Word of Mouth Marketing is not free and still requires a budget

by Dave Rigotti on December 31, 2008 · Comments

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There was a post over at Mashable titled HOW TO: Simplify by Leo Babauta.  In this article, Lee said, “Cut advertising to zero. Instead, leverage the power of blogs and social media for guerrilla-type marketing.”  When I asked if he consider blogs, social media, and other “guerrilla-type marketing” part of advertising, Leo responded with “I consider it marketing, but you don’t need an advertising budget if you do zero-cost marketing the right way.”

Call me bold, but I think it’s ridiculous to think you don’t need a budget for word of mouth marketing if a company is relying solely on word of mouth marketing.  While it is usually considerably smaller than a budget for many traditional media’s, there is still expenses that need to be accounted.  Here are some expenses the marketing team would still have:

  • Employee salaries (e.g. content creators and community managers)
  • Software costs (e.g. online reputation management, widgets, and blog, if Typepad or similar)
  • Webhosting charges related to marketing (e.g. hosting of blog)

I’m not trying to say word of mouth marketing isn’t great (hell, I make my living off of it), but helping people understand it’s not free.  Try going into a budget meeting and say “let’s cut 100% of our advertising” and see if you have a job the next day.

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  • Leo
    Hi Dave ... like I said in the comments of the original post, you make a good point. There is, of course, the cost of your time (if you do the marketing yourself). Other than that, though, it really doesn't have to cost anything, or barely anything at all.

    As I said in the comment on the original post, I did the marketing myself (as I had no money to start up) for my blog and businesses and book, and while I did spend *some* time doing it, it wasn't the majority of my day. And I've created a Top 100 blog (in its first year), one of the Top 10 writers blogs, a best-selling book (on its first day), a profitable ebook business ... again, with no budget for marketing or advertising, except my time.

    But yes, time does have a cost, so point taken!
  • Leo, thanks for the comment. I think your "... time does have a cost... " point sums of lot of the discussion up. For someone sitting at home, it can be "free" but for organizations with teams of people working on word of mouth marketing, it's pretty ridiculous to say it's free. Looking forward to reading more of your posts at Mashable.
  • I agree that WOM is never free, though it can be a lot cheaper if companies and brands do the work themselves. I don't understand why so many brands use agencies for work they can do for a fraction of the cost.

    Our Quicken Loans blog certainly isn't free. We pay Typepad to host it, and all of the contributors are employees who are paid a salary (with the exception of a few guest posts). But it's not costing us a fraction of what some other companies are paying to have their blogs managed for them by an agency.

    Or take the Quicken Loans YouTube channel. Again, the vids aren't free. But we do them all in-house and for very little.

    Finally, as much as I would love to say that Quicken Loans will one day rely soley on WOM for our marketing, I'd be fooling myself. I seriously doubt we'll ever stop using paid search, online partnerships, email marketing, or even traditional advertising in our marketing pie. WOM may get bigger, but it will never be our whole pie. Thanks Dave. Good post.
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