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New series: Viral marketing
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Written by Henrik Flensborg
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Sunday, 08 August 2004
Hi,
Today's issue isn't about personal growth as many of the
previous issues already dealt with that (but don't worry -
I'll get back to the personal development soon).
Today I'm going to focus on growing your business
exponentially.
Today is about viral marketing.
Viral marketing at its roots is all about increasing or
expanding something exponentially. Generally it's the
number of sales, the number of visitors or the number of
subscribers to your newsletter.
Viral marketing is so many different things, so I'll be
covering one type at a time in the next few issues of
Growth Focus.
Today I'm, going to focus on a branch of viral marketing
that has to do with increasing exposure to the advertising
space on your web site.
I'm not talking about showing more ads for your own site,
but about increasing the number of times you get paid for
showing contextual ads.
It's a branch of the viral marketing that deals with
increasing the ad space exposure for your web site without
the need to allocate more web page property to ads or
create more pages/content.
I've chosen this branch of viral marketing first because
it's the easiest you can implement for your own web sites.
The premise behind any viral marketing tool is that you
let "the system" work it's exponential magic for you.
Normally, if your page gets viewed once, you have one
chance of your visitors clicking through to the
advertiser's site [to earn you money]. Show a page twice,
and ad space 'belonging' to you have been shown twice.
Show a page 100 times and your ad space will have gained
100 ad space exposures.
There's a linear correlation between page exposures and ad
space exposures.
But what if you want to exposure your ad space 1,000
times? - Yep, you guessed it, you have to generate 1,000
page views.
But it's totally different with viral marketing.
With viral marketing, if your page gets viewed once,
advertising space that you make money off of gets exposed
once, ten times, one hundred times or maybe thousands of
times.
Viral marketing is sometimes referred to ad referral
marketing.
You, as a web site owner refer other website owners to the
company that delivers the ads to your site.
And as compensation for referring them, you "earn"
advertising exposure on let's say 10% of their ad exposures.
If you refer 10 people and they each get 10 page views,
you would get 10% of 10 people x 10 pages = 10 ad exposures.
10 exposures don't sound like much, but what if they show
1,000 pages each?
That would get you 10% of 10 people x 1,000 pages = 1,000
ad exposures.
It's better, but it's still not viral enough because you
haven't created an "ad exposure epidemic" yet.
But what if the 10 people you originally referred each
refer 10 people to the adverting network?
That would place 10 + 100 people "under" you.
Let's say the advertising plan is made in such a way that
you earn 10% exposures from those you referred directly,
and 5% exposures from those they referred.
If they all show 10 pages, you would earn (10% of 10
people x 10 pages) + (5% of 100 people x 10 pages) = 10 +
50 = 60 ad exposures.
So, because your advertising network has grown, you get 6
times as many ad exposures.
To generate the 50 extra exposures, you would have had to
refer 50 people more (because 10% of 50 people x 10 pages =
50)
But because this is viral marketing, you didn't have to do
anything else besides referring the first 10 people.
Now, if this viral marketing adverting company added a 3rd
layer or level of compensation with let's say a measly 2%
ad exposure compensation, you would have an entire
different situation again.
That would be something like this:
(10% of 10 x 10)
+ (5% of 100 x 10)
+ (2% of 1,000 x 10)
How many additional ad exposures would that get you?
Yep, 200 more - or a total of 260 exposures. That's 26
times as many as if you only had referred the first 10
people.
And with 1,000 page view per web site involved this would
amount to:
(10% of 10 x 1,000)
+ (5% of 100 x 1,000)
+ (2% of 1,000 x 1,000)
1,000 + 5,000 + 20,000 = 26,000 ad exposures.
Now, did you notice that I didn't include any of your own
page views in the calculation?
That's because it has no influence on how many times your
ad space gets exposed.
You see, it's not like a simple banner exchange where you
have to show other people's banners on your site in order
to have your own banner shown on their sites.
So bottom line with this branch of viral marketing is that
the effectiveness is only influenced by the number of ad
space exposures the network beneath you generates.
And there are two ways to increase the number of exposures:
1) Get more people to join your network
2) Get the existing people to have more page views
Number 1 is the easiest to do something about.
You just increase the effort you put into referring people
to the network, and you'll have increased the number of
pages where your ad space get exposed.
