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Word of Mouth Can Work Against You

Name: Word of Mouth Can Work Against You
Uploaded: 2024-07-28T15:00:01+00:00
Duration: 44 s
Channel: Shanli Liu, CPA, CTP
Description: In this brief monologue, Shanli Liu explains that while marketers focus on positive word‑of‑mouth, the majority of referrals are actually negative…

28 Jul 2024 · 1 min

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In this brief monologue, Shanli Liu explains that while marketers focus on positive word‑of‑mouth, the majority of referrals are actually negative. Detractors spread unfavorable opinions when potential customers encounter ads, leading them to seek opinions from others and ultimately decide against purchase. This hidden negative word‑of‑mouth reduces conversion rates over time. When advertising costs (customer acquisition cost) rise faster than the market’s average cost per mille (CPM), it signals that word‑of‑mouth is working against the business, not the ads themselves.

Chapters

Everyone understands positive word of mouth. Did you know that you have far more negative referrals? You have way more detractors. You have way more people that when they see an ad of your business, what do they do? They reach out to other people to ask about you. And then people who would have purchased choose not to based on information they get online or asking someone they know. And so your conversion rate decreases over time. You complain that ads aren't working when in reality all of this is the invisible hand of your product sucking. If you run advertisements and your cost to acquire a customer increases at a faster rate than the average cost of CPMs, the cost per impression in your market, then it means you have word of mouth working against you.