Is word of mouth the best way to advertise something?

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This depends on what you're advertising for. Local market or global market or whatever market can change your approach to advertising. Word of mouth is great for small business dealing with the community it operates in, restaurants and bike shops are great examples of small businesses that heavily rely on positive word of mouth to succeed.
On the other hand you have national or even global businesses that need to use advertisement to get their name and products noticed and to reach as many consumers as possible. Insurance companies and grocery store products are a prime example of this sort of advertisement.
In closing, see what it is you're trying to promote or bring attention to and look at WHO you're trying to inform. The best form of advertisement is the one that works for you or your product.