New GE Study: Word-of-Mouth Referrals Improve Traditional Marketing Efforts

Marketers have long assumed content shared by friends or other influencers carries more weight than paid placements.  Someone is more likely to visit a restaurant when referred by a friend, the thinking goes, than from a television or radio ad.

Now General Electric has some proof.

In late 2011, the company compared the effectiveness of a paid advertising campaign and paid advertising campaign coupled with online-sharing.   Overall, consumers who saw the ad and received a referral from a friend were 138% more likely to view GE favorably than those who saw the ad alone.

The results of the test were originally published in the January 25th edition of Advertising Age.

“Personal referrals are far and away the most influential form of communications,” said Sparklight Communications President Joseph LaMountain.  “Yet many companies and causes fail to incorporate word-of-mouth into their marketing and communications campaigns.”

For example, organizations can raise significant levels of awareness, or funding, for an issue by asking its supporters to share  information to friends, neighbors and work colleagues.  Yet too often this valuable “human capital” is not effectively mobilized.

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