While advertisers and big businesses slap down millions and billions to pay for glitzy ads in traditional media such as television and print, “earned media” such as word-of-mouth and recommendations from peers, are more believable and appear to be more important factors in buying decisions, “…above all other forms of advertising,” according to a recent report from Nielsen surveying over 28,000 Internet respondents in 56 countries.

The Nielsen study found that trust associated with “word of mouth” and “peer recommendations” have increased 18 percent since 2007, and online consumer reviews are the second most trusted form of advertising.  This is an interesting state to contrast with results from a recent Gartner study noting a proliferation of fake or paid reviews.

Sites such as Yelp or Angie’s List where customers consistently rate and review their favorite beauty salons, automobile repair shops, plumbers, and more will be essential for small businesses who have not been early adopters of such mediums.

Today, when parents go on Amazon.com to buy their kids toys or books, they read reviews from other parents or teachers.  Many will not step into a restaurant until they have checked reviews from their friends (or strangers) on Yelp and anyone who is taking a family vacation or honeymoon knows to check the traveler reviews on Tripadvisor to see whether the beautiful hotel on the brochure or website is truly as it seems.

The upshot is that nowadays, many people find it is safer to trust and purchase products that their friends or families have reviewed versus following a paid advertisement.

Paid advertising, such as television or print advertising, is still the most popular form of promotion.  However, traditional media is suffering from a credibility gap.  According according to Nielsen’s Global Trust in Advertising Survey, “…while nearly half (47%) of consumers around the world say they trust paid television, magazine and newspaper ads, confidence (in these ads) declined by 24 percent, 20 percent and 25 percent respectively since 2009.”

Advertising will need to evolve as consumers change their habits.  As hundreds of millions of consumers search and buy online these days, advertisers are finally starting to see the value in what was once the ugly stepchild compared to more traditional forms of promotion – online advertising and reputation management.

The Nielsen survey reported that paid and non-paid search engine results have seen an increase in trust of 40 percent — up from 37 percent in 2007. Nielsen also reported that “…thirty-six percent of global online consumers report trust online video ads, and 33 percent believe messages in online banner ads, up from 26 percent in 2007.”