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The Science behind Viral marketing

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The Science behind Viral Marketing is a look at the key factors that drive growth in viral marketing. (Hint, the most important factor is not the one everyone expects.) It also looks at what is needed to get virality to work, and how to create and optimize viral marketing campaigns or viral products.

One part of the presntation shows the key formulae behind viral marketing.

Suitable for marketers or for product designers.

Published in: Business, Technology
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The Science behind Viral marketing

  1. The Science behindViral Marketing<br />Lessons Learned<br />
  2. 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 />
  3. 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 />
  4. The Best Business Model<br />Virally acquired customers are free<br />Monetization(LTV)<br />Cost ofCustomerAcquisition(CoCA)<br />
  5. 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 />
  6. 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 />
  7. The Viral Loop<br />
  8. 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 />
  9. 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 />
  10. An Example<br />Custs(0) = 5<br />i = 10<br />conv% = 20%<br />K = 2<br />
  11. 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 />
  12. Sensitivity to K<br />See Spreadsheet model<br />
  13. Sensitivity to K<br />
  14. 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 />
  15. YouTube versus Tabblo<br />Both started around the same time<br />YouTube’s growth massively outstripped Tabblo<br />What was happening here?<br />
  16. 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 />
  17. 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 />
  18. A More Sophisticated Formula<br />t = timect = cycle time<br />Thanks to Stan Reissfor help with the forumula<br />
  19. 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 />
  20. Some experiments<br />See Spreadsheet model<br />
  21. Some Experiments<br />Time - t<br />No wonder YouTube was explosive!<br />
  22. Lesson Learned<br />Reducing Viral Loop cycle time has by far and away the greatest effect on viral growth<br />
  23. How to do Viral Marketing<br />
  24. 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 />
  25. Figure out the Viral Hook<br />Something very compelling that the user wants to share<br />
  26. 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 />
  27. 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 />
  28. Content Types<br />Blogs<br />Videos<br />eBooks<br />Applications and Services<br />Etc.<br />
  29. Using engineering for marketing<br />
  30. 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 />
  31. 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 />
  32. 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 />
  33. 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 />
  34. Lessons Learned Optimizing for Virality<br />
  35. Lessons Learned<br />Apply my “Unblock your Sales Funnel” principles to the viral loop steps<br />
  36. GET INSIDE YOUR <br />CUSTOMER’S HEAD<br />CONCERNS<br /><ul><li>Hate being sold to
  37. Find it offensive to give name and email
  38. Don’t want to get spam sales emails
  39. 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
  40. Recommendation from a friend
  41. Education
  42. Data/ information reports
  43. Entertainment
  44. Free stuff
  45. 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
  46. Free trials address product viability and fit concerns
  47. Lowest price guarantees</li></li></ul><li>Example: Groupon<br />
  48. Example: Living Social<br />
  49. 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 />
  50. 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 />
  51. Lessons Learned<br />Look for ways to automate the whole invitation process<br />No thinking required<br />No work required<br />
  52. 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 />
  53. Lessons Learned<br />Look for other ways to get your customers to tell their friends about you<br />Example: ConstantContact’s email signature<br />
  54. Reduce the Cycle Time<br />
  55. Lessons Learned<br />Hybrid Viral<br />Even if you can’t get a viral coefficient > 1you can still enhance customer acquisitionwith some virality<br />
  56. 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 />
  57. Make it work for your Business<br />Creepy<br />Effective<br />
  58. 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 />
  59. The Result:<br />Thanks to paulamarttila.posterous.com <br />
  60. Some Fun Examples<br />For a full set, visit:<br />http://www.ignitesocialmedia.com/social-media-examples/viral-marketing-examples/<br />
  61. For More information<br />Visit my blog at www.forEntrepreneurs.com<br />

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