Can word of mouth be more effective than advertising?

Parakram Rautela
26 November 2012, 03:23 PM IST

Cynically speaking, there was little point to Felix Baumgartner jumping down to earth from "the edge of space", unless you count the fact that the world watched him do it. And that in the 9.03 minutes it took him to get from there — 39 kilometres up — to down here, his sponsor Red Bull got more publicity than it ever would have had it spent the millions of dollars which the jump cost on traditional advertising and marketing. Red Bull will not say how much the giant leap cost but the estimates range from $35 million to $60 million, while the publicity garnered by the company is valued at $160 million.

A recent report in the McKinsey Quarterly, A New Way to Measure Word-of-Mouth Marketing, says the same thing. That "consumers, overwhelmed by choice, are tuning out the ever-growing barrage of traditional marketing."

According to Professor MM Monipally, who teaches communication at IIM Ahmedabad, it is because all advertising is so exaggerated that it becomes unbelievable. "A company gets 10 seconds to pass on its message so it's forced to do it. But every time an advertiser says you dip your shirt in a bucket of my detergent and it'll come out better than new, my wife's reaction is, 'That's so stupid'."

Therefore, says the McKinsey report, what consumers are instead listening to is word of mouth — what they're told by friends and family. And that it "cuts through the noise quickly and effectively".

Could a company then establish itself and grow using only word of mouth, while eschewing traditional advertising and marketing?

Ironically, a "yes" answer is provided by two graduates of the Mudra Institute of Communication, Ahmedabad, who went on to work with an advertising firm in Delhi.

Rahul Anand and Rajat Tuli are co-owners of Happily Unmarried, which sells quirky — their bestseller is the Sandaas ashtray which looks like an Indian squat toilet — items from 60 stores around the country, and also in the UK, France, Australia and the UAE.

Photo courtesy: Piyal Bhattacharya

In the early 2000s, like anybody else who'd wearied of the employer-employee relationship, Rahul and Rajat decided to set up Happily Unmarried. The decision to not advertise — taken while travelling in a bus from west to south Delhi — was made because, simply put, they did not have the money for it.

"So we decided," says Rahul, "that we would turn our packaging into our advertising. Every brown box that left our store, we put writing or pictures on it."

The writing — again quirky in the company's signature style. They have a footmat which says Beware of The Wife, although that might be thought of as rude — "connected" with buyers. Sometimes better than the products themselves. Rahul says people often kept the packaging even after the product that was in it had been discarded.

It also helped, he adds, that they were small. "People tend to talk about the small things they discover," says Rahul. What he means is nobody is ever going to talk to a friend about a Nike store that he might have discovered. "And because of that," says Rahul, "word of mouth helps level the playing field between the big boys and the small fry."

Another ex-advertising executive who has so far not used big advertising is Ranjiv Ramchandani, who cut away in 1997 from his old job in Mumbai to start Tantra T-shirts.

Although he does say that if he could afford it, he would advertise. But that at the moment, "it would drive him bankrupt".

Ramchandani too puts humour-filled writing with an India-connect — "We're desi cool," he says — on his T-shirts, his packaging and also his wash care labels. And a cheaper range of his T-shirts is called Loose Motions.

This quirkiness, humour, and desi cool, says Professor Monippally, are the qualities that get these companies talked about, helping them in the absence of them advertising.

And that the rules do not change as companies get bigger and begin to advertise, that they will still require a certain set of qualities in order to be talked about. And that it is because of those qualities — a certain coolness, trust — that Harley Davidson has clubs built around its motorcycles, and Apple has its fanboys with their slavish devotion to every new iProduct.

That "certain something" is not easily defined. Gopal Kaushik's pub in Manali, The Lazy Dog, for example, gets talked about because he did what the rest of us can only aspire to. Riding through the mountain town on a bike trip, he decided to chuck up his big city life in Mumbai, stay back and start what is now fondly referred to as The Dog.

The power of word of mouth, however, has not yet cut into the amount of money spent on advertising in India. Annual ad spend, according to the Pitch-Madison report, has grown by 10.3% over the last four years, with total spend touching Rs 25,594 crore in 2011.

But, according to the McKinsey report, word of mouth can sometimes sell more than traditional advertising and marketing. For example, when the iPhone was launched in Germany, "sales directly attributable to word of mouth outstripped those attributable to Apple's paid marketing". Six times over.

The report adds that the influence of word of mouth will probably grow, because of the internet and social media. That because of them, "word of mouth is no longer an act of intimate, one-on-one communication. Today, it also operates on a one-to-many basis".

Flipkart for example used only the internet and social media to put the word out about itself as a start-up. It started selling books in October 2007 and did not advertise till March 2011. And yet, say the experts, everybody knew who they were and what they did before they finally began to advertise.

"It's free," says Ramchandani, "which means a consumer will talk about your product or service only if he likes it." Therefore, he adds, word of mouth — both positive and negative — is that much more effective. But he also warns that what is said about you will finally depend on the quality of your product. You begin to cut corners, or do not deliver on the promises you make, and word of mouth will only start to work against you.