Paid Advertising Vs Word of Mouth
Paid Advertising through Marketing Muscle Flex Vs Word of Mouth Driven by Inherent Product Strength
By Vedanarayanan Vedantham
There are two broad ways in which B2C businesses can grow.
The first is the tried and tested method and has been used since the dawn of capitalism. This involves making material investments in marketing/ branding/ advertising over a period of time which moves the brand from awareness to recall and then eventually to top of mind recall assuming the product value propositions & features satisfy the basic hygiene factors demanded by consumers. This is a strategy which has been employed with varying degrees of success by companies which operate in a cluttered, commoditized marketplace with a lot of competitors selling nearly similar products with little differentiation.
The last 5 years have seen the growth of “New-Age” marketing/ digital marketing techniques which have made the lives of business owners/ marketers who operate in such environments, easier. This is because such channels allow for real time adjustments, ease of measuring ROI, flexibility in targeting and are primarily “pull advertising” based on user’s predilections/ intent/ action/ demography bucket/ geographic region. They do not employ traditional mass advertising efforts which afford none of the above mentioned advantages. However, this method still requires heavy advertising cash burn since there are a number of closely spaced competitors breathing down each other’s neck, offering discounts with little to no product differentiation.
Some companies who operate in this space (especially marketplaces which sell third party products) have tried to compensate for the lack of product differentiation through differentiation in service. But that topic is for a different discussion altogether.
The second category in which businesses operate involve creation of positive word of mouth and a virality just through the sheer strength of the product offering itself and ease of usage. These businesses have been a recent phenomenon and examples abound primarily from the tech/ internet space. Names such as Whatsapp, Facebook, Google, Apple come to mind who spent close to Zero (Yes Zero!) on consumer marketing/ advertising and yet occupy their vaunted position as market leaders in their respective areas of forte (sometimes in multiple areas as well).
It is no coincidence that such businesses typically have a first and better yet second mover advantage. Google was not the first search engine, Facebook was not the first social media platform, WhatsApp was not the first chat solution. But yet, their products are indisputably the best.
There is daylight between them and the next biggest competitor, in terms of Market share, despite their products being charged at a premium (E.g.: Apple). This is because of the fierce customer loyalty which they have brought about by continually delighting their target user base with best class products & features which exceed expectations.
To Summarize –
Obviously, any company would love to operate in a space where growth happens through user generated word of mouth, virality and zero marketing spends.
But realism needs to apply.
That is a utopia which cannot be reached by all. If a business finds itself in a cluttered, competitive space (most sectors are crowded today), they need to make continual monetary & time investments in marketing & branding whilst in parallel, work on making incremental product differentiators recognizing the reality of their operating environs.
Vedanarayanan is a multi-faceted personality who juggles his various passions in life – Public speaking, marketing, ecommerce, startups, writing & martial arts. He is engaged in different intellectual pursuits and the various key hats he dons in life today are-
- Marketing Head (www.stayzilla.com) – The largest online marketplace for “Stays” in one of the fastest growing ecommerce economies in the world – India. Stayzilla has a presence across 1200+ cities in India with over 20,000 properties.
- International Speaker– On topics pertaining to marketing & ecommerce having headed marketing functions at multiple ecommerce firms and spoken at various international forums.
- Fiction Author– Authored and published 3 ebooks as part of the Adventures of Prince Surya series-Book 1 – Origins & the Battle of Nakshatra, Book 2 – Evil Rises Within, Book 3 – Legend of the Blue Monkey