Positive Proof of the Power of Word of Mouth

I opened my copy of the Economist enewsletter this morning and scanned the headlines before going to get breakfast

• Delta Air Lines and Northwest Airlines filed for bankruptcy
• Ford has to sell Hertz
• EBay confirmed that it was buying Skype

As always, each interesting in their own right

It was not till I was about to close the email to read it later that I realised a pattern …mabe the thought game I posted about before, is actually coming true sooner that I had thought.

Delta and Northwest – both spend heavily on traditional advertising, but get negative word of mouth because they provide a poor experience, and are being put out of business by Southwest who spend a lot less on advertising, but get positive word of mouth.

Ford has always spent heavily on traditional advertising but has (overall) not enjoyed a positive reputation (read word of mouth driven perception) against the Japanese manufacturers.

Ebay spends over US$2 Billion to buy Skype, a tiny Luxembourg based business that has never spend a dollar on traditional advertising, but has a product that is so interesting that its users recommend it to each other – to the tune of 60m users in 2 years at last count.

Surely the writing is starting at appear written pretty large on the wall …..all the marketing in the world will not keep you afloat if you have a product that is only adequate.

So in the Advising Vs Word of mouth debate, I think this delivers a knock down punch – here is proof that

• word of mouth can overpower huge traditional advertising budgets
• word of mouth will deliver huge value ($2b in a few years) and traditional advertising is not required.

Comments

[James Dutton]

How true, how true. Absolutely spot on with the WOM links in your article.
It's been very interesting over the last couple of weeks to monitor the whole eBay / Skype rumour mill to finally see it happen.
Next thing we are debating on is where will eBay be going with this deal...b2b? audio bidding & return of the gavel?, voicemail services for eBay'ers? Who knows, but it's going to be interesting!
Cheers, J