What people say: More believable than what brands say.

Word of mouth and review/ratings sites trump branding activityWord of mouth has always been a powerful influencer over the success or failure of a product in the market. So when surveys show that consumers value the opinion of their friends most when it comes to the value of a product, there’s nothing particularly unusual about that news.

But consider the explosion in the popularity of review sites like Angie’s List and Yelp, plus other sources of information and opinion in cyberspace over the past few years. These have made it possible to access the opinions of significantly more people than ever before.

Nielsen’s most recent Global Trust in Advertising Survey, which queried ~28,000 consumers around the world in late 2011, found that ~92% of respondents trust word-of-mouth recommendations from friends and family members.

Interestingly, that percentage is actually up from 2007, when Nielsen found ~75% of respondents trusting their friends as a good source of information.

What about online consumer reviews written by complete strangers? Consumers’ trust levels in those information sources has also gone up; it’s ~70% today compared to ~55% back in 2007.

The picture is different with branding and advertising, however. Trust in traditional advertising (TV, radio, magazines and newspapers) has dropped in recent years. Today, only about 47% of Nielsen survey respondents say they trust those sources of information.

Online advertising has actually improved its standing with consumers, but trust levels are still mired in the 30s: 36% trust online video ads … ~33% trust online banner ads … ~39% trust paid search engine advertising.

And when it comes to branded content like company websites, consumer trust in these “owned media” is running below 60%, while e-mail communiqués are scoring even lower on the trust scale (around 50%).

The Nielsen survey results underscore why developing a robust social media presence has become such an important strategy for so many brands. Clearly, recommendations and reviews from friends and strangers alike is having the strongest impact on the purchase decisions that are being made.

Of course, building a social media presence is only half the battle: Whether the content is positive, neutral or negative has huge implications as well. A few negative reviews or ratings can stop a purchaser dead in his or her tracks. Just ask anyone in the hospitality industry, whose establishments are in some senses almost held hostage by TripAdvisor and other rating sites.

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