At the risk of shooting the hands that feed me, I know full well that word of mouth is far valuable to a marketer than advertising. Just ask Audi what was more important to their brand---the advertising they ran in the late 1980s and early 90s,or the lingering word of mouth over false accusations that its cars accelerated out of control.
The Word of Mouth Marketing Association (WOMMA), a very interesting organization, has begun a Word of Mouth Versus Advertising blog on its website. [Thanks for the head's up Adrants]. One entry makes a terribly obvious, but nonetheless interesting point about how a saturation ad campiagn, like the ones favored by drug companies, for example, kill word of mouth, which is far more valuable to marketers. Why? "Because people tell other people about things they think they don’t know about," writes one poster. Good point. Another poster: "If you want to spark word-of-mouth, the first thing you need to do is realize it's not about you. Word-of-mouth only works if your give people an amazing story to tell so that THEY are the introducer of something new, cool, different, interesting, or outrageous." Another good point.
There are some good posters there. But I hope more people from ad agencies and marketers chime in with real-world war stories.