Sales and Marketing

Recently, I have had to immerse myself into studying about viral marketing in order to understand some challenges faced by startups I am studying or assisting as part of my responsibilities at work. This series of posts on Viral Marketing is my attempt to document some of what I have learned. 1Any errors in appropriately quoting my sources is entirely mine. Let me know what you object to, and how I might fix the problem. The data in this post is only as reliable as the sources from which I obtained them.

The term “Viral Marketing” was popularized by some combination of Tim Draper, Steve Jurvetson and Jeffrey Rayport. Jeffrey Rayport used the term “v-marketing” in an article in Fast Company in December 1996/January 1997. ²Jeffrey Rayport, The Virus of Marketing, Fast Company, Dec 96/Jan 97. Accessed at FastCompany.com on Nov 28, 2013. Tim Draper and Steve Jurvetson of DFJ claim to have used the term “viral marketing” in their 1997 newsletter to investors in which they discussed DFJ’s investment in Netscape. Steve Jurvetson published a blog post discussing the term in May 2000. ³Steve Jurvetson, Recent Developments in The Evolution of Viral Marketing, May 1, 2000. Accessed at DFJ.com on Nov 28, 2013

Viral marketing is a collection of marketing, advertising, and sales techniques designed to exploit the power of dense social networks in order to increase product or brand awareness, increase user adoption, and drive revenue growth. This practice is not new, evidence exists to suggest that it has been in use at least since the 1800s. ⁴See for example Infectious Texts: Modeling Text Reuse in Nineteenth-Century Newspapers. Also, Here’s How Memes Went Viral – In the 1800s.

According to Steve Jurvetson viral marketing is:

• Network-enhanced word of mouth,
• Usage affiliated marketing – friends marketing to one another.

As a result of their belief in the power of viral marketing DFJ invested in several startups that used viral marketing techniques in order to grow; Hotmail, NetZero, Skype, eVite, SeeUthere, Keen/Inforocket, Homestead, Mimeo, and NetMind/Palm are startups he mentions in his blog post.

According to Jeffrey Rayport viral marketing is most successful when it:

• Is stealthy in the way it approaches potential targets,
• Offers something free but valuable upfront,
• Exploits the natural behavior of members of its target communities,
• Does not look like a virus – avoids eliciting initial negative reactions from its targets,
• Exploits nodes with many weak ties in social networks rather than nodes with few strong ties,
• Reaches the tipping point – the point at which future growth mimics the behavior of an epidemic.

So, for a startup short on time, cash, people and resources, how does one go about developing a product with viral characteristics? What makes products go viral? What mechanics enhance social transmission?

Recent research ⁵Berger, Jonah A. and Milkman, Katherine L., What Makes Online Content Viral? (December 25, 2009). Available at SSRN: http://ssrn.com/abstract=1528077 or http://dx.doi.org/10.2139/ssrn.1528077. Published in Journal of Marketing Research, Volume 49, Number 2, April 2012. Accessed Nov 28, 2013. suggests that digital content goes viral for a simple reason, when people care they share. More specifically, digital content that evokes positive emotions like amusement, awe, or excitement, is shared more than digital content that evokes negative emotions like anger, anxiety, frustration, or sadness. Social transmission and diffusion is governed by individual-level psychological and macro-level sociological factors. What does this mean? I am unlikely to share news about a digital product ⁶I am mainly interested in the application of this research to digital products, so I will use “content” and “product” interchangeably. that makes me happy, but that I feel is irrelevant to my community of friends. ⁷For example, language barriers could dissuade me from transmitting a particular product widely among my community of friends. Later we will see examples of viral marketing that involves targeting specific markets by LINE, a Japanese messaging app. People share in order to entertain their friends, but entertaining content that is surprising and interesting is more viral than content that is merely entertaining. People share in order to inform and educate others, but content that is also practical and positive is more viral than similar content that is merely informative.  The authors make some suggestions for people developing products that might benefit from viral growth:

• Viral marketing campaigns designed to spread adoption of a digital product should evoke high-arousal emotions – content or relaxed consumers will share less than amused consumers. The controversies that surrounded Facemash helped to propel Facebook’s adoption. ⁸See for example; Katherine A. Kaplan, Facemash Creator Survives Ad Board, Harvard Crimson, November 19, 2003. Accessed on Nov 28, 2013. Note that the article attracted 216 comments. Facemash was Facebook’s predecessor.

