2009

Submission : Prof Issac Jacob K J Somaiya Institute of Management Studies and Research, Mumbai

[VIRAL MARKETING]
Rahul Avasthy PGDM Marketing – Roll number 08

Viral Marketing

Principles of Viral Marketing
Viral marketing, or "refer-a-friend," email campaigns have received a lot of attention in the media recently. These campaigns, which encourage recipients of promotional emails to forward the messages to their friends, have garnered both positive and negative reviews from consumers, privacy advocates, and industry pundits. At the heart of the issue are concerns over sending unsolicited email, but by using viral marketing tactics carefully, marketers may avoid negative reactions and gain an excellent return on investment (ROI) as they increase the reach of a marketing message to a targeted group far beyond their original audience. I admit it. The term "viral marketing" is offensive. Call yourself a Viral Marketer and people will take two steps back. I would. "Do they have a vaccine for that yet?" you wonder. A sinister thing, the simple virus is fraught with doom, not quite dead yet not fully alive, it exists in that nether genre somewhere between disaster movies and horror flicks. But you have to admire the virus. He has a way of living in secrecy until he is so numerous that he wins by sheer weight of numbers. He piggybacks on other hosts and uses their resources to increase his tribe. And in the right environment, he grows exponentially. A virus don't even have to mate -- he just replicates, again and again with geometrically increasing power, doubling with each iteration: 1 11 1111 11111111 1111111111111111 11111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111 In a few short generations, a virus population can explode.

Viral Marketing Defined
What does a virus have to do with marketing? Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, to millions. Off the Internet, viral marketing has been referred to as "word-of- mouth," "creating a buzz," "leveraging the media," "network marketing." But on the Internet, for better or worse, it's called

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"viral marketing." While others smarter than I have attempted to rename it, to somehow domesticate and tame it, I won't try. The term "viral marketing" has stuck.

The Classic Hotmail.com Example
The classic example of viral marketing is Hotmail.com, one of the first free Web-based e- mail services. The strategy is simple: 1. Give away free e- mail addresses and services, 2. Attach a simple tag at the bottom of every free message sent out: "Get your private, free email at http://www.hotmail.com" and, 3. Then stand back while people e- mail to their own network of friends and associates, 4. Who see the message, 5. Sign up for their own free e- mail service, and then 6. Propel the message still wider to their own ever- increasing circles of friends and associates. Like tiny waves spreading ever farther from a single pebble dropped into a pond, a carefully designed viral marketing strategy ripples outward extremely rapidly.

Elements of a Viral Marketing Strategy
Accept this fact. Some viral marketing strategies work better than others, and few work as well as the simple Hotmail.com strategy. But below are the six basic elements you hope to include in your strategy. A viral marketing strategy need not contain ALL these elements, but the more elements it embraces, the more powerful the results are likely to be. An effective viral marketing strategy: 1. 2. 3. 4. 5. 6. Gives away products or services Provides for effortless transfer to others Scales easily from small to very large Exploits common motivations and behaviors Utilizes existing communication networks Takes advantage of others' resources

Let's examine at each of these elements briefly.

1. Gives away valuable products or services
"Free" is the most powerful word in a marketer's vocabulary. Most viral marketing programs give away valuable products or services to attract attention. Free e-mail services, free information, free "cool" buttons, free software programs that perform powerful functions but not as much as you get in the "pro" version. Wilson's Second Law of Web Marketing is "The Law of Giving and Selling" (http://www.wilsonweb.com/wmta/basic-principles.htm). "Cheap" or "inexpensive" may generate a wave of interest, but "free" will usually do it much faster. Viral marketers practice delayed gratification. They may not profit today, or tomorrow, but if they can
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generate a groundswell of interest from something free, they know they will profit "soon and for the rest of their lives" (with apologies to "Casablanca"). Patience, my friends. Free attracts eyeballs. Eyeballs then see other desirable things that you are selling, and, presto! you earn money. Eyeballs bring valuable e- mail addresses, advertising revenue, and e-commerce sales opportunities. Give away something, sell something.

2. Provides for effortless transfer to others
Public health nurses offer sage advice at flu season: stay away from people who cough, wash your hands often, and don't touch your eyes, nose, or mouth. Viruses only spread when they're easy to transmit. The medium that carries your marketing message must be easy to transfer and replicate: e-mail, website, graphic, software download. Viral marketing works famously on the Internet because instant communication has become so easy and inexpensive. Digital format make copying simple. From a marketing standpoint, you must simplify your marketing message so it can be transmitted easily and without degradation. Short is better. The classic is: "Get your private, free email at http://www.hotmail.com." The message is compelling, compressed, and copied at the bottom of every free e- mail message.

