Business owners will consider it money well spent as long as enough consumers pay attention and buy the product or use the service. But much of the time, consumers do not pay attention. When an ad comes on the TV or radio, they change the station. They turn the pages of magazines without really seeing the ads. If an ad appears on their computer screen, they get rid of it or just look away.
Dave Balter worked in advertising, and he knew that most people do not like ads. They avoid watching them, reading them, or listening to them. He also knew that people do pay attention when they hear about goods and services from people they know. So he said to himself, "If no one pays attention to advertising, but they do pay attention to the opinions of their friends and family, let's focus our attention there. Let's figure out a better way."
What Balter came up with was a website where consumers could sign up to receive free products. In return, they promised that if they liked the products, they would tell their friends. In most cases, the volunteers also got coupons to give to their friends. All Balter asked was that they report back on two questions: What did you think of the product, and who did you talk to about it? Balter then reported back to his clients, the companies who had hired him.
After four years, Balter had 65,000 volunteers trying products and telling people about the ones they liked. Then a reporter heard about Balter's idea and wrote a story on it a major magazine. Free advertising! Within a year after that story appeared, Balter had 130,000 volunteers. Today, he has over 400,000. Balter has advertised a wide variety of products with the help of these volunteers. They are doing word-of-mouth advertising, perhaps the best kind there is.
There may be a risk to advertising by word of mouth, however, according to George Silverman, author of The Secrets of Word-of Mouth Marketing. What is the danger? Studies have shown that a customer who likes a product or service will tell an average of three about it. But when she does not like one, she will tell eleven. This means that while good word of mouth can help, bad word of mouth can really hurt.