How to Launch a Viral Service

There's a great conversation going in my comments on this post about how to market a new web based application. Ken Dyck has a great point: if the product is truly good, it'll market itself. I think he's been reading a little too much of the Johnnie Moore - Seth Godin love fest, but he has a very valid point. So, his comments manifested some recent thinking  I've been doing - about how to design a service that virally markets itself. And some of the criteria that the application has to meet for that to happen. Here's my proposed list:

1. It's free. (Cost is not a barrier to trial.)
2. The use of it by one person naturally informs others of its availability and benefits. (eg Get your free web-based accessible at any computer e-mail at hotmail.com, condoms)
3. A small amount of time investment required from the user to go from testing the service/product to deriving value (ie drag the bookmarklet to your browser and start tagging your posts with technorati tags, then get traffic from technorati's blog finder).
4. Any others?

Design Your Business Model Around These Criteria

One of the reasons that I am interested in analyzing this now, is that we've come to the realization that WhizSpark, with our current business model doesn't meet two of the criteria above. Here's a quick analysis of our current approach and why we don't get viral uptake:

1. Failed. We can't make our service free. One of our main selling points to event planners is that our service is advertising free. So, how can you make an ad free service - free to use - and still make money? Auren Hoffman suggested we make it free, kill evite, then sell out to google. That seems more like a dream than a business plan, though. Unfortunately. What we do have in the works is a program where people apply to have free use of WhizSpark. We also have back up revenue streams which could afford us to give away what we currently charge-for and then generate income selling higher value services.
   
2. Passed w/ an A++. One customer usually brings 5 more leads.  Our brand is secondary to our customer's brand, but it is not invisible to the customer. Every email invitation and event website has our name and url on it (ie Powered by WhizSpark). So, when a customer uses our service to market or organize their event, everyone that goes to the event knows about us.
3. Failed. The problem with the leads is that it takes too long for each lead to a.) understand our value proposition and b.) derive value with minimal effort. We overcome this right now with a lot of sales and service. But, that won't scale very well. We plan to improve our UI, add more tutorials and make the process of building an event website quicker by pre-loading info and standard designs.

Use These Criteria to Choose a Business
Something else we've realized in the last few months is that we picked a very challenging business to start as our first entrepreneurial effort. (For a lot of reasons that aren't necessary to discuss for this point.) So, we've been weighing a new project that meets the "viral" criteria. Without giving away the idea, here's how it meets those criteria and still generates cash:

1. Passed. It's free for people to use. This isn't revolutionary. Make the service free and put ads on it. With adsense, sales is automated, which is the hardest (and most important) part of starting almost any new business.
2. Passed with A++. Not sure I can say anything specific about this without giving the idea away. But, in the google adsense game, as long as you get people to use it, they create public content, they have incentive to share that content with others and then these new people engage in creating more content that starts the whole cycle again --- you have a runaway revenue model. Of course, this is technically building a community. So, maybe we should make this part the two Cs: Content and Community.
3. Yes. This idea we are doing will have an extremely low barrier for trial. Someone will see the value of it and experience it in 5 seconds. The value that users will derive won't be earth shattering. But, it'll have high entertainment value for a young audience. Which seems to be de rigueur lately.

The more I think about this, the more I think that this is what sums up the second Internet Boom: People creating free viral consumer services that are ad supported. And the impetus is adsense. Of course, the VC's open check books, Rupert's buying spree, and the stock market's zeal for all that is google is fueling it. The question is how many ad supported free services can the internet support? As long as we continue to create new and better advertising methods that track ROI, I'd say that there is a lot of business-es that will move their offline advertising budget and even their sales budget into online advertising, which is technically lead generation.

Let the good times roll.

 

Comments

[Ken Dyck]

You might consider combining points 1 and 3 together into a single one: low barriers to usage. If you ask users to invest much time, money or thought into a service they aren't likely to stick around very long, an idea Joel Spolsky addresses nicely in Strategy Letter III: Let Me Go Back!

[Sooz]

I don't think it has to be free. I just spent $30 on Shaun Inman's new Mint (website stats app) and wrote about it on sooz.com. $30 isn't a lot of money, but it's more than free.

Mint @ Technorati

[Pete Cashmore]

Actually, I think in most cases it *does* have to be free - at least the basic service does. But you can always charge for support or add-on services - just look at Skype; I chose Skype because it was free, but when I start making all my calls with Skype, I'll use it because it's there. If you charge from the outset, you'll never get the bottom-up growth you need.

The lack of a free service is certainly a barrier to using WhizSpark - I, and many hundreds of other readers, see your blog every day and yet I'll never use WhizSpark because I don't have an immediate use for it. But if it was free, I'd probably find uses I hadn't imagined. Before Google Maps came out, I certainly wouldn't have gone looking for mapping services, for instance. Sometimes your audience doesn't know what they want until you give it to them.

A free service with Adsense would probably work, but I don't think it's the "fix all" solution it's cracked up to be. Back in the boom, people presumed you could simply get eyeballs and monetize later with ads - but sometimes ads alone don't cut it, and they need to be combined with other revenue streams. On the other hand, setting up a web service is essentially free these days, so you might as well try out different models.

One last point - I use the Adblock extension for Firefox. I don't see any Google ads and I block out any image/script containing "banner", "doubleclick" etc. I'm not sure of the demographic that uses this extension, but I guess it's many early adopters. Either way, I feel that less experienced internet users tend to click more ads and hence generate more revenue, so any ad-based model has to ensure a good Pagerank.

[pete caputa]

Thanks for your thoughts, Sooz and Pete.

[Noah Brier]

Interesting post Pete, thanks.

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