Tell a friend: Word of mouth rocks. It’s how many people find a dentist, a plumber, a pediatrician and a realtor, even a shrink. You tend to trust your friends. So when one of your close pals swears by her hairstylist, raving about what a “shear” delight he is, you are apt to give him a shot rather than thumbing through the phone book and blindly calling random barbers. Then you’ll tell your friends. “

Small wonder this type of hype is highly coveted.

Now countless companies are trying to glean lessons from the phenomenon of friend-given recommendations. It’s increasingly difficult to cut through the advertising clutter, as consumers gain more and more control over the messages they receive in this world of DVRs and video on demand. Thus, companies invest an estimated $100 million to $150 million a year on word-of-mouth or buzz marketing.

Intelliseek’s “2005 Consumer-Generated Media and Engagement Study” polled 660 online consumers and explored attitudes and opinions across key consumer-generated media venues – including Internet message boards, forums, blogs, direct company feedback and offline conversation. The study found that, compared to traditional advertising, word-of-mouth behavior continues to grow in importance in consumer awareness, trial and purchase of new products.

Consumers are 50 percent more likely to be influenced by recommendations from peers than by radio or TV ads, which is a slightly higher level of influence and trust than found in a 2004 study coauthored by Intelliseek and Forrester.

Yes, everyone knows that good word of mouth can do wonders for a company’s reputation and its bottom line. Of course, the flip side is that the masses can also bad-mouth you and ruin your chances at future fame and fortune. The reality is that, while everyone wants to get good word-of-mouth buzz, not many companies understand how to garner that much sought-after street cred and high regard.

If you’re an affiliate, buzz marketing is an affordable way to generate interest and develop traffic. Even the smallest of affiliate sites can engage customers in this way. It takes strategic thinking but not an ad budget to rival Coke or Pepsi. What is required, however, is some dedication to spreading an idea, a few passionate people and a willingness to talk. A lot. The payoff is that you’ll encourage some folks to check you out online. And you might even earn better commissions as a result.

But currently, word-of-mouth marketing appears to be a fickle business, but if marketers apply some strategy, they are sure to be singing its praises. Whether you tell your friends your secrets or not is up to you.

Take a Bite From Apple’s Book

Apple Computer is one of the best-loved brands around. Even though it claims less than 5 percent of the PC market, fans are rabid about its products. And take a look down the street – see any white ear buds? The prolific iPod phenomenon is proof of how Apple is transforming the music business through good buzz.

One reason Apple got to be so popular in the first place can be traced to Guy Kawasaki, best known for his former role as chief evangelist at Apple; he helped spread the company’s Macintosh operating system through word of mouth. Soon after, other tech firms like Microsoft hired their own evangelists. Kawasaki has authored eight books on marketing, and he thinks that today’s high tech changes will make it easier to spread the word.

“The ubiquity and freedom of broadband are absolutely changing the world, making it easier to build brands, not harder. You used to have to have $3 million to buy a Super Bowl ad,” Kawasaki says. “MySpace and Facebook have been able to build great products and use word-of-mouth and guerrilla marketing to build amazing brands. Nowadays, blogging and podcasting are considerably more powerful means of word of mouth than people simply spreading the word by, well, word of mouth.”

Kawasaki’s advice to marketers hoping to build buzz is to first create a great product and then let customers try it out, let them test-drive. And maybe, just maybe, they’ll spread the good word.

G’head, Squeeze the Charmin

A couple of marketers are taking Kawasaki’s advice and letting the public experience their products in a very hands-on way in the form of “pop up” stores. It’s tough to cut through the clutter, so some brands are renting space on a short-term basis to let consumers experience their goods and generate buzz.

Kodak and Illy Caffè both wanted to let consumers see and experience their products in a hands-on environment. So each opened brief “art exhibits” at their self-created temporary galleries. Kodak’s galleries, which were open during the month of November in New York City and San Francisco, didn’t have merchandise for sale, just photos on the walls and new cameras for gallery-goers to check out.

“The vision behind the Kodak Gallery is to invite consumers in to experience photography and to feel and touch the products. It is much more about the learning experience and getting immersed in the digital experience,” says Kate Imwalle, who helped put together the Kodak Gallery in San Francisco’s Cow Hollow neighborhood. “This gallery is about the power of photographs and celebrating community.”

Kodak promoted the gallery and encouraged foot traffic, but a key component of the experiment was the lack of outright product-pushing. That way, gallery-goers could relax and enjoy the environment.

Galleria Illy at 382 West Broadway in New York had a coffeehouse vibe and tons of art events – acclaimed painter Julian Schnabel created coffee mugs, and NYU film students shot a series of films – to get American consumers hip to its brand. The rental was short term in the high-priced SoHo neighborhood; it opened Sept. 15 and closed Dec. 15. The idea was to give people a chance to experience the brand in the artsy milieu of a coffeehouse/art gallery.

“The galleria was a physical manifestation of our brand. It was like our business card,” says Greg Fea, president and CEO of Illy Caffè North America. “People got to experience Illy and education and culture. They had a full immersion experience with the brand. It was received really well. We’ve been extremely pleased. We had events around art and culture, because culture is a big part of coffee. ” People in New York got to know us better. We served 20,000 coffees, like 300 to 400 on weekend days, and 200 a day during the week.”

Kodak and Illy both advertised without being overt about it. Instead, they created places where people gather and could talk about photographs or coffee. They created communities.

