Viral Marketing as a Launch Strategy
There is a prevalent theory that in today’s world of limitless communication the easiest way for a start-up to launch is to rely on viral marketing. The idea is that whatever product or service you are introducing; the main distribution platform should be word of mouth. Proponents claim that the internet lubricates viral commiunication. They point to the successes of YouTube, MySpace, Skype, Facebook, and Flikr and infer that because these sites grew exponentially through word of mouth and they are internet based, that therefore all consumer facing internet properties can and should be distributed the same way.
I read a post in startup-review.com about Myspace. What I found most fascinating is that the launch for Myspace.com was more traditional than it was viral. It was only after it had achieved a certain user base that viral tactics began to work. This is an interesting fact that calls into question how a company should market itself in the internet age.
If we analyze the five companies that I mentioned as examples: Youtube, myspace, skype, facebook, and flikr, an interesting trend emerges. They are all products of the network effect. What I mean by this is that these sites are completely worthless without a network of people. Much like the fax machine is useless unless at least two people have it; these sites need a significant users base to be effective.
Youtube needs uploaders and downloaders. Myspace needs profiles and viewers. So does facebook. Skype needs callers. Fliker needs photos and views.
These sites did not work because of viral marketing, but rather they received viral marketing because they worked. Myspace and Skype are the clearest example of this. They both started with great distribution platforms, and only once they had that core group of users did these sites become more effective and worthy of spreading virally.
A second misconception is that a network site, once it has the network, tends to attract an even bigger crowed because it has a bigger pool of advocates to spread its message. While this might play some role in the equation, the reality is that the more of a network a site has the better product is, and thus it becomes an easier viral sell. As the site gets better and better, it is able to get users to speak about the product, and has an easier time keeping new members. It was only after our example companies became effective through their primary distribution channels that they started seeing their exponential growth.
What I am saying can easily be applied to the pre-internet fax machine. Initially it was difficult to sell a fax machine because there was no one to send faxes to. A lot of marketing and sales efforts were spent getting these machines into the hands of a few businesses, and eventually a network of fax machines was formed. The value of each fax machine increased exponentially, and before anyone knew it, people were jumping to get their hands on one of them. The viral/buzz was created not because there were more evangelists out there, but because the fax machine was becoming a really indispensable product.
Viral, word of mouth, buzz, and all other web 2.0 fads are great in theory, but in practice, if you want to build the next great consumer facing application, and rival the success of skype, myspace or facebook, then make sure you have a strong distribution network in place first.
Entry filed under: Start-up.