Strengths and weaknesses of viral marketing - Essay Example

? Strengths and weaknesses of viral marketing Introduction Viral marketing is a form of product promotion where information is spread verbally from one person to the other or via the internet. When customers like a product or a concept, they like to share the experience with friends, relatives and colleagues, and in turn those people share with their network of friends making the concept or product ‘go viral’ (Blythe, 2005, P.110). This paper evaluates the strengths and weaknesses of viral marketing, in addition to, research evidence on strategies of viral marketing. Literature review Researchers investigating the network of referral for different products indicate that strong ties between family and friends were likely to be activated for information flow and were more influential than weak ties between acquaintances. Leskovec, Adamic and Huberman, in their research on customer behavior associated with networks used data from Yang on customers purchasing Japanese cars to conclude that geographically defined networks were more useful than demographic networks (Leskovec, Adamic and Huberman, 2007, P.14). Research has indicated that customers are more willing to share information via word of mouth when the moral hazard presented by the information was strong. The network structure and information characteristics come into play when individuals make decisions about sharing information. Self confessed loyal customers were more likely to tell others about products when they were dissatisfied, but failed to do the same when they were satisfied. In the online community, word of mouse is not restricted to pairwise group interactions between individuals; rather customers can share their experiences and opinions with everyone. For instance, some online recommendation systems allow users to rate others views or directly rate other reviewers to form a trusted reviewer network that has little overlap with the physical world social circles (Hastings, 2007, P.151). Most research on the spread of information and influence through social networks has been carried out in the context of epidemiology. The main problem associated with this paradigm is that it assumes a known social network over which the product recommendation spreads with a single parameter specifying the infectiousness of the recommendation. Contrary to expectation, Leskovec, Adamic and Huberman, found that the chances of infection decreases as interaction increases (Leskovec, Adamic and Huberman, 2007, P.14). Therefore, marketers should avoid providing excessive incentives for customers to recommend products due to the corresponding weakening of credibility after the first recommendation. They also found that individuals have influence over only a few friends in network based epidermic models. Leskovec, Adamic and Huberman, recommend that smaller tightly knit groups are more conducive to viral marketing (Leskovec, Adamic and Huberman, 2007, P.14). Rationale for viral marketing Viral marketing exploits the established social networks between people by encouraging customers to share product experience and information with friends. It is important for marketers to understand the context in which viral marketing works and the qualities of products for which it is most effective. This is important in order to ensure that the right strategy is adopted to create favorable customer attitudes towards a product (Blythe, 2005, P.110). It can be argued that some services used by people to communicate are naturally suited to viral marketing because such products can be advertised as part of communication. Examples of such products are email services like Yahoo and Hotmail which were adopted very fast because every message sent through them was an advertisement for the service and the service was free. Hotmail spent only $50 000 on traditional marketing but still acquired 12 million users in 18 months. By the end of 2000, Hotmail had over 70 million users with 270 000 new accounts opened each day. Google’s Gmail grew rapidly in spite of the fact that customers had to sign up for the mail service through a referral (Lee, 2001, P.192). Most products cannot be advertised in this way; in any case, the choice of products on offer has increased as a result of the emergence of online marketers who can supply a wide variety of products. Another aspect of online retail is the fat tail phenomena, where a large portion of the sales consists of obscure products. For instance, at Amazon.Com 20 to 40 percent of unit sales fall outside the top 100 000 ranked products. Some online marketers argue that the fat tail indicates that key products with low sales volume contribute significantly to overall sales (Lee, 2001, P.192). On the other hand, product purchases that result from recommendations obey the 80-20 rule where the top 20% of the products sold account for 80% of the sales. As a result, it is impossible to effectively advertise niche products using traditional approaches. A more targeted marketing approach is advantageous to both the marketer and the consumer who benefits from learning about new products (Lee, 2001, P.192). The advent of online product and merchant reviews both at retail sites like Amazon and Ebay and at specialized product comparison sites such as CNET has made targeted marketing easier. This is further enhanced by collaborative filtering recommendations that market related products. These refinements help customers discover new products and receive more accurate evaluations but cannot substitute personalized recommendations from friends. This is a result of the fact that people are likely to concentrate on