Profiting From Viral Marketing

Profiting From Viral Marketing

By Chris Kalaboukis, CTO, SwapSmarts.com

Looking at the incredible success of hotmail, super friend whazzup videos and other viral marketing techniques, I decided to do some investigation on viral marketing, how and why it works, and how and why it doesn't work. Many people tout the amazing spread of viral marketing messages, but what company has truly profited from viral marketing? So I asked the question: Can anyone give me an example of where viral marketing actually generated massive sales growth?

First, lets start with the concept of viral marketing: viral marketing is simply a new way of describing an old concept: Word of mouth. Word of mouth sells everything from movies and books to search engine technology. Viral marketing takes word of mouth, and applies new tools and techniques in order to spread the word about a product or service. The big difference between viral marketing and word of mouth is reach: word of mouth is local, viral marketing can be global. The other difference is that with viral marketing the message becomes the object which is spread, not the recommendation for the product or service. This differentiation is key, which illustrates the breakdown between word of mouth and viral marketing. Viral marketing is not as effective as most people say it is. Many people seem feel that this is the only type of marketing they need to do, its free and it will bring in millions. That's true, but only if you are called PayPal, Napster or Amazon.com and have the money to back up your viral campaign with traditional marketing.

Word of mouth is a specific recommendation for a specific product or service based on a request, or an extremely positive experience with a product or service.

Viral Marketing concentrates on brand awareness, as opposed to recommending a specific product or service: it can only be used to spread awareness of a product or service, not to sell the product or service. Viral Marketing is not marketing: it is more akin to advertising.

To illustrate, here are a few attributes of successful viral marketing:

1: The message you are spreading must be free

While you can spread the word about things that cost money, unless they have a small niche or very compelling story, they will not spread as easily as things that are free. For example, can you imagine Hotmail (the prime viral marketing example) spreading as fast or as far if you had to pay for it when you signed up? Or PayPal?

2: The message you are spreading is easy to spread (such as forwarding an email)

Objects are easier to spread when they are self contained, and the spreader can spread the object using a familiar tool, like email. Refer a friend forms are good too, but if something can be made into an object, from a video clip to a URL it can be passed faster, because the spreader can use familiar communications tools to do the spreading.

3: The thing you are spreading is interesting or funny, or provides value

The item has to appeal to the audience it is going to. If it doesn't then no one will forward it.

4: Spreading the thing does not reward the spreader (very important)

While this point is flexible, it truly differentiates a viral campaign from an affiliate program. The item to be passed must have enough value in it so that the spreader spreads it of their own accord, with no monetary incentive. If there is an incentive, then we have to call the spreaders motive into question. Would they have spread the virus had there been no monetary incentive? If so then the object will have little value to the recipient.

For example, in the UK last year, Virgin sent out an email to 25 people, offering two free theater tickets to the recipients and to anyone they could refer. They had 20,000 available tickets and they ran out in three hours. This is a good example of viral marketing. It met all four criteria above, but as stated before, it raised awareness of Virgin; it did not help sell theater tickets. Virgin got press, attention, their message was spread, but did they make any sales directly related to the viral marketing piece? This is unknown. Did they spend a ton of money to buy those tickets: yes, unless they owned the tickets. If you go by the adage that viral marketing is advertising, its OK, because the main purpose of advertising is brand awareness.

Viral Marketing = Brand Awareness

So thats the nutshell: there is no direct connection with viral marketing and sales, just like there is no direct connection between advertising and sales. However, there are ways in which you can build a connection between viral marketing and sales.

A Two Tier System

The two tier system: give away a subset of your product for free, but charge for the full version or give away a free version of your product and sell an enhanced pay version. For example, lets say that you give away a free monthly newsletter on topic X which is 8 pages long, then charge a fee for a extra or expanded version of the newsletter, which is double or triple the length with more information. The danger here is that this could backfire if you provide the wrong balance of features in the pay vs. free version. For example, readers of the pay version may find enough value in the free version and not enough additional value in the pay version in order to keep subscribing.

A Giveaway System

In this example, you are a garden tool retailer. You email a few people on your opt-in list and tell them they qualify for a free packet of seeds. You give them a link to a choice of 10 or twelve types; let them choose the ones they want. You then send out the free seeds with some sales material - you tell them to tell their friends to claim a packet of seeds in the same way by hitting the web site. You may lose money on the seeds, but could be the first company they will think about when they see that sunflower in their garden. They may think of you when their shovel breaks. If not seeds, send something else. You do not have to send out expensive items. Seeds as in the example will go in the mail with a few flyers and a small catalog.

