What is the Magic Number for Viral Marketing Growth?

First, what is Viral Marketing?

Viral marketing takes place when many of your customers are responsible in some way or another to create awareness of your product. The customer may or may not be rewarded in some way to spread the word. The product could be anything – from a new hot car just introduced in the market, or a free email service like Hotmail. In the offline case of a new car, the owner drives the car around and is automatically creating awareness of the car in this manner. In the case of Hotmail, the service inserts a line “Get your private, free email at http://www.hotmail.com” – at the end of every email message sent out by users who use the free webmail service. A typical viral marketing effort grows exponentially. If we assume that each person is responsible for getting two customers, then the growth would look like this –

1
1 1
1 1 1 1
1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

As you can see this growth is very powerful and grows exponentially… 2,4,8,16,32,64,128,256,512,1024…

Services such as MySpace, Youtube, Flickr, Hotmail, ICQ, Yahoo Messenger, MSN Messenger, Bluemountain arts and PayPal have all shown viral growth patterns until they reach a very high critical level such as 20 million or 30 million, after which they exhibit steady growth, because they have reached a certain market saturation point – beyond which they cannot grow at the same exponential rate.

The great thing about Viral marketing is that your advertising budget is almost zero in most cases – as members of your website spread the word about your great unique service. Because they do the talking and tell their friends, their friends are more receptive to listen to them and very likely click to check out the service (at a rate that is un-comparable to an online advertisement). Friends have a large factor of trust – that brings in this large click-through-rate that results in exponential viral growth.

The one important fact about Viral Marketing is that the first mover in the product or service has a very big advantage over the others who launch similar product or service afterwards. Unless you are a Microsoft or Yahoo!, you just cannot get significant market share for your product if there already exists a couple of first movers who have grabbed majority of the share – unless your similar service has something unique and of value that is lacking in the first-mover’s model. By this, I don’t mean its not possible to achieve the same customer base, its just more difficult, because people are already exposed to the concept and have already signed up for the first mover’s service.

In some cases, people do not mind having accounts setup and being part of separate communities providing similar services. For example – a large number of people are members of and regularly visit multiple friendship network type sites like – Facebook, Myspace, Orkut, Friendster, LinkedIn (Business Networking). This is because each of them has a twist and a different image – serious, party, business – and appeals to these unique traits in individuals.

If your product had significant advantages over the dominant players, you could get a break and make loyal consumers of the other product or service switch over to you. This is exactly what Yahoo! Messenger Service, and MSN did to grab market share from AOL (which had bought out ICQ, who had a user base of 40 million!).

A viral concept spreads mostly by Email, Instant Messaging or in some cases in chat rooms. The flow of information is very fast and costs almost nothing. The fact that email is free allows the Viral concept to spread fast in a frictionless media.

Seth Godin’s Equation, and the Magic Number

Seth Godin is known mainly for his concept and book called “Permission Marketing”. Before he started writing books he sold of a company for $30 million to Yahoo!. He’s been a consultant for major companies like Microsoft, Yahoo and IBM.

If you think you have a product or service that can spread in a Viral manner, you should test it out with Seth Godin’s basic principal – which will give you your answer.

Seth Godin, in his book Unleashing the Idea Virus, says that to grow exponentially by some form of viral marketing, the “Magic Number” described below must be met.

How do we calculate the Magic Number?

Let us suppose for this example, that we are running an e-greeting cards site. Lets assume that each visitor to our site sends cards to 5 people. Lets also suppose that these recipients of cards have a 50% chance to go to the site and are interested enough
with the concept to send cards to 5 of their friends. Now, if we start with 10 people the generations look like this:

10 people send 50cards

which means that 25 people (50% of 50 cards) come to your site and get the “virus”and send (25 x 5) = 125 cards

which again means that 63 people (50% of 125 cards) get the “virus”
and send 315 cards

which again means that 162 people (50% of 315 cards) get the virus
and send 810 cards

which means that 405 people (50% of 810 cards) get the virus
and send 2025 cards…

This might seem like a slow growth. But, if you assume each “generation” takes 3 days to occur, then we’d have 58million users in 54 days!!!

Of course, this doesn’t really happen – because it is quite unlikely that you will get the 50% conversion rate. If you take the above example and use a 30% conversion rate – then
the number of users drops from 58 million to less than 10,000. Which is why “conversion” is critical.

So, what is value of the magic number?

You can compute the magic number by multiplying the number of cards the average user sends (in the example above it is 5) by the percentage of people who convert (50%). therefore, in this case the magic number is 2.5 = (5 new invitations x .5 conversion rate – that is, 50%) . This figure of 2.5 is “how much bigger” each generation will be than the one before.

Until the magic number exceeds 1.2 or 1.3, its’ very hard for a product to get viral fast enough to beat the competition.

What motivates people to participate in Viral Marketing?

The best forms of viral growth happen when there is absolutely no motive for the consumer to spread the message. 99% of people are totally unaware of the fact that they are spreading a viral message.

By sharing jokes, you could be spreading the word about a joke site where you got the joke from, because the joke site has a link in the email (joke) that is being circulated. Many people forward the joke they get from you to their list of friends. The email joke that is being circulated may have a link to a website in it. Some people may want to read a few more jokes and they may click on this link, which takes them to the joke site. On visiting the website they may read some more jokes which they would like to share with their friends – and thus fuel the Viral growth further.

