The Science behindViral Marketing<br />Lessons
Learned<br />

Explosive growth!<br />YouTube<br />Facebook<br />Zynga<br
/>Groupon<br />Twitter<br />Gilt Groupe<br />All have set records for growth rates<br />The key is Virality<br />

The Power of Viral Marketing<br
/>When it works it is Free!!<br />Far more effective than paid promotions and advertising campaigns<br />If done well can be self-sustaining + growth<br />Unfortunately rarely achieved!<br />

The Best Business Model<br />Virally
acquired customers are free<br />Monetization(LTV)<br />Cost ofCustomerAcquisition(CoCA)<br />

Topics<br />The Science behind Viral
Marketing<br />How to do Viral Marketing<br />Optimizing for Virality<br />Making this work for your business<br />Examples<br />

Where my experiences come from<br
/>Tabblo<br />Photosharing site<br />Founded by Antonio Rodriguez, 2005<br />Acquired by HP within 18 months<br />Great investment return<br />All credit is owed to Antonio Rodriguez<br />

The Viral Loop<br />

The Math behind Virality<br />Key
variables:<br />Custs(0) The initial set of customers<br />i The number of invites sent out<br />conv% The percentage of invites that convert into customers<br />

The Viral Coefficient<br />K The
Viral Coefficient<br />K = no of invites x The conversion % (i x conv%)<br />Turns out to be a very important variable. It equals the number of new customers that each customer is able to successfully invite.<br />

An Example<br />Custs(0) = 5<br
/>i = 10<br />conv% = 20%<br />K = 2<br />

The Formula<br />New custs added
in this cycle =<br />New custs added in the previous cycle x K<br />Assumes that customers only send out invites once, and not continuously in every later cycle<br />To calculate the number of customers at any particular cycle (c):<br />Custs(c) = Custs(c-1) + NewCusts(c) <br />

Sensitivity to K<br />See Spreadsheet
model<br />

Sensitivity to K<br />

What we learned<br />Viral Coefficient
must be > 1<br />to have viral growth<br />Viral Growth is a compounding phenomenon<br />Increasing the Viral Coefficient has a big impact on the rate of growth<br />

YouTube versus Tabblo<br />Both started
around the same time<br />YouTube’s growth massively outstripped Tabblo<br />What was happening here?<br />

Tabblo’s Viral Loop<br />User discovered
Tabblo<br />Wait till they take some photos<br />Upload<br />Share (i.e. invite others)<br />Some portion of those think, this is great, I want to use this myself<br />Wait till they take some photos<br />Upload<br />Etc.<br />

YouTube’s Viral Loop<br />User discovers
YouTube<br />Sees some hilariously funny content<br />Decides to share that with friends<br />Friends see hilariously funny content<br />Decide to share that with their friends<br />The time to infect is far shorter!<br />

A More Sophisticated Formula<br />t
= timect = cycle time<br />Thanks to Stan Reissfor help with the forumula<br />

What this tells us<br />
Raised to the Power of …<br />Multiplier<br />Shortening the cycle time has a far bigger effect than changing Viral coefficient!<br />

Some experiments<br />See Spreadsheet model<br
/>

Some Experiments<br />Time - t<br
/>No wonder YouTube was explosive!<br />

Lesson Learned<br />Reducing Viral Loop
cycle time has by far and away the greatest effect on viral growth<br />

How to do Viral Marketing<br
/>

The Basics<br />Figure out the
Viral Hook<br />What makes people want to share content?<br />Content or Product/Service<br />Initial Seeding<br />Use communications networks to spread<br />Email, Twitter, Facebook, Google+, etc.<br />Refresh & Re-seed<br />

Figure out the Viral Hook<br
/>Something very compelling that the user wants to share<br />

Viral Hook - What works:<br
/>Something of Value:<br />Applications<br />Educational content<br />Data<br />Things of monetary value (Discounts and coupons)<br />Something entertaining<br />Humor<br />Games<br />News<br />Inherently Viral Services<br />Email, Skype, etc.<br />Other?<br />