3. Scales easily from small to very large
To spread like wildfire the transmission method must be rapidly scalable from small to very large. The weakness of the Hotmail model is that a free e- mail service requires its own mailservers to transmit the message. If the strategy is wildly successful, mailservers must be added very quickly or the rapid growth will bog down and die. If the virus multiplies only to kill the host before spreading, nothing is accomplished. So long as you have planned ahead of time how you can add mailservers rapidly you're okay. You must build in scalability to your viral model.

4. Exploits common motivations and behaviors
Clever viral marketing plans take advantage of common human motivations. What proliferated "Netscape Now" buttons in the early days of the Web? The desire to be cool. Greed drives people. So does the hunger to be popular, loved, and understood. The resulting urge to communicate produces millions of websites and billions of e-mail messages. Design a marketing strategy that builds on common motivations and behaviors for its transmission, and you have a winner.

5. Utilizes existing communication networks
Most people are social. Nerdy, basement-dwelling computer science grad students are the exception. Social scientists tell us that each person has a network of 8 to 12 people in their close network of friends, family, and associates. A person's broader network may consist of scores, hundreds, or thousands of people, depending upon her position in society. A waitress, for example, may communicate regularly with hundreds of customers in a given week. Network marketers have long understood the power of these human networks, both the strong, close networks as well as the weaker networked relationships. People on the Internet develop networks
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of relationships, too. They collect e- mail addresses and favorite website URLs. Affiliate programs exploit such networks, as do permission e-mail lists. Learn to place your message into existing communications between people, and you rapidly multiply its dispersion.

6. Takes advantage of others' resources
The most creative viral marketing plans use others' resources to get the word out. Affiliate programs, for example, place text or graphic links on others' websites. Authors who give away free articles, seek to position their articles on others' webpages. A news release can be picked up by hundreds of periodicals and form the basis of articles seen by hundreds of thousands of readers. Now someone else's newsprint or webpage is relaying your marketing message. Someone else's resources are depleted rather than your own.

Put into practice
I grant permission for every reader to reproduce on your website the article you are now reading -- "The Six Simple Principles of Viral Marketing" (see http://www.wilsonweb.com/wmt5/viral-principlesclean.htm for an HTML version you can copy). But copy this article ONLY, without any alteration whatsoever. Include the copyright statement, too, please. If you have a marketing or small business website, it'll provide great content and help your visitors learn important strategies. (NOTE: I am giving permission to host on your website this article AND NO OTHERS. Reprinting or hosting my articles without express written permission is illegal, immoral, and a violation of my copyright.) When I first offered this to my readers in February 2000, many took me up on it. Six months later a received a phone call: "I want to speak to the King of Viral Marketing!" "Well, I'm not the King," I demurred. "I wrote an article about viral marketing a few months ago, but that's all." "I've searched all over the Internet about viral marketing," he said, "and your name keeps showing up. You must be the King!."
The Secrets of Word-of-Mouth Marketing by George Silverman

Viral Marketing by Russell Goldsmith

It worked! Even five years later this webpage is ranked #1 for "viral marketing." To one degree or another, all successful viral marketing strategies use most of the six principles outlined above. In the next article in this series, "Viral Marketing Techniques the Typical Business Website Can Deploy Now" (http://www.wilsonweb.com/wmt5/viral-deploy.htm), we'll move from theory to practice. But first learn these six foundational principles of viral marketing. Master them and wealth will flow your direction.

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Viral Marketing
Why viral marketing fails
Ensuring one’s marketing message evokes enough sentiment for it to be passed on and on is a gigantic challenge.

Hotmail owes its success to viral marketing. Sabeer Bhatia, creator of Hotmail.

Sunil George Kuruvilla It was supposed to be the advertising agency‟s nightmare. After all, who would need an advertising agency when the consumer himself passes the advertising message voluntarily to others? It was supposed to be the next Big Bang. Instead, most ofthe campaigns often end in a whimper. Yes, I am talking about viral marketing. First, the basics. Viral marketing uses social networks to create and spread brand awareness. An analogy can be drawn with pathological and computer viruses in the way the viral message passes from one consumer to another. Outside the context of Internet, viral marketing has been referred to as „word-of- mouth‟, „buzz creation‟, „network marketing‟ et al. Twisting Shakespeare‟s words, what is in a nam e? That which we call a virus by any other name would be as nasty. Well, as we will see, there is a lot in a name. A good illustration of viral marketing is the practice of Hotmail to append its own advertisement to every outgoing mail. What it means for Hotmail is that every recipient of a mail would also find an invitation to join Hotmail. Let‟s say one of your friends sends a mail to you from his Hotmail account. You got mail. You read the mail and notice a tiny message at it bottom. The message says, “Get your private, free e- mail at http://www.hotmail.com‟. You click on it. You open the free account. Voila! You got virus! Now, you send a mail to your aunt in New Jersey. She sends a mail to her son in Boston, who in turn sends a mail to his newfound girlfr iend in Paris, so on and so forth. This is exactly how Hotmail became the largest mail service provider in the world. What started as a flu is an epidemic now.

