cost
Advertisements cost the company money in certain ways. First, it costs the business money to produce the script for the ad, and lastly, it has to pay some to air the advertisement on Television or radio. Word-of-mouth marketing, conversely, is free of any cost. Whenever a satisfied or unhappy customer discusses a business with others, it won’t cost them a dime.
Time Frame
The time frame of both forms of marketing can differ. When businesses use advertisements, they buy vacant spots to air them on the medium. Since this involves money, the number of times which company can air the ad should be in compliance with the company’s marketing budget. Thus, ads have more set timelines than word of mouth. Word-of-mouth marketing can continue even after an advertisement finishes. Every occasion a consumer buys or uses a product or service, the potential of his to let someone know what he knows would benefit what that business offers. And, each other customer they hold has the capacity to tell many others, whilst an ad tends to arrive at the intended audience immediately.
Benefits
One of the major differences between these 2 kinds of marketing is the ‘message’. Advertisements permit the company to pay for the ad to control the ‘message’ that it sends to the consumers. However, businesses can’t control this message transmitted with word-of-mouth marketing. This is a benefit of paid marketing. Reversely, word-of-mouth marketing constructs creditability which a paid and cannot. Most customers are aware of the fact that ads are meant to be promotional tactics. They also know that the company regulates this message. Whenever a friend or family member recommends a brand, it is deemed more reliable than a paid ad. According to the Association Word of Mouth Marketing, word-of-mouth marketing is hard to fake or formulate and is based on consumer satisfaction.
Conclusion
In our opinion, word of mouth is unquestionably the best medium to engage and retain loyal customers and promote increased sales and revenue. If not already, realize this fact and start working towards integrating it into your word-of-mouth business. We sincerely hope that you would have found this article interesting and informative and all of your inquisitiveness concerning WOM vs Advertising would have been satisfied and answered.
Recommended Articles
This has been a Guide to Word of Mouth Marketing vs Advertising. We discussed the basic concept, main reason, benefits, and functions here. You can also go through our other suggested articles to learn more –
