Word of mouth is the best advertisement any product can possibly have. Why don't they invest in making products better instead of ads?

simple answer. They have to make the first sale. You don't get word of mouth from people who have tried a product. If you try something and don't like it, most likely you will never buy it again.

I think this logic (which is correct) is at least partially why viral marketing campaigns have taken off so much recently, even among large corporations. They are relatively cheap to produce (in comparison to big advertising campaigns on television), and if the Internet community responds positively, then they'll essentially market the product or service for you by spreading the ads--images, video, whatever--to their friends and followers.

well, the biggest campaigns are for products that no one really needs. that's what marketing experts do when they talk about inventing a market. They work hard to convince us that we can't live without the crap they invent. Like silly bandz, who needs it?

A lot of products don't last long enough for word of mouth. Example, "My dad has had the same cell phone for six years and it still works like new. That's the one I'm going to buy." That just won't happen. Also think KIA Motors. They can't build a decent car, so they have cute hamsters rapping and riding around in washing machines. The problem is the buying public -- we don't care about quality anymore.

Ads are probably cheaper to create and run than actually making good decent high quality products. Also if the product is to good then they cannot sell that much of them as they will be too reliable so this limits the companies potential profits.

Because doing business without advertising is like winking at a gorgeous girl in the dark; you know what you're doing but nobody else does...