Viral marketing relies on infectious word of mouth
By Hassan Fattah
Red Herring
March 2, 2001
Viral marketing, it seems, is a part of every business strategy these days.
Christianity.com is using it to spread the gospel. ERoom is trying it out to
market collaboration software. And the American University's Kogod School of
Business has embraced it to recruit students.
Ever since the founders of Hotmail added a Hotmail link to every email sent
through the service in 1996 (bringing in up to 12 million users in just 18 months
for a little more than $100,000 spent on marketing), viral marketing has held
out the promise of big growth for little money. Recently, as marketing budgets
have shrunk and VC dollars have dried up, retailers and managers of content
sites have been paying much more attention to viral, hoping it will do for them
what it did for Hotmail, Internet phone provider Dialpad, and other startups.
In response to this interest, most online ad and marketing shops have cobbled
together viral marketing services and christened themselves viral experts.
'Viral seems to be a necessary word in business plans these days,' says Stever
Robbins, president of advisory firm VentureCoach, a Boston-based startup. Some
80 percent of the business plans that he has seen mention a viral marketing
strategy, he says, even if it isn't really viral.
TELL YOUR FRIENDS
Think of viral as word of mouth on steroids. This approach to marketing is
not new -- Mary Kay Cosmetics, Amway, and Faberge Shampoo long ago proved there's
good money to be made when friends tell two friends. But the Net takes the process
to another level. It can spread a message like a brushfire around the world.
And because people lend a message credibility just by forwarding it, viral can
have a much stronger effect than traditional advertising or third-party recommendation.
'There's no surprise why there's so much interest in viral -- after all, our
cost of acquisition is essentially zero,' says Brad Garlinghouse, CEO of net-to-phone
provider Dialpad, which built its business on a viral marketing strategy. Only
seven months after launch, Mr. Garlinghouse says, Dialpad had amassed a base
of 7 million registered users, outstripping even Hotmail's success in as much
time. 'But viral marketing is also very tricky. People think they can package
it and sell it, but that's just not true.'
It's very difficult to make a viral campaign take hold. The message must be
compelling, and it must be tailored to the right audience. Even then, viral
marketing is almost by definition an accident. Many argue that firms like Qbiquity
(formerly Gazooba), Viralon, and others that sell viral marketing services are
really just selling a wrinkle on the traditional email list.
'Nobody has ever planned viral marketing, they only say they do,' adds Jim
Meskauskas, chief Internet strategist at online media agency Mediasmith. 'Think
of viral marketing as the next pet rock. No one knew it could really take off,
but it did.'
EMAIL INDIGESTION
Of course, one person's viral marketing is another person's spam. And businesses
that flood the Net with quirky videos and sweepstakes gimmicks walk a thin line
between interesting people and annoying them. In fact, viral marketing can be
as big a risk to a brand as an advantage, marketers warn.
'A lot of people are basically putting out the equivalent of graffiti on the
wall,' says Mark Modzelewski, director of PR firm Niehaus Ryan Wong NYC. 'Now
tell me, how many times have you bought something because of a bunch of graffiti
on the wall?'
Viral can spread a negative message as quickly as a positive one. Take the
well-publicized example of Swedish furniture-maker Ikea, which launched a viral
campaign to publicize the opening of its new store in Emeryville, California.
Ikea's marketers set up an email postcard service for visitors to send to friends
announcing the store's opening. Users who passed the word got a discount; the
more friends they referred, the bigger the discount. In no time, people were
flooded with the cards as 'friends' tried to maximize their discount. Within
48 hours, 80,000 email cards were sent through the service, many of them just
plain spam, and Ikea quickly canceled the offer after some bad press.
'At first we thought it was really terrific and smart of us,' admits Rich
D'Amico, Ikea's business manager. 'But you can have the best of intentions and
[have] it not be construed that way.'
The lesson, Mr. D'Amico says, is to think the campaign through, have clear
objectives, and, most importantly, reach the right people. Ikea marketers haven't
gone back to viral marketing since, focusing instead on opt-in permission marketing.
Mr. D'Amico says the furniture retailer may try another viral campaign, but
will set its goals in a different manner. 'If you're going to ask people to
talk about you, you'd want them to say the right things,' he stresses.
And there lies the fundamental risk in viral marketing. Effectively, individuals
are taking hold of your brand and talking about it, and they could end up misleading
or, worse, diminishing it in the process.
'It's a hard concept to control because you really don't do anything [once
it's out],' says Myron Roomkin, dean of American University's Kogod School of
Business. School officials curtailed all traditional marketing in favor of a
purely Webcentric model earlier this year. So far it's working -- the viral
campaign has boosted applications by 30 percent. Still, it was a gamble, Mr.
Roomkin says. 'We jumped off a cliff to do this, but I think people have to
take a leap of faith to make this stuff work,' he adds.
Clearly, viral has delivered good results for early players. These days, though,
many marketers say it requires a more focused approach and different expectations.
According to Sandeep Krishnamurthy, a professor of marketing at the University
of Washington, viral campaigns work better for promoting Net-based services
than products, and they work best when it's a free service or a free component
to a service. They also are more effective when aimed at a homogenous customer
base -- cable subscribers or telephone users, for example -- or a social network
that communicates often. In every case, viral efforts must provide value to
sender, recipient, and company.
But sophistication and honesty may be the most critical elements. 'Fake viral
marketing is when it's so obvious you're marketing something, you tip off the
audience,' notes Ray Simon, author of Mischief Marketing. 'It has to be a genuine
service that people need.'