Almost everyone hates them —TV commercials, ad announcements, fliers, telemarketers, free trials, limited time offers, all of it. At their most basic level, commercials and advertisements interrupt us. They steal our limited time and attention in the hope of selling some product or service. And today, we’re interrupted more than ever before. Research shows, in fact, that the average person is exposed to up to 1,000 advertising messages a day. There is so much clutter that, frankly, it can get annoying.
But all of that is changing. Through the Internet and the digital world, we’re more connected than ever. We increasingly rely on actual people — our friends and even strangers — when we make purchasing decisions. Today, the best form of advertising is trusted word of mouth. The old model of interrupting people with commercials, billboards, fliers, radio messages etc. is over. And this shift is something that any organization looking to get its message out — from startups and businesses to non-profits and educational institutions — should recognize.
Many years ago, before the Internet, commercials on television and the radio were, for the most part, effective because they had our full attention. Brands were often built and maintained through big marketing budgets spent on TV ads. A product could launch a successful advertising campaign and instantly become success. Did you know, for example, that a TV ad was designed for the famous cereal line “Cap’n Crunch” three months before it was a cereal? Animator Jay Ward (the creator of Rocky and Bullwinkle) created the TV commercial in 1963 and showed it to executives at Quaker Oats, who liked the ad so much that they decided to produce the breakfast cereal. The advertisement came before the product.
Cap’n Crunch is an example of what famous marketing author Seth Godin calls “The TV-Industrial Complex,” where advertising often comes before distribution of new products. The process, Godin says, goes something like this: “Buying ads gets you more distribution, sells more products [and] makes you more of a profit with which you can buy more ads.”
That process worked 40 or 50 years ago and still does today — especially if you’re an established brand like Budweiser, Nike or Coca-Cola. By and large, though, for most businesses and organizations, the era of the “TV-Industrial Complex” is over. With an abundance of media platforms and content to choose from, it’s increasingly hard for companies to reach us. Most people don’t care or don’t have time for a new ad about the latest soap or soft drink. We’ve grown used to mentally tuning out commercials. Instead we rely on real people — from virtual strangers we’ve never met to our friends on Facebook.
According to Nielsen, a consumer research company, recommendations from virtual strangers on the Internet are the second most trusted form advertising, well ahead of radio and TV ads, print ads, and online banner ads. While an “interrupting” advertisement on your television often cannot tell you everything you need to know about a product before a purchase, online recommendations from strangers, in contrast, can provide a host of of information about almost any product or service.
Take Amazon.com, for example. Its user rating system allows its customers to rate books, movies and music on a one-to-five scale — enabling consumers to quickly gauge the quality of an item. And to help determine the accuracy and quality of each user review, Amazon also allows its shoppers to rate the “helpfulness” of any user rating. While not all user reviews on Amazon are accurate, the important thing is that customers often pay attention to them and take note. A study conducted on BizRate, a popular user review website, found that 59 percent of respondents considered user-generated product reviews more valuable than expert reviews.
This trend has also had a significant impact on the growing market of mobile commerce. When it comes to purchasing applications on smartphones, user ratings are extremely important in buying behavior. Market research on the mobile app market has shown that apps with higher ratings are more likely to be downloaded than apps with lower ratings. In fact, on average, app users need to see at least a four-star rating (out of five) before they download or purchase mobile applications.
While recommendations from online strangers are becoming an increasingly reliable form of advertising for new products, the most trusted form of advertising, according to Nielsen, is recommendations by “personal acquaintances” and people we know.
That may be why many are calling social media sites like Facebook the “holy grail” of marketing, as they allow companies to observe and participate in their customers’ conversations. Indeed, the reason Facebook has achieved multi-billion dollar valuations on Wall Street is because of its vast potential for advertising.
Mark Zuckerberg, the founder and CEO of Facebook, said, “For the last hundred years media has been pushed out to people … but now marketers are going to be a part of the conversation.”
On Facebook, brands — like Adidas and Pepsi, for example — can create their own company “fan pages,” allowing users to write reviews, leave comments and add photos directly on the company’s page. In this way, users can have a similar level of interactivity with companies as with any “friend” on Facebook. What’s more, such interactions may enable a company’s brand or “experience” to travel quickly through a network of friends.
The power and importance of Facebook to marketers lies in the fact that “people influence people.” This marketing multiplier effect can be a powerful “brand builder” for an organization. Here’s an example from Crain’s, a business magazine: “Say each visitor to your (Facebook) page has 500 friends. If 1 percent of those 500 “like” you, that's five people, who each have 500 friends apiece, too. Now 2,500 people will know about your site.”
In addition, to more effectively target customers based on interest, Facebook offers businesses a tool called Facebook Insights, which give businesses stats and demographic info on their visitors.
Today, more companies are starting to see the value of marketing a brand via social media. According to a poll by Effie Worldwide and Mashable, 70 percent of marketers plan to increase their social media budgets this year, with 35 percent of respondents indicating that their main goal is to increase Facebook fans and Facebook “likes.”
With all the talk of Facebook “likes,” digital “word of mouth” and user ratings, what’s the overall message for businesses and organizations? The first is that organizations should spend more time building a great product and creating value. If it’s truly a product that people love, they’re more likely to recommend it to friends. Second, instead of spending a boatload of money on traditional, “interruption” advertising — ads on TV, newspaper and magazine ads, fliers, billboards, etc. — businesses should use the Internet and social media to engage customers. Word of mouth on the Internet travels fast. So if your fans and customers really enjoy what your product or service, chances are they’ll spread your message to their friends.
The most important thing, however, is that organizations should be cognizant of the fact that the Internet has empowered consumers with more complete information on new products. That’s a good thing — it means that companies are less likely to bamboozle us into buying poor products and services and, hopefully, that we will see fewer annoying ads and commercials in the future.
Christopher Henty is a senior in the School of Industrial and Labor Relations. He may be reached at email@example.com. #TheStartupBiz appears alternate Wednesdays this semester.