Viral Marketing as a Launch Strategy

September 11, 2006 at 7:56 pm 4 comments

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.

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Entry filed under: Start-up.

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4 Comments Add your own

  • 1. Hasan Luongo  |  September 14, 2006 at 7:44 am

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  • 2. Daniel  |  November 2, 2006 at 6:51 pm

    First, you discuss the need of a compelling product, then you discuss a distribution network. In a later post you discuss the value of marketing to startups regardless of an exceptional product.

    As a marketing executive for an independant interactive agency, I’m going to passionately agree and disagree with you simultaneosly. Firstly, marketing IS essential. The better product will lose out to an inferior product many times over due to poor marketing execution. For example, look at Sony. For every Playstation, there are 5 mini-disc/ memory stick technologies that lost out in the marketplace due to a combination of failing to build a network economy, overpricing, and plain arrogance. Also look at Beta vs. VHS.

    A compelling product is easier to sell, but proper marketing is indespensible. Marketing is NOT the same as distribution. To create distribution channels, the product needs to be positioned appropriately and have the right image that emotionally resonates with the consumer’s needs (and those needs can be practical or whimsical depending on the audience). I hate how product centered many business people are. The “if I build it they will come” mentality is the most damaging myth in business.

    Now about “viral” marketing. Viral marketing can only be called “viral” if its a success and spreads on it’s own like wildfire. To call a campaign viral before it succeeds is definately counting your chickens before they’ve hatched.

    I work for iChameleon Group, one of the most successful interactive marketing firms in the country representing clients like Motorola, DeBeers, Bridgestone Golf, Virgin Mobile, and Taco Bell.

    We’ve unlocked the magic code to viral marketing, and it requires 4 to 6 months of highly strategized storyboarding and constantly feeding your target market’s dialogue with fresh content. It’s not easy, but there’s no question that the best way to get customers is to get people talking. The intended “viral” campaign is usually made in conjunction with external media like television and is probably the very best in terms of ROI for your marketing budget because the audience is wide, but more importantly, the prospective consumer actively engages and interacts with your product/brand.

    Good strategy is essential. Viral works best when there’s already some distribution (meaning that they turn their interest into a purchase), and when it’s a consumer product. B2B viral works very well as well, you just have to enter into the right communities to encourage sharing (you won’t get as large of an audience, but the audience is highly targeted); that generally means no YouTube or MySpace.

    All said, I’m surprised at how quickly you bashed “viral” marketing. Yes, it’s not a magic bullet, but spending $50k on an interactive marketing campaign with viral potential is very likely to return a substantially better ROI than a $50k full page ad in a magazine (and can eave you with email addresses and better understanding of your audience than the magazine ad as well). Definately, young companies with compelling products should explore interactive marketing. That said, you should also hire an expert and not try and do it yourself… a campaign that hopes to be viral takes months of planning and very deliberate execution.

    Reply
  • 3. Peter Koning  |  November 3, 2006 at 12:30 am

    Interesting discussion. I will try incorporate some of these ideas in the launch of our marketing platform for software companies.

    Reply
  • 4. EP  |  November 4, 2006 at 11:13 pm

    Hi Daniel,

    Thank you for your very thoughtful comment. I did not mean to imply that viral marketing is not a useful tool, as it is by far the most economical marketing mechanisms ever. What I did want to make very clear is that it is not a be-all-and-end-all of internet marketing. I have seen too often startups build themselves on the notion that viral distribution will get them too the Promised Land. This may be one of several approaches to take, but it can’t be the only one.

    As always, thank you for reading.

    Eli

    Reply

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About

Exactly one year ago I set off on the most exciting journey of my life; I started Emerging Demographics Inc (the parent company of HireWorkers.com).

Along the way I was selected as one of the top 20 young entrepreneurs by BusinessWeek.com and the 21st coolest young entrepreneur by Inc. magazine. I have also appeared in ABC7, Telemundo, NPR, and been quoted in StaffingIndustry.com, WorkforceManagment.com, Entrepreneur Magazine, and various other publications.

Over the next few months I will recount some of the stories and lessons learned from building, developing and creating a business from scratch.

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