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Viral Marketing
The emergence of clicktivism as an online version of activism is also a case in point. Through the clicktivism method, users are encouraged to donate, write a letter, forward a mail or sign a petition, online. Forwarded mails are increasingly taking the place of actual black flag marches. In the Indian context, the presence of clicktivism was appare nt during the recent anti-reservation strike and when strong e- mail „appeals‟ reached a lot of people. So, how can a technique that worked so well for Hotmail and clicktivists fail? Here are the reasons:
The name

Shakespeare was wrong. The name „viral marketing‟ is crippling. It has such a negative denotation that cannot be washed away even by a dip in the Ganges. Many experts, obviously enamoured by this innovative marketing tool, have tried to give it a shroud of respectability by using other terms. Alas, they have failed. The term „viral marketing‟ has proved to be as dogged as the technique itself. Talk about the doctor tasting his own medicine.
Spam? No thank you, Ma’am.

Those of us who have received innumerable mails explicating about ways to increase our assets will be wary of anything we receive from outside our social network. We are more likely to reach for the Delete button than the Forward button. Spam is the equiva lent of an itch on your back that you can‟t reach. Spam causes many a spasm of anger, and unsolicited messages are Spam. Period.
The times, the people

Generation X (anyone born between 1961 and 1981) dominates the consumer landscape today and they are savvier to marketing than any other generation before them. They are also characterised by their cynicism, scepticism and mistrust in traditional values. So, if ever they get the idea that somebody is using them as vehicles for marketing, then we may all sing „God save the marketer‟. As Lincoln put it, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
The how of it

Viral marketing seems simple enough. Indeed, in the Hotmail case, all it takes is a click on the link. However, it doesn‟t always work that way. For one, not every company is in the business of a free e- mail service. How does an FMCG company or a retailer ensure that the consumer spreads its advertising message „voluntarily‟? This is the crux of the issue: how do you make a receiver of an email press the Forward button? The answer is simple. People will forward content that they feel strongly about. So that‟s easy. We just identify a strong issue. What then? The problem from a branding perspective is how does one ensure that the „strong issue‟ is in sync with your own brand identity. Surely, not many companies can afford to take up issues espousing political ideologies.
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The ‘E’ word