After creating the website, Zuckerberg forwarded the link to a few friends for advice. But the link was sent out on several campus group list-serves, and traffic skyrocketed. In the course of one day, the number of visitors quadrupled – by 10 p.m., the site had been visited by 450 people, who voted at least 22,000 times. 

– Extract from 2003 Harvard Crimson article about Facemash and Mark Zukerberg.

• Viral marketing campaigns should focus less on targeting “influentials” and more on crafting content and creating features that will cause contagious social transmission.

Why do consumers talk about some products more than others, and what drives those conversations immediately and over time? Jonah Berger and Eric M. Schwartz have studied that question. ⁹Berger, Jonah A. and Schwartz, Eric M., What Do People Talk About? Drivers of Immediate and Ongoing Word-of-Mouth (April 25, 2011). Available at SSRN: http://ssrn.com/abstract=1822246. Published in Journal of Marketing Research, Volume 48, Number 5, October 2011. Accessed Nov 28, 2013. Their research suggests that:

• Digital products that have higher public visibility with consumers, or that send consumers more frequent cues gain greater volumes of immediate, ongoing and overall word of mouth. ¹⁰It is not an accident that you generally open the apps on your smartphone or tablet that send you periodic prompts more frequently than those that do not.
• Promotional giveaways may boost word of mouth, and it is better to giveaway the product itself, or to giveaway non-product items like t-shirts. ¹¹A brand-new, unread email, chat, or status update could be considered a reward that fits in this category.
• Simply being “more interesting” is not a sufficient quality to maintain word of mouth.
• There is a difference between the factors that lead to online word of mouth and offline word of mouth sharing.

Here are some examples of products that have benefited from the power of viral marketing. ¹²I am gathering data in this Google Spreadsheets Document. If you have historical data you want to include in this effort please send it to me and I’ll add it to this document.