the views of friends and be more influenced by their actions. What is more, friends are more acquainted with each other’s needs and tastes. Research by Lucid Marketing established that 68% of consumers consulted friends and relatives before purchasing electronics, which is more than half of those who used search engines to find the product information (Hastings, 2007, P.151). Strengths of viral marketing From a marketing perspective, viral content spreads fast from one person to the other. This presents online marketers with a superior strategy of promoting content at a fraction of the cost and effort required by traditional marketing. According to Jupiter Research, over 90% of consumers tell at least one other person about a website when the original recommendation came from a friend (Hastings, 2007, P.151). An example of such success is Trojan Games viral marketing campaign with its award winning sex-and-games spoof video content which was viewed by over 40 million people. The company achieved several benefits from the stunt with 77% of customers claiming to recall the Trojan Brand after seeing the video. 73% gave the campaign a positive rating; 80% perceived the campaign to be unique while 50% were likely to consider the Trojan brand after the campaign (MINDCOMET, 2008, P.6). Viral marketing campaigns put the marketer in touch with millions of prospects which exponentially increases the profile of a product. Bullguard, which makes anti-virus and firewall software, and distributes the products online, engaged in a viral campaign in 2004. The company created the viral campaign using a home-video style clip and specialist site seeding. The campaign generated over 6 million clip views and over 30 000 post view trial product downloads worldwide. The brand benefited from doubled Google search results; increased number of dealers endorsing and selling the company’s products and repositioned the brand as a leader in the security software industry (MINDCOMET, 2008, P.6). More people are able to see the product and this increases awareness among customers of the product, its purpose, and available offers to customers. When marketers share content, it establishes them as authorities in a particular field and people approach them for advice and recommendation. Unlike traditional advertising, viral is not interruptive; rather, viral campaigns work through the internet to deliver exposure through peer to peer endorsement. Therefore, even when viral campaigns are not of interest to the consumer they are welcomed by the receiver. This is because viral campaigns focus on products that consumers want to interact with and spread proactively (Scott, 2010, P.286). Weaknesses of viral marketing Viral marketing is associated with creating peer to peer awareness and generating a buzz; consequently, it is associated with more risks especially when done improperly without understanding the factors of success as it creates a negative buzz. For instance, the Dr. Pepper “Raging Cow” online viral campaign generated a backlash among the blogging community as it was perceived as a clumsy infiltration in a tight-knit community. In essence, bloggers objected to being patronized on how to blog about the company’s Raging Cow beverage (Scott, 2010, P.286). Sometimes a successful viral campaign fails to benefit the brand strategically. For instance, Burger king’s “Subservient Chicken” campaign aimed to promote the company’s latest chicken sandwich. The viral agent achieved its objective with 46 million people watching it but many watchers failed to realize that the video was, in fact, promoting a chicken sandwich. Essentially, this campaign generated a character that outshone the product. Therefore, viral campaigns must deliver strategic brand benefits (Oetting, 2009, P.146). Viral marketing is associated with spamming where spammers use established networks to sell their goods and services. This trend has increased consumers’ hesitation to conduct online business as they are concerned that their data might be used by the selling site or they might be victims of identity theft. A survey conducted by IBM indicated that 78% of respondents did not complete online purchases because of this concern. Jupiter established that over 58% of the respondents feared that companies would sell their personal information (Oetting, 2009, P.146). Conclusion Viral marketing provides marketers with an opportunity to reach many customers at a lower cost compared to traditional marketing approaches. Viral marketing is most effective when it is able to appeal to a large network of people who are connected, and the message delivers brand benefits to the marketer. Brand benefits include increased customer awareness, increased internet searches and higher sales volume. Bibliography: Leskovec, J., Adamic, L. and Huberman, B., (2007). The Dynamics of Viral Marketing. http://www-personal.umich.edu/~ladamic/papers/viral/viralTWeb.pdf2007. Blythe, J., (2005). Principles and practice of marketing. London: Thomson Learning. Lee, O., (2001). Internet marketing research: theory and practice. Hershey, Pa.: Idea Group Pub. Hastings, G., (2007). Social marketing: why should the devil have all the best tunes? Burlington: Elsevier Science. MINDCOMET (2008). Viral marketing; understanding the concepts and benefits of viral marketing. http://cmginteractive.com/uploads/viral_marketing.pdf. Scott, D., (2010).The new rules of marketing and PR: how to use social media, blogs, news releases, online video, & viral marketing to reach buyers directly. Hoboken, N.J.: John Wiley & Sons. Oetting, M., (2009). Ripple effect: how empowered involvement drives word of mouth. Wiesbaden: Gabler. Read More