Why do people share?<br />A
paper on that here:<br />http://marketing.wharton.upenn.edu/documents/research/Virality.pdf<br />http://www.nytimes.com/2010/02/09/science/09tier.html (summary)<br />Virality driven by physiological arousal<br />High arousal, Postive (awe) – most likely to be shared<br />High arousal, Negative (anger or anxiety) – less likely<br />Low arousal, de-activating (sadness) – unlikely<br />

Content Types<br />Blogs<br />Videos<br />eBooks<br
/>Applications and Services<br />Etc.<br />

Using engineering for marketing<br />

Inherently Viral Applications<br />The most
viral apps are those that are require sharing to work properly:<br />HotMail<br />Skype<br />YouTube<br />FaceBook<br />Etc.<br />

Initial Seeding<br />The bigger your
initial seeding the better<br />Identify Influencers<br />Reach / Influence<br />Klout, SocMetrics and other services emerging to help<br />Develop the right relationship<br />Listen, Strategize, Engage, Measure<br />Paid Seeding<br />Paid search, Virool.com, etc. <br />

Spread through Communications Networks<br />Early
days this was email<br />Social Networks have turbo-charged sharing<br />What you want:<br />Low effort for the user doing the sharing<br />

Refreshing and Re-Seeding<br />Google Search
(paid and organic)<br />Creates new seeding<br />New Blog posts<br />Cause your existing readers to re-invite<br />Farmville, etc.<br />Continue to invite by regular posts to your wall<br />

Lessons Learned Optimizing for Virality<br
/>

Lessons Learned<br />Apply my “Unblock
your Sales Funnel” principles to the viral loop steps<br />

GET INSIDE YOUR <br />CUSTOMER’S
HEAD<br />CONCERNS<br /><ul><li>Hate being sold to

Find it offensive to give
name and email

Don’t want to get spam
sales emails

Worried that email address will
be given to other marketers</li></li></ul><li>UNDERSTAND WHAT MOTIVATES THEM<br />CONCERNS<br />MOTIVATIONS<br /><ul><li>Want to solve my problem

Recommendation from a friend

Education

Data/ information reports

Entertainment

Free stuff

Meeting other people like me
that have insights to share</li></li></ul><li>CREATE A SOLUTION THAT ENTICES THEM AND ADDRESS THEIR CONCERNS<br />CONCERNS<br />ENTICE & ADDRESS CONCERNS<br /><ul><li>Customer testimonials address vendor risk

Free trials address product viability
and fit concerns

Lowest price guarantees</li></li></ul><li>Example: Groupon<br />

Example: Living Social<br />

Another strategy<br />Offer a reward
both to the user and to their friend<br />Overcomes the feeling of being sleazy<br />Can lead to much higher success rates<br />

Lessons Learned<br />Maximize the number
of invites they send out<br />Leverage tools that provide easy reach to their friends:<br />Twitter<br />Facebook: post to their News Stream<br />LinkedIn<br />Automate access to their address book<br />Works well for GMail, and other on-line address books<br />Etc.<br />

Lessons Learned<br />Look for ways
to automate the whole invitation process<br />No thinking required<br />No work required<br />

Don’t just invite once<br />Look
for ways to keep repeating invites<br />E.g. Facebook games like Farmville that post to your News Stream<br />

Lessons Learned<br />Look for other
ways to get your customers to tell their friends about you<br />Example: ConstantContact’s email signature<br />

Reduce the Cycle Time<br />

Lessons Learned<br />Hybrid Viral<br />Even
if you can’t get a viral coefficient > 1you can still enhance customer acquisitionwith some virality<br />

Lessons Learned<br />The Viral Loop
is an important Funnel<br />Design each step carefully<br />Simplify and eliminate manual steps<br />Test for adequate motivations and incentives<br />Address concerns<br />A/B test each step<br />Metrics to evaluate and improve<br />

Make it work for your
Business<br />Creepy<br />Effective<br />

What can go wrong? -
Branchout<br />Social networks are for hanging out with friends<br />Not promoting your business<br />Branchout (recruiting app on Facebook) <br />Spammed users walls with way too many entries<br />

The Result:<br />Thanks to paulamarttila.posterous.com
<br />

Some Fun Examples<br />For a
full set, visit:<br />http://www.ignitesocialmedia.com/social-media-examples/viral-marketing-examples/<br />

For More information<br />Visit my
blog at www.forEntrepreneurs.com<br />