Sometimes Viral growth takes place when people like to share interesting information they read somewhere or get from someone, with their friends. Again, as above, friends send emails to friends.

People may also spread the word about a website to their friends in exchange for a reward or an entry into a sweepstakes and a chance to win a prize. They maybe motivated by the idea of earning or winning money, as in the case of AllAdvantage and ValuePay lotto systems – where for every friend you invite to play lotto you automatically are rewarded with one free ticket for a cash prize draw.

The “invite your friend” or “recommend this site” feature

This is a must for every site. Simply put a “recommend this site” link on the homepage and subpages, by which your site visitors can invite their friends and relatives, or people they think might find your site interesting. By clicking on this link a small window pops open, which has text boxes in which they can enter the names of their friends and their email addresses. They could invite up to say 10 friends in one go. By clicking on the submit button at the bottom, an automated email is sent to each of the persons they invited, saying “Hi *John*, your friend Jack has invited you to see this site” or “Jack would like your to check out this site, etc etc”.

You could visit the various script resources, that I mentioned earlier (cgi-resources.com and hotscripts.com), to download and install this script on your site. Or, if you don’t have any knowledge about installing scripts, you can visit recomemnd-it.com. They will then give you a simple HTML text which you need to plug into your site, and you will automatically get all the features required for this invitation system to happen – no programming experience reqired. A good twist that recommend-it has added to this system – is that, the person who is inviting his friends will automatically get entered to win a prize. This slightly increases the chance that someone will invite friends to see your website. I liked the recommend-it.com system and strongly recommend it!

A viral twist to the recommend-it system

For this you will have to write your own “invite your friend” or “recommend-it” program.

This is how it works

Offer visitors to your site one entry into a prize draw for every friend they invite to see your site. Let them invite as many friends as they want (your invite-friends form could have as many as 20 blank text-entry boxes – to invite up to 20 friends at one go!). For each friend they invite, they get a ticket for your prize draw of say $100. Pretty straightforward so far. Nothing new. But here’s the twist…

Along with every invitation email that is sent to their friends, you insert 20 empty text-entry boxes so that they – the friend who receives the email – can also invite their friends, and get an entry into the $100 prize draw for each friend that they invite.

Again, when these invited friends invite more friends, you send 20 more empty text-entry boxes – so they can invite their friends and so on.
How can you use Viral Marketing to grow your business?

A classic example of viral marketing is Hotmail.com – a first-mover in giving a free web based email address. The Hotmail strategy is simple:

1. First giveaway free a email address and service.

2. At the bottom of every free email message sent out from hotmail user, include the message –
“Get your private, free email at http://www.hotmail.com”

3. Then stand back and watch while people email to their own network of friends, who see the message, then sign up for their own free web email service, and then further propel the message still wider to their own circle of friends.

Like tiny ripples spreading ever farther from a single pebble dropped in a pond, a carefully designed Viral Marketing Strategy ripples outward, extremely rapidly.

Lets now look at the seven basic elements which are required for a viral marketing campaign to be successful…

1. Give away a free product or service

2. The message must spread in a almost zero frictionless manner.

3. Ability to grow from small to large, without growth hindering further growth..

4. Take advantage of common motivations such as prizes, free money.

5. Must work within the communication media network.

6. Ability to take advantage of other’s resources.

7. Growth rate of each generation must be greater than the “Magic Number” mentioned earlier.

About the Author

Leave a Reply 4 comments

anthony - May 16, 2008 Reply

Another great article.

Question-

You mention a few script services for the “tell a friend” forms and recommend (pun intended) one.

Is there any reason not to go with the one that gives away a prize or write your own script for that matter?

Reason I ask is because you did mention the others and
the fact that you could write your own.

anthony

PS I’ve got to get my website up so I can start shamelessly
promoting on these comments.

Vishal - May 16, 2008 Reply

Hi Anthony,

If you go with third party script like recommend-it, they get some amount of free exposure (for providing you the script and resources for free). If you write or purchase a script – then you are in full control and can possibly customize it further.

Since I wrote this article there are is a twist in recommend-it type scripts which are also available in the market. These basically let you import all your contacts in Hotmail, Gmail, Yahoo Mail etc. and immediately blast out the message too all of them from within the form. Its pretty simple and easy.. and this ONE SIMPLE IDEA has resulted in some of the Social Media / Social Networking sites gaining MILLIONS of members almost overnight.

You sign up, and then in one easy step via a form you can import and invite all your contacts in your various webmail accounts in one click. No password is stored ever anywhere. Take a look at this nifty script called GetMyContacts.com for hardly $40 and also this other one for $100 at viralinviter.com (more powerful).

Blog and Website Flipping - August 29, 2008 Reply

I’ve read a few articles already and I’m really impressed and can;t wait to start using your tips. Thanks and keep up the posts

Figel - August 27, 2010 Reply

At the moment I’m working on some facebook and youtube viral marketing and there are some pretty useful tips for basic virtal marketing in this short article.

Leave a Reply: