By: Jane Walsh
Have you ever thought about the marketing stages for different products? What is put out through paid advertisements and what you hear from your friends, both remind you of the product and can help you decide whether or not you are interested in it. But both ads and word of mouth trends tend to flow in waves. They work independently, as well as together to keep books, movies, video games, etc. in the public’s eye. Where paid advertisements may introduce you to a new product, word of mouth reminds you later on that it exists. We’ve all heard, “I just finished watching this Netflix movie,” or “Have you played the new Call of Duty yet?” Word of mouth is a free medium that tends to linger on after advertisements have died down.
At what point between was the public excited about the release of the fifth Harry Potter Book? Was it after they had read the fourth? Or maybe, because it was later in the series, the anticipation was grouped together with a few of the books in J.K. Rowling’s series. What about when the movies were being released? Harry Potter is a good example of a franchise that thrived off of great reviews through word of mouth, but also did its fair share of advertising. So this brings us back, if a product can reach such a large audience through word of mouth, where do companies spend their money on advertisements in order to be the most productive?
This article studied, specifically, four movies during both the theatre release and the video release. They compared the paid advertisements and the level of word of mouth spread with the revenues collected during each stage. What they found was that paid advertisements were the most successful initially, when the movies were headed into theatres. However, they did not show any increase in revenue when the movies came out on video. The results for word of mouth trends were the opposite. They showed more success when the movies came out onto video. With this information, marketing companies can save money on advertisements by using them more effectively.
Bruce, Norris I., Natasha Zhang Foutz, and Ceren Kolsarici. “Dynamic effectiveness of advertising and word of mouth in sequential distribution of new products.” Journal of Marketing Research, 49.4 (2012): 469-486.