Word of mouth marketing has been around for a long time, but brands are becoming more sophisticated. P&G, one of the largest advertisers, is pioneering a 2.0 approach to marketing that has little need for paid media advertising and leverages good old-fashioned face-to-face social networks. From a BW article:

About a year ago, P&G began developing Vocalpoint to market directly to moms, which it defines as women with children ages 19 or under. After doing tests in three cities — Columbus, Tulsa, and Buffalo — the program went national in March. Ultimately, P&G plans for half of Vocalpoint’s business to involve its own brands. Already Vocalpoint has done campaigns for three P&G products: Dawn Direct Foam dish detergent, Febreze Air Effects air freshener, and Millstone coffee. It has completed one national outside campaign for ABC’s (DIS ) new show What About Brian, and in June it will launch another for WD-40 Co.’s (WDFC ) No-Mess Pen.

P&G concentrates on finding women who have large social networks. Vocalpoint moms, who range in age from 28 to 45, generally speak to about 25 to 30 other women during the day, where an average mom speaks to just five. P&G has found many of these connectors on the Internet with banner ads on sites such as iVilllage.com. Those nabbed from Net ads are linked to a site that gives them more information about Vocalpoint and asks them screening questions.

What’s Vocalpoint’s allure to the women? For one thing, they receive a steady stream of product samples. That’s not all. They also get “a voice that is going to be heard by other companies,” says Knox. Vocalpoint does this via a weekly e-mail newsletter it sends connectors called The Inside Track. A recent edition asks for the women’s opinions on everything from the design of the newsletter itself to express mail options.

This is why GM displaced P&G as the #1 spender on “conventional media” in 2005:

In fact, most of the top ad categories have trailed the U.S. ad economy, growing at less than half the total ad marketplace. That’s reflected in P&G’s slide, but it could be that the cutbacks are less an indicator of underlying health in marketing budgets, as it is a sign of shifts taking place across the marketing mix. The Monitor-Plus data tracks most of the major media, but it does not track other forms of media and marketing that P&G and other marketers may be shifting to. In 2004, P&G began moving toward a communications planning approach in an effort to become less reliant on traditionally measured media.

Most companies aren’t stupid — they know that there are more efficient and more effective ways to propogate their messages than paid media advertising. They understand the power of harnessing their own consumers to spread the word. They understand the power of peer-to-peer communication, of giving consumers a voice. But they are trapped in the old system. Even P&G at the vanguard of non-advertising marketing still dumped $2.5 billion into advertising in 2005. But you can already here the sucking sound — what’s now a trickle of dollars fleeing advertising may soon become a torrent.

Now, imagine when brands like P&G start to leverage online social networks like MySpace for similar word of mouth campaigns — but without giving the network hosts (like MySpace) a dime, becuase the users/consumers will do all the work for free.

Consumers are the new medium for marketing 2.0 — they are the medium and the message.