I'm sure if any time over the last hundred years you asked any business owners what their most effective form of advertising was, you'd get the same answer.

Word of mouth.

If you asked them which advertising produced the most loyal customers, the answer would be the same.

Word of mouth.

The most long term customers' Word of mouth.

If you asked them how they created word of mouth advertising, though, they might mumble something about delivering a high quality product and service. But for the most part they'd have little idea how to actually create good word of mouth advertising.

For them word of mouth was more of a passive venture, something that "just happened."

In the last twenty years or so, though, a more active strategy has been built up for referral marketing, which is, after all, merely the creation of good word of mouth advertising.

For the last hundred years every business person just "knew" that word of mouth advertising was the most effective. Today studies are showing that referral marketing may be even better than even that conventional business wisdom thought it was.