I left it towards the end quite deliberately. Ok, ethics is slightly slippery. Yet, there is a certain hideousness to the act of spreading one‟s advertising message through an unsuspecting customer. So, what if the customer is not king? What if the customer is a donkey? He is still the king of donkeys. And many times, „voluntary‟ is not always voluntary. This is because the consumer doesn‟t suspect that he has fallen victim to the plans of a dexterous marketer. The latest evidence of a viral marketing campaign gone wrong is Sony‟s attempt to use Youtube to market its Playstation consoles. Sony created a fictitious character called Peter and tried to pass him off as a hip-hop maven. Needless to say, the plan flopped as discerning users soon discovered the scam. In the end, Sony had to make a public apology. That must have hurt. Is that it? Is it time to say goodbye to the virus? Far from it. Like a true, blue virus, we can always expect it to take a mutant form that is more resistant to the vagaries of marketing. Watch this space. Viral marketing and viral advertising refer to marketing techniques that use pre-existing social networks to produce exponential increases in brand awareness, through self-replicating viral processes, analogous to the spread of a computer virus. It can often be word-of-mouth delivered and enhanced online; it can harness the network effect of the Internet and can be very useful in reaching a large number of people rapidly. Some of the first recorded offline / online viral campaigns were developed by Tim Nolan of Spent2000.com fame circa 1996. By placing abstract pairings of catch-phrases, quotes, song lyrics and image mashups, Mr. Nolan developed a method of creating "buzz" around a URL based installation. Phrases like "This city isn't safe" placed along side a URL created curiousity enough in people's minds to remember a URL and visit again once they were online. Viral marketing sometimes refers to Internet-based stealth marketing campaigns, including the use of blogs, seemingly amateur web sites, and other forms of astroturfing, designed to create word of mouth for a new product or service. Often the goal of viral marketing campaigns is to generate media coverage via "offbeat" stories worth many times more than the campaigning company's advertising budget. The term "viral advertising" refers to the idea that people will pass on and share interesting and entertaining content; this is often sponsored by a brand, which is looking to build awareness of a product or service. These viral commercials often take the form of funny video clips, or interactive Flash games, an advergame, images, and even text. Viral marketing is popular because of the ease of executing the marketing campaign, relative low-cost (compared to direct mail), good targeting, and the high and rapid response rate. The main strength of viral marketing is its ability to obtain a large number of interested people at a low cost.
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Viral Marketing
The hardest task for any company is to acquire and retain a large customer base. Through the use of the internet and the effects of e-mail advertising, the business-to-consumer (B2C) efforts have a greater impact than many other tools of marketing. Viral marketing is a technique that avoids the annoyance of spam mail; it encourages users of a specific product or service to tell a friend. This would be a positive word-of- mouth recommendation. One of the most successful perspectives found to achieve this customer base is the integrated marketing co mmunication IMC perspective. Types of Viral Marketing Campaigns: These are few types of Viral Marketing– Pass-along: A message which encourages the user to send the message to others. The crudest form of this is chain letters where a message at the bottom of the e- mail prompts the reader to forward the message Incentivised viral: A reward is offered for either passing a message along or providing someone else's address. This can dramatically increase referrals. However, this is most effective when the offer requires another person to take action. Undercover: A viral message presented as a cool or unusual page, activity, or piece of news, without obvious incitements to link or pass along. In Undercover Marketing, it is not immediately apparent that anything is being marketed "Edgy Gossip/Buzz marketing" ads or messages that create controversy by challenging the borders of taste or appropriateness. Discussion of the resulting controversy can be considered to generate buzz and word of mouth advertising. Prior to releasing a movie, some Hollywood movie stars get married, get divorced, or get arrested, or become involved in some controversy that directs conversational attention to them. User- managed database: Users create and manage their own lists of contacts using a database provided by an online service provider. By inviting other members to participate in their community, users create a viral, self-propagating chain of contacts that naturally grows and encourages others to sign up as well.
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Tips for Optimizing Viral Marketing Campaigns
Listed below are five insights on how to execute a viral marketing campaign most effectively.
1. Offer an incentive. Viral marketing works best when a valuable and tangible incentive is offered, encouraging individuals to forward an email message to their friends. However, marketers Rahul Avasthy Page 9

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should cap the incentive to a specific quantity to avoid spam-like distribution of the message -for example, offering an incentive of 20 percent off referrers' next purchase if they forward the message to five friends. Open-ended incentives, such as offering a $5 credit for every five friends referred, can end up causing a marketer customer service, financial, and privacy-related problems. A women's athletic clothing multichannel retailer recently offered a creative and socially aware incentive when it launched a viral marketing campaign that rewarded message recipients with a free T-shirt and a $1 donation to the Susan G. Komen Breast Cancer Foundation when an individual sent the special email message to five friends and three of those friends opted in to the retailer's catalog or email list. The campaign was tremendously successful, driving a clickthrough rate three times higher than normal, an email newsletter sign-up rate of over 30 percent, and a catalog subscription rate of nearly 70 percent. Meanwhile, cost per sale decreased by 89 percent. 2. Don't consider the referral an opt-in. When a customer refers a friend, the referral should not be considered an opt-in. A name and email address volunteered by a person's friend does not constitute an opt-in by the individual, so the data should be deleted immediately after the referral email is sent. Verbiage should be included in the referral email asking if the individual would like to receive future mailings, allowing her to opt in if she wishes. 3. Personalize the referral email. Response rates increase dramatically when users can see that a message is coming from a friend, so it is best to personalize the email message to show that it's coming from a recognizable source. The subject line is the key component in a viral marketing email, because it can immediately identify the email as friendly. A good subject line may read: "ADV: John Doe Thought You'd Like 20% Off at XYZ.com," thereby identifying that it is an advertisement, there's a special offer, and the message was sent from a friend. 4. Track and analyze the results. As with any marketing campaign, tracking the results and optimizing performance over time is absolutely necessary. Thankfully, sophisticated email marketers can track insightful and actionable data that can be used to evaluate performance. Important metrics to analyze are pass-along, click-through, and conversion rates. Marketers should separate the click-through and conversion rates by original customers from referrals and evaluate their respective performances. These metrics will alert a marketer to which offers and customers drive the highest ROI. 5. Continually promote friendly referrals. Marketers who want to have their messages frequently forwarded should place a viral marketing offer in every relevant outgoing email message. Viral marketing makes for a great one-time campaign, but it can also be a very effective tool for continuing to broaden the reach of your marketing messages over time.

Though no sure- fire way exists to prevent negative customer reactions, by following these five concepts marketers should find their viral marketing campaigns to be most effective.

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