Companies spend billions of dollars each year producing slick advertisements, when just a few happy customers raving about their product or service on the Internet might do them a lot more good, for a lot less money. It seems there's nothing like word of mouth to move a product.
That's the take-home conclusion of a new Nielsen Global Online Consumer Survey which found that recommendations by personal acquaintances and opinions posted by consumers online are the most trusted forms of advertising globally.
The survey of over 25,000 Internet consumers from 50 countries shows that nine in every ten Internet consumers trust recommendations from people they know, while seven in every ten trust consumer opinions posted online.
However, in this new age of consumer control, advertisers will be encouraged by the fact that brand websites--the most trusted form of advertiser-led advertising--are trusted by as many people as consumer opinions posted online.
"The explosion in consumer-generated media over the last couple of years means consumers' reliance on word of mouth in the decision-making process, either from people they know or online consumers they don't, has increased significantly," said Jonathan Carson, President of Online, International, for the Nielsen Company. "However, we see that all forms of advertiser-led advertising, except ads in newspapers, have also experienced increases in levels of trust and its possible that the CGM revolution has forced advertisers to use a more realistic form of messaging that is grounded in the experience of consumers rather than the lofty ideals of the advertisers."
The Trust in Advertising element of the survey was first conducted in April 2007 and the two years since then reveals that brand sponsorship has seen the greatest increase in levels of trust from 49 percent of Internet consumers in April 2007 to 64 percent in April 2009--an absolute increase of 15 percentage points.
Brand sponsorships are closely followed by ads before movies, which have increased from 38 percent to 52 percent--a 14 percentage-point increase. Also ranking high are personal recommendations, which have increased by 12 percent from 78 percent in April 2007 to 90 percent in April 2009.
Consumer opinions posted online tend to be trusted most by Vietnamese Internet consumers (81 percent) and their Italian (80 percent), Chinese and French (both 77 percent) counterparts. However, online opinions tend to be trusted the least in Argentina (46 percent) and Finland (50 percent).
In comparison, 72 percent of U.S. Internet consumers trust this form of advertising, meaning the U.S. ranks 12 out of the 50 countries represented in the survey for trusting consumer opinions online.
When it comes to trusting brand sponsorships, Latin American countries lead the way with 81 percent of both Colombian and Venezuelan Internet consumers and 79 percent of Brazilians trusting this form of advertising.
In contrast, sponsorships hold the least sway amongst Swedish (33 percent), Latvian (36 percent) and Finnish online consumers (38 percent). In comparison, 62 percent of U.S. Internet consumers trust brand sponsorships, placing the U.S. 21 out of the 50 countries surveyed.
Brand websites, globally the most trusted form of advertiser-led advertising, hold the greatest sway in China (82 percent). Following China are Pakistan (81 percent) and Vietnam (80 percent).
However, brand websites tend to be trusted least amongst Swedish (40 percent) and Israeli (45 percent) Internet consumers. The U.S. ranks 22 amongst the countries surveyed with 70 percent of U.S. Internet consumers trusting brand websites.
"The regional differences provide a clear guide to advertisers as to how they should focus their ad strategy in different countries. It also shows that, despite the authority of word of mouth when it comes to consumer decision-making, advertisers still have a major say in the process," said Carson. "This is backed up by past Nielsen studies which showed that the majority of people posting comments online went to the advertiser website or emailed feedback to the company before they posted. The website, and monitoring feedback through it, is a golden opportunity for advertisers to shape the tone and content of consumer opinion before it reaches the digital masses."
Although brand websites score highly amongst Internet consumers, the survey shows that other forms of digital advertising are trusted less than ads appearing in traditional media such as TV billboards, radio, magazines and newspapers -- despite the latter being the only form of advertising to experience a drop in levels of trust since the 2007 survey.
Text ads on mobile phones (24 percent), online banner ads (33 percent), online video ads (37 percent) and ads in search engine results (41 percent) are the forms of advertising least likely to elicit a degree of trust.