5 January, 2000

Viral marketing leads to healthy e-business

Entertainment and leisure guide Virgin.net added 20,000 customers to its marketing database by emailing out just 25 people and letting the online grapevine do the rest. It managed this impressive feat in under three hours.

Though the company gave away 20,000 cinema tickets, getting its customers to PR its business with a good offer amounted to an incredibly cheap and effective marketing campaign.

This is viral marketing. Companies employ users to do their promotion for them through word of mouth referrals which can spread across the Internet in much the same way as a virus. Unlike spam email, companies rely on users to voluntarily pass information on or to refer others to a particular site or service.


Spreading like wildfire

Virgin.net described its December 20,000 cinema ticket giveaway as 'viral marketing at its best'. The company sent 25 people a free movie ticket email encouraging them to forward the email onto friends and colleagues. Just under three hours later, the company claims it had given away 20,000 tickets.

The giveaway, according to Virgin.net, generated an interest at its peak of 500 emails a minute and the company said it is planning to do a lot more campaigns.

Jo Peat, head of marketing at Virgin.net, said: "The best way to try and attract new people to our site is through word of mouth. The giveaway opened up our site to a whole new lot of people, and we now have a database of more than 20,000 people."

"We did prepare for a long time for this, but I was still surprised how quickly the tickets were snapped up," Peat continued. "This campaign brought in new people and was exciting to the user. It is different from spam email as it is rewarding to those that take part."


That's entertainment

A spokesman for The Chartered Institute of Marketing believed the Virgin campaign was particularly successful as the company offered a relevant and motivating incentive (free tickets) which is directly related to its online offering (entertainment and leisure guide).

Jay Marathe, head of consulting at Durlacher Research, said: "Viral marketing is good in that it is free and is well suited to the Internet in its networking nature. It works best with a product that is good, as users will want to recommend it to friends who will receive information from a trustworthy source."

According to Durlacher's Thinkpiece: Creating Community Online report, users of an Internet community or service are "incentivised to expand a community" because its value increases as the number of participants do. It is in the interest of users to encourage other people to join, which often results in viral marketing.

"Instant messaging services such as ICQ and AOL benefited from viral marketing. The more people on the network, the more value the service offers," said Marathe. ICQ's service grew from a handful of hobbyists to six million users in this way, the Durlacher report claims.


Bad reaction

However, although viral marketing has the advantage of targeting a vast audience for free, the technique may have its problems. Analysts warn that online marketing cannot be controlled so campaigns run the risk of backfiring. If an individual does not like a product or a service or is unhappy at being sent unsolicited email, they may react negatively to a company.

Marathe warns that while viral marketing offers a temporary spurt of visitors to a site or service, companies need to provide a very good service to maintain the new customers and make the campaigns worthwhile.

With the increasing threat of spreading viruses, companies will also need to reassure its campaign audience that what they are sending is safe and legitimate.

According to Eric Chien, senior researcher at SARC (Symantec Antivirus Research Centre), "A company using mass marketing runs the risk of spreading viruses through email. If they send an attachment, viruses can hook on to messages and can spread easily."


Taking precautions

As any increase in the use of email could lead to the wider proliferation of viruses, Chien recommends marketing companies take simple precautions.

"Sending text-only emails will not cause the wider spread of viruses. Marketing companies should avoid sending attachments: they can offer a URL message which can take individuals to their web page or they can digitally sign their messages. This can avoid the spread of viruses and can assure users that the email is legitimate," he suggests.

Jo Peat of Virgin.net concluded: "You can't control viral campaigns in one sense, but you do need a limit which we set with our campaign. We are extremely pleased with the results and have been inundated with positive feedback. There has been no negative feedback."


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