It's Catching

Brandweek, June 5, 2000 by Karen J. Bannan

Viral marketing used to happen by accident. Now marketers are looking for ways to infect consumers with their messages via the Web.

You can spend $10,000 or $1 million on a marketing campaign, but in the end, the best ads are the ones that transcend their main purpose and become entertainment. Anheuser-Busch's recent Budweiser "Wassup" campaign is one example. Although the ads originally launched on TV, the campaign gained momentum on the Web with lightning speed. Within a month of its online debut, many users had downloaded the ad from the Web site and sent it, or myriad variations, to friends and business associates, say analysts. This phenomenon--the purest form of viral marketing--is an advertising medium that many hope to capitalize on. Unfortunately not everyone will succeed at duplicating the pure viral marketing experience, leading many companies to go at it from an artificial means.

Over the last six months, e-mail marketing has exploded due to a low cost barrier and relatively high response rates, says Michelle Slack, a senior analyst with Jupiter Communications. The category is expected to grow from $164 million last year to $7.3 billion by 2005. At the same time, per-user e-mail volume will explode by a factor of 40, according to a report issued by Jupiter last month. In 2005,268 billion commercial e-mails will go out, a significant increase over the 3 billion messages sent in 1999.

Companies are already cashing in on viral campaigns. Visit 10 commercial sites on the Web and you're sure to find links to tell-a friend-type promotions. Open an e-mail and you may find a text-based promotion or banner ad embedded in the message. Entertainment and e-commerce industries are two of the most successful categories gaining ground by using viral marketing, says Jupiter's Slack.

But there is also a downside to viral marketing. A highly-charged anti-spam sentiment has emerged over the past 12 months, forcing several companies to pull viral marketing efforts all together. Going forward, marketers will need to demonstrate caution. With more e-mails making their way into consumers' inboxes, the chance that commercial e-mail-- even opt-in marketing--will be viewed as spam also increases.

There are other issues aside from consumer perception. The most common viral marketing delivery method--HTML e-mail--can pose a technical problem. Marketers who use this type of e-mail as a delivery vehicle are often shut out. America Online, which is the nation's largest Internet Service Provider, has 22 million users, but its proprietary e-mail program doesn't support HTML-based e-mails.

The challenge then is to create a marketing campaign that balances content with caution. Retailers and advertisers need to learn how to incent people without incensing them. Recognizing that not everyone can capture this balance, today there are at least five companies that specialize in viral marketing, and if the research is correct, that number is sure to grow, says Jupiter's Slack.

EPIDEMIC.COM

Kelly Wanser, Epidemic.com's chief executive officer, says she doesn't think that what her company does is truly viral, even though its billed as a viral marketing service. Epidemic.com attaches to consumers' outgoing personal e-mails. If the recipient of an ad clicks on it or buys something after clicking through, the e-mail's sender gets a piece of any resulting profits.

In order to thwart spamming, Epidemic.com doesn't base its incentives on the number of eyes that are looking at a message. Instead, they base payments directly on traffic and sell-through, says Wanser. And, since Epidemic.com can track the source of a message, it can not only see how far its ads are going, but exactly where they originated from in the event of a problem.

The consumer-driven process is fairly simple. After downloading a small software component, consumers select their favorite ads or allow Epidemic.com to do it for them. Since every member of the program discloses personal demographic information, it's easy for the company to target ads, giving advertisers such as Dell Computer, Hanes, 1-800 Flowers.com, and Omaha Steaks a highly motivated audience.

There's even a feel-good component to the program. Consumers can donate their earnings to charity or raise money for a specific group.

To date, Epidemic.com's program is succeeding. At the end of the first quarter, the company posted 10,000 ad impressions per month and was signing up new members at a fast clip. Members are also reaping the rewards, with the average monthly pay-out hovering at $20. Members who recruit other members get a piece of their earnings, too.

"Our business model is working because we're not focused on getting people to give us their email addresses," says Wanser. "We're expanding the reach of a banner ad and providing a service to consumers, too."

FAVEMAIL

Like Epidemic.com, Favemail is looking to brand consumer e-mail. Consumers can download a small plug-in or, if their e-mail doesn't support HTML, sign up for a free Web-based e-mail account. Then, they can select an ad or banner from 165 "faves" available on the site. If they like more than one ad, users can create an album of ads that they can run on a rotational basis. They can also turn ads off completely, giving users a comfort level that is often missing in viral promotions. Favemail doesn't limit users to revenue-generating ads. The company will also let them create and attach their own ads. There's even a photo cropping tool so users can attach personal photographs to their messages.