A Discounting System

What if the free thing that you are spreading is a discount for your product or service? In my opinion, this is the most effective method to tying sales to your viral marketing system. For example, lets say that you sell computer training manuals. You send a note to your opt-in email list, go to this website and sign up for a 20% off coupon on any book sale. When they hit the site, encourage them to refer this offer to a friend, where they can enter a friends email address in order to send them the 20% off offer as well. Ensure that the person who is doing the sending does not get a discount just for sending, but only for signing up. When the friend signs up, they can do the same to their friends. Dont worry about the amount of coupons this type of campaign eventually generates: every coupon which goes out could lead to a sale so the more, the merrier.

Conclusion

Not every product or service can be sold via viral marketing. Viral marketing sometimes involves an expense but when used effectively, it can reduce your costs. Remember that viral marketing is NOT about making more sales, but a branding exercise. It doesn't have to be a product that is custom designed to spread virally, it just has to be something worth talking about.

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Chris Kalaboukis is CTO of SwapSmarts: http://swapsmarts.com
Chris has 17+ years of experience in internet, information technology and business development with web design, wireless, high-speed internet, cable television and entertainment firms. His current site features over a thousand experts ready to give advice on 1000+ topics

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PROFOUND KNOWLEDGEPeter Andersen

Profound Knowledge by FocusedImpact.com

We all are on a quest for knowledge. Whether its information that will make our lives easier or just small packets of data that in a trivial way allows us to sort out why things are the way they are on this planet. As intelligent beings we are constantly receiving and sorting information, in most instances, we are overwhelmed. Therefore, when relevant information arrives that is meaningful, concise and thought provoking, we have a tendency to reflect on this data for the principles and guidance that it offers. Here are seven insights that are worthy of the title Profound Knowledge.

1. LEADERSHIP PRINCIPLES: R.E.S.P.E.C.T.
Respect is essential for effective leadership. Lack of respect will require a leader to work twice as hard to realize their objectives. Furthermore, leaders can't be successful as disconnected individuals, no matter how great their individual expertise or potential is. To be an effective leader, you must have the support and respect of those you lead.

2. PARADIGMS: BREAKING THE MOLD
Paradigms are sets of rules and regs that establish the boundaries of what is currently believed to be possible within a given field. Therefore, our perceptions of reality, based on our paradigms, dramatically effect our business decisions. Likewise, we try to make future decisions by basing them on our current paradigms. Case in point, in 1968 Swiss watch makers had over 60% of the world's marketshare. By 1978, their dominance shrank to a mere 10%. What happened? The current paradigm had shifted and a new paradigm was born... It was the Swiss that first developed the quartz watch however they did nothing to protect their ideas and freely displayed the new quartz at world watch conferences. Seiko quickly capitalized on this new method of watch design and significantly enhanced their marketshare to become a world leader.

3. THE NEED FOR LONG-TERM VISION: THE PELICAN BRIEF
The pelican catches fish by flying high over their unsuspecting victims then diving at a high rate of speed into the water to forcefully overcome their prey. Although a successful method, this process eventually leads to their demise. You see, diving from high altitudes damages their eyes and slowly breaks down other vital functions that allow for their success. Eventually, the pelican goes blind and is unable to fish at all.

4. WORD OF MOUTH MARKETING
Businesses have used word of mouth marketing for years. In the case of the liquor industry, it was not uncommon to have paid agents visit trendy bars, order the brand of choice (normally an unknown import) and strike up conversations with both barkeeps and customers in order to establish or talk up a cool image. In many cases it worked!

5. SUCCESS
Studies by Harvard, Stanford and the Carnegie Foundation suggest that success on the job depends 85 percent on people skills and only 15 percent on technical knowledge.

6. ORGANIZATIONS AND GEESE
Geese fly in a V-formation where each bird must take a turn at fighting the wind and being the leader. Each must know the common destination and choose the right course and speed. At any given moment each bird must be capable of leading all the others.

7. CREATIVITY
Creativity does not come from inspiration. Creativity comes from knowledge.

Discover more Profound Knowledge by visiting the
Focused Impact Media Group at http://www.focusedimpact.com

(c) 2001, 2003. Focused Impact Media Group. All Rights Reserved.

This article can be freely published. Please include all copy above this sentence.

PROFOUND KNOWLEDGE - CHAPTER ONEPeter Andersen

Profound Knowledge - Chapter One Written by Focused Impact Media http://www.focusedimpact.com

We all are on a quest for knowledge. Whether it is information that will make our lives easier or just small packets of data that in a trivial way allows us to sort out why things are the way they are on this planet. Therefore, when relevant information arrives that is meaningful, concise and thought provoking, we have a tendency to reflect on this data for the principles and guidance that it offers. Here are a total of fifteen insights, each of which has appeared in previous issues of our monthly newsletter under the highly regarded title of Profound Knowledge.

RISK TAKING / ENTREPRENEURSHIP

1. Norman Vincent Peale: The greatest risk in life is to risk nothing. The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing.