Create Community

Communities happen online, too. A perfect example of how rock bands have used word of mouth to gain recognition for their songs and gigs is found at MySpace.com. Basically, MySpace combined the Internet Underground Music Archive’s song-posting service with Friendster.com’s meet-your-buddies’-buddies community model while ditching that site’s control-freakish attitude on how members can and can’t use the service.

More than 42 million members have joined MySpace.com since its inception in 2003. Rupert Murdoch’s News Corp. bought the website for $583 million last summer.

“Our band has been a part of MySpace since 2003, and we have like a million friends now,” say Pete Wentz, lyricist and bassist of Fall Out Boy, a punk/pop band that will be featured on a MySpace record compilation. “There’s a whole group of kids who are disenfranchised. So you’ve got to go to sites like MySpace.com to reach those people.”

MySpace.com founder Chris DeWolfe says that his company will remain true to user-generated, not corporate-dictated content. “Music labels now understand word of mouth. It happens in an organic manner on MySpace.”

Viral Videos

Now that broadband is a reality, videos can get passed around virally. Spending on online video advertising is anticipated to triple in the next two years, according to research firm eMarketer. Spending will reach $640 millio

n in 2007, up from $225 million 2005. Advertisers will spend at least $1.5 billion or more by the end of the decade.

Coffee company Illy has video podcasts to immerse people in the brand. And Nike has a stealth video campaign out, too. In it, Brazilian soccer sensation Ronaldinho sits on the grass. Someone hands him a metal box. He takes out new cleats, laces them up, then juggles a ball and kicks it into the crossbar four times in succession. A swoosh is subtle but clearly visible through the 2-minute, 44- second commercial. And no, this isn’t a Nike spot on TV.

This “Touch of Gold” video was viewed at a nascent website called YouTube.com an astonishing 1.9 million times after being up on the site for only a month. Nike, a pro at underground publicity, creates under-the-radar campaigns that spread like wildfire – and doesn’t shell out millions to do so.

Nike’s latest play-for-no-pay stunt also includes “Dance with the Ball” and “Don’t Tread on Me: Manifesto.”

“If you want to talk to U.S. soccer fans, you have to go online,” says Nike spokesperson Dean Stoyer. “Soccer is a huge initiative for Nike, and the soccer community lives online. We’re always looking for new ways to be on the cutting edge.”

A few weeks ago, YouTube.com was just two guys – Chad Hurley and Steve Chen, CEO and CTO, respectively (both early employees of PayPal). Currently, YouTube uploads 10,000 videos per day, moving 12 terabytes of video daily – an entire Blockbuster store and a half worth of footage.

The site highlights the most-viewed videos and who’s linking to each clip. MySpace, BlogSpot.com and Friendster all helped steer traffic to Touch of Gold. The best part: YouTube is like photo-hosting site Flickr.com, only for videos – and it’s free. People can upload and share clips with the world.

Beware the Backlash

A word of caution to any would-be word-of-mouth marketers: Be careful what you wish for. For example, take Sony, which recently hired graffiti artists in various cities to paint comics on outdoor surfaces (it paid local merchants for the right to do so). The artwork showed kids playing with various toys with dazed, expressionless faces and hypnotized eyes. Upon closer inspection, the toys they are playing with aren’t rocking horses, marionettes or skateboards, but Sony PSP (PlayStation Portable) game devices.

The ads never mention the company or the product. The concept behind the campaign was that people would see the graffiti, recognize the PSP, think they were cool and tell others to check it out.

The only problem was that in locations like San Francisco, real artists tagged the work “Fony” and wrote scathing manifestos telling the electronics giant to leave city sidewalks alone. This is a perfect example of attempted word of mouth gone terribly wrong. Sony got plenty of buzz, but it also branded itself a poseur in the indie art community.

Likewise, the Intelliseek study found strong negative reaction to shill marketing or artificial buzz, in which consumers are paid or offered incentives to recommend products or brands. One-third of respondents said they would be disappointed if a trusted contact did not fully disclose a paid or incentive-based relationship; 26 percent said they would never trust the opinion of that friend again; and 30 percent said they would be less likely to buy a product or service.

“Trust is the currency of effective advertising,” says Pete Blackshaw, Intelliseek’s chief marketing officer who oversaw the study. “But it’s highly fragile.”

Boston-based BzzAgent has clients like Lee Jeans, Penguin Books and Ralph Lauren. Its “agents” are regular people who volunteer to receive products and plug them. Technically, disclosure is encouraged, but it’s left up to the individual. Tremor, Procter & Gamble’s four-year-old word-of-mouth division, has a group of selected “cool” teens to help hype products. Both firms have gotten a lot of buzz for the buzz they create for clients. But not all the buzz is bueno.

In October, nonprofit advocacy group Commercial Alert sent a letter to the Federal Trade Commission urging a thorough investigation of P&G’s Tremor, which has enlisted about 250,000 teenagers in its buzz marketing salesforce. Commercial Alert charges that Tremor targets teens with deceptive advertising.

“The Commission should carefully examine the targeting of minors by buzz marketing, because children and teenagers tend to be more impressionable and easy to deceive,” says Gary Ruskin, Commercial Alert’s executive director. “The Commission should do this, at a minimum, by issuing subpoenas to executives at Procter & Gamble’s Tremor and other buzz marketers that target children and teenagers, to determine whether their endorsers are disclosing that they are paid marketers.”

DIANE ANDERSON is an editor at Brandweek. She previously worked for the Industry Standard, HotWired and Wired News.