Advertising vs. Social Word-of Mouth and Advocacy Behavior, Part 1: The Trends

Good advertising does not just circulate information. It penetrates the public mind with desires and belief.
– Leo Burnett, advertising industry pioneer

The entire concept, and set of approaches, for conveying ideas and themes which motivate consumers to buy – and keep spending, be willing to be upsold and cross-sold, be receptive to learning about new products and services, be emotionally bonded to a single brand or company within a category, and actively, and positively, speak on behalf of that favored brand or company – has changed to a remarkable degree over the past couple of decades. If Rip Van Winkle were a corporate, brand, or marketing executive, and he’d just recently awakened from his 20 year sleep, he’d scarcely recognize the customer life cycle, loyalty behavior, and relationship landscapes.

Marketing is, essentially and arguably, the way customers, prospects, non-customers, and other stakeholders become aware of, perceive, and find benefit in a continued relationship with a company’s, product’s, or service’s value proposition. Many companies and ad agencies have viewed traditional paid advertising as the way to influence that awareness and perception, and as the central method of motivating and stimulating customer behavior. Over the past two decades, the role and value of advertising has seen significantly morphing, as has the pressure on it, as a discipline, to produce results. Even so, relatively few companies or marketers have been sufficiently proactive or responsive to what has amounted to advertising deconstruction.

This is a subject which gets relatively little treatment in articles and books; but, given the sea change taking place between traditional advertising and promotion and consumer generated communication, it definitely merits some discussion. As informal offline and online consumer media have increased in use, the decision-making impact of traditional offline advertising and promotion, via electronic and print media, has been declining for years; and these forms of communication have, likewise, been in decline. In fact, the wireless telecom panel at a 2006 Word of Mouth Marketing Association (WOMMA) conference said that, in their industry, social word-of-mouth was the #2 purchase indicator, i.e. driver, while advertising was #19 (even though, at the time, advertising was still getting most of the marketing budget while social word of mouth was receiving little of it).

Budgets for social media advertising and promotion, however, have been on the rise over the past several years. Evidence of this can be seen in social media expenditure and investment increases, while, overall, corporate marketing budget declines and refocusing are taking place. Giants like Procter & Gamble, for instance, cut its 2009 advertising budget to $7.6 billion, down from $8.6 billion the previous year. They have reported beginning to use more non-traditional approaches for advertising and promoting their household products, such as having pages on social media sites like Facebook and targeting influential bloggers with new product samples. Considerably more than electronic and print advertising, these approaches can be quickly tested and launched. They are, in addition, relatively simple and inexpensive to execute, especially when compared to the complexities and costs involved in generating, placing, and evaluating mainstream advertising.

As an overarching trend in marketing, companies such as P & G, having become enamored with online social media tools and venues, have tended to reduce their budgets for traditional advertising, or not see its integrated value. For example, Marketing Sherpa reported that, for B2B companies, direct mail, trade shows, and especially print advertising were all forecasted to see substantial declines during 2010. At the same time, web site design/optimization, social media, virtual events/webinars, search engine optimization (SEO), and email marketing were projected to see significant increases.

Online advertising, such as web ads and email ads, did have some traction up until a few years ago (a DoubleClick study showed these as a ‘shopping aid’); however, as marketers have become somewhat more sophisticated in the use of social word-of-mouth, online advertising has tended to be sidelined.

As Mark Twain wrote in May, 1897, on the widely-circulated rumor of his demise, the ‘report of my death was an exaggeration’ and premature. The same observation ought to be made for traditional advertising, especially with regard its potential for melding with social word-of-mouth for greater blended impact. Some of our social word-of-mouth research has paralleled work by other organizations, such as Keller Fay Group. We have found, for example, that 19% of consumers use advertising in traditional media as an information source for helping make purchase decisions and this is even higher among 18 to 29 year olds, while only 4% use social media (1% to 2% by Keller Fay). Keller Fay’s research has shown that one in five word of mouth conversations about brands in the U.S. involve a reference to advertising. As found by Keller Fay, for those who influence the behavior of others, the role of advertising in generating social word-of-mouth is even greater.

This is significant because research by Keller Fay and others also shows that the level and effectiveness of social word-of-mouth is substantially increased when stimulated, encouraged, and supported by, or conjoined with, traditional advertising. In the automotive and financial services sectors, for example, their study results, when compared with companies in these sectors that The Nielsen Company identified as having made significant, moderate, and low budget cuts, showed that companies which maintained higher advertising levels during the high-pressure 2008 to 2010 time period generated much higher, and more positive, word-of-mouth. Further, in the financial services industry, where much of the news was negative during this period, maintenance of advertising budgets helped sustain a much more positive overall tone.

American Business Media has reported that, in a recession, advertising is necessary to both protect market position, maintain ‘share of mind’, and protect brand perception. Coopers and Lybrand has stated that “During an economic downturn, a strong advertising/marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery.”; and Harvard Business Review has reported that, especially in times of economic instability, advertising should be regarded as a contributor to profits, not a drain. As Keller Fay wisely concluded, “Silence, during times of crisis, is not golden.”