How effective is advertising compared to reviews or recommendations?

A recent Buzfactor survey conducted by Vizu asked 300 consumers, “What factors most influence your decision to try a business for the first time?”, and found only 4.5% of consumers said it was advertising. And while online reviews are important, a business’s location or the availability of a coupon or discount both have greater influence.  However, none of these comes close to the impact recommendations have on where we shop and dine or what local service providers we select.

While websites offering online reviews attract a lot of attention, it’s important to note that only 19% of consumers say they often or very often read online reviews, and of these 24.4% say reviews strongly influence their ultimate purchase decision.  So, the reality is that online reviews actual influence less than 5% (19% times 24.4%) of consumers. In comparison, 74.1% of consumers say recommendations influence their decisions, and, most importantly for businesses, consumers say they act on these recommendations 64% of the time which means recommendations from trusted relationships have potentially 10 times ((74.1% x 64%)/(19% x 24.4%)) more impact than online reviews on where we shop and dine and what we buy.