2. Success is only achieved through progress. Progress is only achieved through risk.

3. If you don't go into the cave of the tiger, how are you going to get its cub?

4. A true optimist knows that it is darkest just before the dawn.

5. Many a false step is made by standing still.

BUSINESS STRATEGIES / CONCEPTS

1. Einstein was often quoted as saying, No problem can be solved from the same consciousness that created it.

2. When you drink the water, remember the well.

3. On the digital battlefield, information is the weapon

of choice. - FocusedImpact.com

4. In business, there is only one rule: whatever works.

5. One principle of chaos theory states that within dynamic systems, a slight variation, can create significant change. Therefore, does the flap of a butterfly wing in Tokyo affect a thunderstorm in Texas? Are events in nature and human relationships driven by the utterfly effect ?

ITEMS TO PONDER:

1. Only 7% of a message is communicated verbally. 35% is conveyed

through intonation and style. Whereas 58% of your message is delivered

by non-verbal cues.

2. Sometimes the grass on the other side of the fence is concrete painted

green.

3. There is nothing more precious than time. Money, love and happiness

do not exist without time.

4. Mark Twain once said, I am an old man and have known a great many

troubles, but most of them never happened.

5. What is knowledge?... He who receives an idea from me receives instruction himself, without lessening mine; just as he who lights his torch at mine receives light himself, without darkening mine. - Thomas Jefferson

Focused Impact Media Group specializes in integrated marketing communications. We are skilled at optimizing results by coordinating multiple communication channels into a highly focused-impact that enhances brand identity, positioning and market awareness. For more information and to receive our popular monthly newsletter visit http://www.focusedimpact.com.

PROFOUND KNOWLEDGE - CHAPTER TWOPeter Andersen

Profound Knowledge - Chapter Two
Written by Focused Impact Media
http://www.focusedimpact.com

We all are on a quest for knowledge. Whether it is information that will
make our lives easier or just small packets of data that in a trivial way
allows us to sort out why things are the way they are on this planet.
Therefore, when relevant information arrives that is meaningful, concise
and thought provoking, we have a tendency to reflect on this data for the
principles and guidance that it offers. Here are a total of seven insights,
each of which has appeared in previous issues of our monthly newsletter
under the highly regarded title of Profound Knowledge.

1. LEADERSHIP PRINCIPLES: R.E.S.P.E.C.T.
Respect is essential for effective leadership. Lack of respect will require
a leader to work twice as hard to realize their objectives. Furthermore,
leaders can't be successful as disconnected individuals, no matter how
great their individual expertise or potential is. To be an effective leader,
you must have the support and respect of those you lead.

2. PARADIGMS: BREAKING THE MOLD
Paradigms are sets of rules and regulations that establish the boundaries
of what is currently believed to be possible within a given field. Therefore,
our perceptions of reality, based on our paradigms, dramatically effect our
business decisions. Likewise, we try to make future decisions by basing
them on our current paradigms. Case in point, in 1968 Swiss watch
makers had over 60% of the world's marketshare. By 1978, their dominance
shrank to 10%. What happened? The current paradigm had shifted and a
new paradigm was born. It was the Swiss that first developed the quartz
watch however they did nothing to protect their ideas and freely displayed
the new quartz at world watch conferences. Their paradigms caused them
to think that the old method of watch making would never be challenged.
Seiko quickly capitalized on this new method of watch design and significantly
enhanced their marketshare to become a world leader.

3. THE NEED FOR LONG-TERM VISION: THE PELICAN BRIEF
The pelican catches fish by flying high over their unsuspecting victims then
diving at a high rate of speed into the water to forcefully overcome their prey.
Although a successful method, this process eventually leads to their demise.
You see, diving from high altitudes damages their eyes and slowly breaks
down other vital functions that allow for their success. Eventually, the pelican
goes blind and is unable to fish at all.

4. WORD OF MOUTH MARKETING
Businesses have used word of mouth marketing for years. In the case of the
liquor industry, it was not uncommon to have paid agents visit trendy bars,
order the brand of choice (normally an unknown import) and strike up
conversations with both barkeeps and customers in order to establish or talk
up a cool image. In many cases it worked!

5. SUCCESS
Studies by Harvard, Stanford and the Carnegie Foundation suggest that
success on the job depends 85 percent on people skills and only 15 percent
on technical knowledge.

6. ORGANIZATIONS AND GEESE
Geese fly in a V-formation where each bird must take a turn at fighting the
wind and being the leader. Each must know the common destination and
choose the right course and speed. At any given moment each bird must
be capable of leading all the others.

7. CREATIVITY
Creativity does not come from inspiration. Creativity comes from knowledge.

Focused Impact Media Group specializes in integrated marketing
communications. We are skilled at optimizing results by coordinating
multiple communication channels into a highly focused-impact that
enhances brand identity, positioning and market awareness. For more
information and to receive our popular monthly newsletter visit
http://www.focusedimpact.com.