There are several ways to help those in your network to
have more page views, but I'll be saving this information
for another article.
So getting more people to join is the key to getting the
most viral effects from your efforts.
But, and here's the real secret to making this kind of
viral marketing work, you have to make sure that the people
you refer will also put an effort into referring people
themselves.
There are probably internet marketers out there that will
hate me for sharing this with you, because this is how they
have been wildly successful with viral marketing, and it's
also what they have been charging big bucks for sharing.
Let's say that you don't refer just 10 people, but that
you put ten times as much effort into referring people, and
refers 1,000 people.
Ten times as many people sound great, but what if none of
those people really focus on referring more people
themselves?
Let's, for the sake of the example, say that they on
average only refer 2 people. And let's also assume that
these people also just refer 2 people each. And each person
generates 1,000 ad exposures.
The calculation will now look like this:
(10% of 100 x 1,000)
+ (5% of 200 x 1,000)
+ (2% of 400 x 1,000)
Which is:
10,000 + 10,000 + 8,000 = 28,000
28,000 is by no means bad, but compare this to the 26,000
ad exposures that where generated when you had only
referred 10 people.
You put in 10 times as much effort (to increase the number
of people referred from 10 to 100), but you don't get 10
times as many ad exposures.
In fact, you only get 1.077 times as many ad exposures.
That's just like working ten hours and not getting paid
for the last 8,923 hours :-(
I hope that it's clear by now that it's not simply a
matter of referring more people, but it's also absolutely
critical that the people you refer knows the same secret
that you do now so they can help build your network.
It's also good to know that not all people will get this
secret even after you've told them about it.
So let's say only 10 percent of those you refer really
understands the secret to mastering viral marketing.
If you refer 10 people, only 1 of them will understand the
importance of referring people.
This 1 person will generate 10 referrals, but the
remaining 9 will on average only generate 1 referral each
(as an example) - and because they are totally clueless as
well when it comes to the secret of viral marketing, they
will also only generate an average of 1 referral.
With 1,000 page views per person the calculation will look
like:
(10% of 10 x 1,000)
+ (5% of (9 + 10) x 1,000)
+ (2% of (18 + 10) x 1,000)
1,000 + 950 + 560 = 2,510
Compare this to the 26,000 ad exposures that were
generated if all the people you referred understood the
importance of referring people to the network AND
understood the importance of passing on the secret of viral
marketing to those people as well.
You "lost" 23,490 ad exposures because not enough of your
referrals really understood how to make viral marketing
work for them.
I'm not going to bore you with more calculations, but
here's a list that compares the percentage who "gets it"
with the number of generated ad exposures.
10% = 1,000 + 950 + 560 = 2,510
20% = 1,000 + 1,400 + 1,280 = 3,680
30% = 1,000 + 1,850 + 2,360 = 5,210
40% = 1,000 + 2,300 + 3,800 = 7,100
50% = 1,000 + 2,750 + 5,600 = 9,350
60% = 1,000 + 3,200 + 7,800 = 12,000
70% = 1,000 + 3,650 + 10,360 = 15,010
80% = 1,000 + 4,100 + 13,280 = 18,380
90% = 1,000 + 4,550 + 16,560 = 22,110
100% = 1,000 + 5,000 + 20,000 = 26,000
This is why it's so critical to educate those you refer.
If you don't tell them about it, they can't help you build
your network.
So, success with viral marketing is all about focusing on
getting lots of people to sign up and teaching them why
it's important, so they can do that themselves.
So which options do you have when it comes to viral
contextual advertising?
Not a lot yet.
But one option is http://growth-focus.com/cbc which I
highly suggests you take a look at if you want to ad viral
contextual advertising to your web site.
If viral marketing fascinates you, then I also suggest
that you go to http://growth-focus.com/viral and sign up
for "It's All Viral" right now.
In "It's All Viral" you don't get the in-depth articles on
how your business can benefit the most from viral
marketing, but you'll learn about new viral tools as soon
as I discover them.
All the best,
To your wealth and growth
~Henrik Flensborg
P.S. The procrastination ebook is still available from
http://growth-focus.com/procrastination-download.html
P.P.S. What did you think of today's newsletter? Something
you can use in your daily professional and personal life?
Let me know what you think at feedback@growth-focus.com.
This BTW is also the place to send me any suggestions for
new topics to cover.
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