Viral Marketing: Plant a Promotional Seed that will Spread
Like Wildfire>
"Our business runs on word of mouth," said Hugh Hefner some
time ago, and his business is still running pretty well. Viral marketing
is word of mouth on steroids, accelerated by the speed and immediacy
that the Internet offers.
California-based venture capitalists, Draper Fisher Jurvetson, first
coined the term "viral marketing" in 1997, when they used the term
in Netscape newsletter--"we used several examples to illustrate the
phenomenon, without defining it more precisely than 'network-enhanced
word of mouth.' Its original inspiration came from the pattern of
adoption of Hotmail, beginning with its launch in 1996." [4]
Hotmail was able to 'grow' its subscriber base more rapidly than any
other company in history. In its first 1.5 years, Hotmail signed up
over 12 million subscribers while spending less than $500K on marketing,
advertising, and promotion. It is now signing up more than 150,000
subscribers every day, seven days a week.
The Mechanism
Although the origins of chess remain shrouded in mystery, one of the
more common stories is that the game was invented about 1,000 BC,
by an Indian mathematician, who presented it as a gift to some potentate.
Asked what he would like as a reward for the cool new game, the inventor
asked to have the chessboard filled with rice-one grain on the first
square, two on the second, four on the third, eight on the next, and
so on. Seems a modest request. However, two times two times two, 64
times (2 64) is more rice than there is in the entire world! That
is the power lurking in "a friend told a friend, who told a friend,
who told a friend…" and the mechanism that makes viral marketing tick.
Jurvetson [4] gives the following simple first-order model for viral
spread:
cumulative users = (1 + fanout) cycles
"The exponent 'cycles' is the number of times the product is used
in the time period since launch (or frequency x time). In the early
days, Hotmail and ICQ fanned out to about two new users every month,
and they each told two friends, and so on, and so on. By the simple
model, one seed user grew to three users at the end of the first
cycle, nine by the second, 27 by the third, and so on."
But that's just marketing, not selling--conversion and retention are
obviously important bottom-line considerations for the adult webmaster.
You can also factor in variables that describe the success of the
recruiting message and the retention rate as percentages:
cumulative users = [(1 + fanout x conversion rate) x retention rate]
cycles
"Working through the variables, the ideal viral product will be
used to communicate with many people, will convert a high percentage
of them to new users, and will retain a high percentage of them.
It will also be used quite frequently." Considering that happy Web
users will tell 12 people on average about their experience [6],
the viral strategy has a lot to offer webmasters.
Part 2: The
Process
Part 3: The
Dangers
Part 4: Sources,
Resources & Credits
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