• Hotmail was introduced to the public in July 1996. By the end of the month it had 20,000 users. By the fourth month it had exceeded 100,000 users. Hotmail gained its 1,000,000th user in January 1997. It crossed the 12,000,000 user mark within 18 months, after spending only $500,000 on marketing. ¹³Data from Tony Lloyd, Are You Using The Dynamic Power of Viral Marketing? Accessed on Nov. 28, 2013. Hotmail gained 30 million users in 30 months. ¹⁴MSN Hotmail: From Zero to 30 Million Member in 30 Months, February 8th, 1999. Accessed at Microsoft PressPass on Nov. 28, 2013.  How did this growth occur? Tim Draper convinced Sabeer Bhatia and Jack Smith to include “Get your free email at Hotmail.” at the end of each email message sent through Hotmail. ¹⁵I found at least one source that claims that Hotmail had 400,000,000 users by December 1997.
• Napster was introduced to a group of 30 people in June 1999 by Shawn Fanning and Sean Parker. Within a week Napster had 15,000 users. Within a year it had acquired 25,000,000 users. It peaked at 80,000,000 users within 2 years of its release, and then started to lose users because of all the legal trouble it had started to attract. ¹⁶Alex Laird, The Napster Revolution. Accessed on Nov. 28, 2013
• Pinterest ¹⁷Unless noted monthly unique users are estimates developed by Steve Cheney, How To Make Your Startup Go Viral The Pinterest Way, TechCrunch, November 26, 2011. Accessed on Nov. 28, 2013. Click on the link to the Google Spreadsheet document. was launched to the public in March 2010 by Ben Silberman, Evan Sharp and Paul Sciarra. It had 2000 unique visitors in April 2010. By August 2010 it had 11,000 unique visitors. Pinterest’s monthly unique users grew at an average monthly rate of 54% in 2010, exceeding 80,000 in January 2011. The number of monthly unique users grew by an average monthly rate of 45% in 2011, and Pinterest crossed the 1,000,000 monthly unique users threshold in August 2011. It had 3,300,000 monthly unique visitors in November 2011. Monthly unique users grew to 27,323,489 in November 2012. ¹⁸Data for 2012 and 2013 is obtained from Compete.com’s Pinterest analytics dashboard.  In May 2012, Mashable reported that Pinterest was beginning to focus more on international expansion. ¹⁹Lauren Indvik, Confirmed: Pinterest Raises $100 Million to Fund International Expansion,Mashable, May 16, 2012. Accessed on November 29, 2013. Pinterest’s US only unique users had risen to 31,549,541 for January 2013, and 32,835,276 in October. Semiocast reported that Pinterest has 70,000,000 global users worldwide in July 2013. ²⁰Semiocast press release: Pinterest, July 10th, 2013.
• Facebook launched as theFacebook in February 2004. It had more than 650 registered users within the first week or so. Originally it was limited to students of Harvard. ²¹Alan J. Tabak, Hundreds Register for New Facebook Website, Facemash Creator Seeks New Reputation With Latest Online Project, Harvard Crimson, February 9th, 2004. Accessed on Nov. 28th, 2013. In May 2004 it expanded access to include Harvard, Columbia, Stanford and Yale. It hit the 1,000,000 user mark in December 2004. By May 2005 it had expanded to include more than 800 colleges, and in September 2005 it dropped “the” from theFacebook. Also in September 2005 it added high school networks, with addition of international schools following in October. Around that time it also launched Facebook Photos. Facebook’s user count hit 6,0000,000 in December 2005. It launched a product for mobile users in April 2006 and expanded to include work networks the following month. September 2006 was another big month for Facebook – it launched its news feed and mini-feed that month. It also expanded access so that anyone could become a registered user. Its registered users increased to 12,000,000 in December 2006. One year later it had 58,000,000 users. In March 2008 Facebook launched in German. Later that year it launched Facebook Chat, and also opened an office in Dublin. The “Like” button was introduced in February 2009. Facebook had 360,000,000 users in December 2009. A year later it had 608,000,000 users. In November 2011 Facebook had 845,000,000 users. By October 2012 Facebook had more than 1,000,000,000 registered, active users ²²Data obtained from Facebook Timeline, accessed on Nov. 30, 2013. The most recent update available Facebook has 1,267,191,915 users. ²³Ellis Hamburger, 1.26 Billion Facebook Profiles Become A Clickable Monument To Humanity, The Verge, September 29, 2013. Accessed Nov. 29, 2013.
• This chart shows growth in users for LINE, the Japanese chat app. LINE is a particularly interesting case study because it has developed an international strategy ²⁴Eric Pfanner, A Japanese Social App Contacts New Shores, New York Times, September 5, 2013. Accessed on Nov. 30, 2013 that involves deliberate and targeted international launches. ²⁵See for example; Japanese Messaging App LINE Comes To India. Launches TVCs Promoting Free Voice Chat And Stickers. and Social App Line targets UK after signing 260m users (including Sir Paul McCartney). There are other reports about LINE’s activities related to a launch in Spain.

You will find more statistics at Statista

• The next chart shows growth in users for KakaoTalk, the Korean messaging app.

You will find more statistics at Statista

• This last chart shows the quarterly user count for Linked in from Q1 2009 to Q3 2013.

You will find more statistics at Statista

In the next post in this series I will examine a few case studies in a bit of detail to try to understand the specific techniques that have worked, and if possible to try to identify techniques that lead to failure.