Viral marketing has some great advantages – and some dangers
think of that old shampoo commercial: “Then she told two friends and they told two friends and so on…”
Viral marketing is like that: using your customers to help you market your product or service. That can mean simply having them forward your marketing messages (in most cases, e-mail) to their friends. Or it can be a more formal “sign up a friend” program that includes incentives.
Theoretically, viral marketing could work with any product, but it tends to huddle around some basic categories. It doesn’t appear to have much use in the business-to-business arena (it is also used mostly for acquisition, but can have retention applications). It is particularly suited to high-tech and entertainment – movie trailers and games often bounce around the Internet.
AllAdvantage, which offers an advertising-carrying “viewbar” that allows users to navigate the Web more easily, is a formal viral marketing company because it pays people both to surf the Web and to get friends and family members to join – allowing up to five referrals.
Some call AllAdvantage the first viral marketer. In March 1999, the four founders originally sent out a handful of e-mails (company legend says 84) and in 10 days, 250,000 people had joined. That figure is now 8 million. Other than one small college newspaper campaign, AllAdvantage has never done any advertising. “We have not had to,” says Gregg Stebben, whose title is chief Internet evangelist. “We have a sales force of millions of people and they’re doing a great job.”
Last spring, Taiwanese e-commerce company eDove Corp., a subsidiary of Reach Online Inc., Arcadia, CA, handled a viral e-mail campaign to both build up the prospecting list to promote Sony Music’s artists and to draw customers to the stores run by the Holiday karaoke chain. The campaign involved a team scratch-off game played through e-mail, with prizes from Sony and Holiday.
“In about two months we collected a database of over 200,000 names, which is 10% of the online population in Taiwan,” says Lou Tseng, CEO of Reach Online.
An example of viral’s use with a product that is neither technical nor entertainment, is a General Mills campaign launched in early September. The effort – to get college students in Chicago and Seattle to sample the Bugles snack – included a heavy viral component. The company handed out out sample packages that included postcards and a CD-ROM with a hotlink that enabled people to send the promotion to friends and get free tickets to a Gas Giants rock concert (a Bugles wrapper is required for entry).
In a certain sense, it’s odd that direct marketers would get involved with viral. DMers are concerned with measuring the precise results of their efforts, but viral often puts the campaign out of the control of the marketer.
Indeed, if original recipients send the e-mail to a friend via the forward button on their e-mail program, it’s difficult – if not impossible – for the marketer to track. But HTML mail can include a link to use to forward the e-mail. In that case, a new e-mail is actually sent to the intended recipient from the company server and the marketer can track it.
It appears that no numbers exist on what typical forwarding and conversion rates are in campaigns with a viral component. In a Jupiter Communications study, however, 69% of consumers reported telling between two and six people about a Web site when the original recommendation came from a friend.
But perhaps the mathematical-minded marketer can have his or her unease assuaged by the fact that they’re not paying a cent for new customers referred by others. In the case of the Bugles campaign, the results will be known by how many people show up at the concerts and how many bags of Bugles fly off the shelves, says Steven Kaplan, CEO of Bounty SCA Worldwide, the sampling and DM-services company working with General Mills.
Marketers have a range of opinions about whether viral marketing has privacy concerns. Libertine-minded people feel that the messages are being passed around among friends, so what’s the problem? On the opposite, cautious end of the spectrum, companies feel that because the volley begins with them, they may be implicated in any spamming. Further, they may more positively be encouraging that spamming if they are using incentives to get people to forward messages. After all, if a consumer will get points or money for signing people up, why not troll the Internet for any and all e-mail addresses he or she can find?
“A majority of the programs are incentivized or premium-based – get X amount of dollars off your next purchase if you refer a friend,” says Jay Schwedelson, corporate vice president of Worldata/Webconnect, a DM-services company that is not heavily involved in using the technique. “But people start referring non-friends to get the incentives. It becomes spam.”
Perhaps the most instructive story regarding privacy is Buy.com. Early this year, the online megamart planned to roll out a formal viral program in which participants would get paid for signing up friends. The company got cold feet, but for honorable reasons: It felt the privacy environment wasn’t conducive to such a program. It was especially concerned about fraud and hackers being able to abuse the system.
“What we couldn’t control was if those people just started to spam people and we would be complicit in that,” says Peter Sterling, Buy .com’s senior director of direct marketing.
When using incentives, experts advise limiting the number of people a consumer needs to sign up. For example, Ikea once offered a discount of $25 to those who forwarded an electronic postcard to five people and $75 for sending it to 10 people, but no increase above that.
Another solution is to make sure – even in a viral context – that people know why they’re receiving mail and from whom they’re receiving it. In other words, consumers should get their friends’ permission before they sign them up.
“If you have the ability without any authentication to sign people up, there will be abuse,” says Rodney Joffe, founder of both e-mail company Whitehat.com and CenterGate Research. “You must have a step that says before your friend is signed up, he has to do something specific.”
For example, FreeLotto, which runs a lottery-format sweepstakes on the Web, has a refer-a-friend program in which the forwarded e-mails (they actually go back through FreeLotto’s server) include the forwarder’s name and IP address. They begin: “This e-mail was sent to you by John P. Friend from the e-mail address [email protected] and the IP address 1.23.45.67. John wants you to win Cars and Cash from FreeLotto.” It goes on: “If this is not someone you know, or you believe that this was an unsolicited e-mail, please contact us at [email protected].”
“It’s wrong not to take that step,” says FreeLotto president and CEO Kevin Aronin. “We’ve had no complaints – none – and we mail our contest results to 10 million subscribers a day.”
On the other hand, FreeDrive .com, a major player in the free Internet storage business, includes no such information in its message, which looks like your standard unsolicited commercial e-mail. CEO Mike Rhodes points out that people know where the mail is coming from because of the sender’s address. The practice doesn’t seem to be hurting FreeDrive too much. The company has signed up 7 million customers since launching in June 1998 – without doing any online or offline marketing. Rhodes says that 38% of its customers sign up through a referral, the rest through an affiliate network of 10,000 sites.
Whatever you do about viral, one thing is clear: There is no such thing as a pure viral campaign and it is rarely the primary purpose of the campaign. Viral is just one tool in the marketer’s shed. Aside from privacy concerns, why not encourage people to forward your marketing mail to friends, why not ask them to lend you a marketing hand?
Says Bounty’s Kaplan: “It’s almost negligent not to put in a message that says, `Tell a friend.'”
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