Half Engineer / Half Business Guy

Starting Your Business And Becoming An Entrepreneur

Tag: Marketing

That Dumb Video Is Not A Viral Strategy

Viral Strategy is not, as the first few pages of Google’s results will have you think, a stupid video that gets 10M hits. Really amazing content can be viral…but is not strategy.

Viral means: Users will share your stuff.

Viral Strategy means: Figuring out how to influence people to share your stuff MORE.

Of course, the value of your product IS important. However, value is generally determined by the needs of your target audience and the ability of your team to create quality content. You’re not likely to completely change your target audience to try to influence virality, and you probably already strive for top content. I’ll talk more about value later.

The core of viral strategy is: There are 3 parties here: your company, sharer and recipient(s). The higher the benefit to the sharer and recipient(s), and the easier it is to share, the more viral you’re going to be.

The most important levers:

  1. Sharing Friction (Reach)
    1. How easy to share
    2. How many people reached per share
  2. Reciprocity (Drive Action)
    1. Can’t just help the company
    2. Must help sharer and recipient
    3. Drive action

Sharing Friction (Reach)

How difficult is it to share, and how many recipients are reached per sharing action?

Low Friction Per Share

One obvious example is YouTube, with its share button. Though the value of a funny video is debatable, hitting “share” and typing an email address or instantly posting to Facebook or Twitter is extremely simple.

Auto-tweeting for a user signing up with a twitter application is annoying, but it’s the ultimate in low-friction sharing. In fact, it’s negative friction (effort required NOT to share)! BTW – I’m not recommending this!

Low Friction Per User

Though it’s low-friction per share, an “email this” button may only reach a few recipients at a time. However, a Facebook share instantly reaches hundreds or thousands of users.

Ticket companies like TicketLeap are also at this end of this spectrum. It may take significant time and effort for an event organizer (the sharer) to select and set up a ticketing service, but when they send an event invite, it’s an instant share to every invitee and attendee (recipients), and TicketLeap (the company) reaches a huge number of potential customers.

Reciprocity (Drive action)

The real core of a viral strategy is that it incentivizes people to share your product, and incentivizes the recipient to act on the shared information.

A tweet may be shared with thousands of people instantly, but unless the viewer has a reason to, they won’t take action. The key is to make sure that your company isn’t the only party that benefits.

There are 3 parties here: your company, sharer and recipient(s). The higher the benefit to the sharer and recipient(s), the more viral you’re going to be.

In the graph below, I show a number of examples of highly viral companies, arranged by reciprocity (how many parties benefit). I’ve split this into two groups: “Need to Function” means the core product of the company requires sharing, and “Help Each Other” means the product can be used without sharing.

Viral Strategies 12Feb11 v2 1024x687 That Dumb Video Is Not A Viral Strategy

No One Benefits

A typical example of what’s NOT very viral is adding a “share this” button. Since it doesn’t necessarily help the sharer or the person receiving the link (only the company).

I Benefit

The sharer gets benefit by sharing. For example, Hipster recently got thousands of signups for beta testers, without anyone even knowing what they did. In order to receive a beta invite, you had to share a link to the site with at least 3 other people. The sharer received the benefit of getting closer to an invite – the value to the recipient was no more than a “share this” button.

You & I Benefit

Farmville (by Zynga) is a viral machine, and one of the key features of getting new users into the game is how they use invites. The game moves slowly so that in some cases, the only way to move ahead of the painful pace is to suck more friends in or pay extra!

To illustrate: once Jon realizes he has to get help from somewhere to advance in the game, the free way to do so is pull in a friend with the pre-worded invited: “Glenn – Jon just sent you a cow, will you help him out?”. Jon receives benefit from Glenn’s signup & future help, and Glenn feels an obligation to help out Jon, who’s already given him this free cow, and asked Glenn in public (on Glenn’s facebook wall!) to reciprocate. Don’t be a jerk, Glenn. Jeez.

Another interesting example is the file-sharing feature of Dropbox. In order for Glenn to send a file to Jon, he simply clicks “share”, enters Jon’s email address, and then Jon receives an email telling him to sign up as a Dropbox customer to receive the file. Both the sharer and recipient get value, and Dropbox gets its new user.

Many of You & I Benefit

This is a major factor that helped social networks like Facebook, Twitter, and LinkedIn take off.

When you first joined Facebook, it’s likely because you either wanted to see your friends’ pictures or what they were up to (content), or your friends asked you to join so they could follow you (more content). The more friends you have on Facebook, the more value it provides to you, so you try to get as many people 1) on Facebook and 2) actively sharing as possible.

This includes bugging people to post pictures and even the original “poke” to get them to respond and engage. “Likes” and “comments” on content are almost a goal in themselves, as people try to post valuable status updates or videos to get as many pats-on-the-back from the community as possible.

In the biggest examples of this model, the drivers tend to be the desires to increase content and get social approval.

We All Benefit

This is why Groupon is the fastest growing company ever. With Facebook, there is an unbounded problem: if more people share, you get a better experience. With Groupon, there is a light at the end of the tunnel – you know how many people are needed, and you know the reward.

Reasonable Goal-Setting: Imagine a boss saying “you’ll get paid more if you work hard for a long time” vs. “if you finish this blog post by tomorrow, I’ll give you $100”. It’s uncertain what the outcome is for the first request, but it’s pretty obvious what it would be for the latter.

Mutual & Broad Participation Required: Not only that, but you MUST share with a BUNCH of people NOW and you ALL get benefit. No one benefits if everyone doesn’t participate. Not only does the experience improve with more people, but if someone is asked to help, there’s an obligation not to ruin it for everybody.

Effective Customer Targeting: Furthermore, if a user is trying to get a deal on Groupon, he’s going to target the people most likely to sign-up for a particular promotion.

As you can see from all of these examples, there are a number of components to improving virality. In general, help both the sharer and recipient, and push them to act through some benefit and/or the desire for social approval.

OK FINE, “QUALITY” IS IMPORTANT TOO

…but I’d focus on Value Added.

This includes both the size of the audience (potential reach), and how much benefit do they get (quality).

Obviously, viral videos do well because they are quality (of some sort) content, that a huge number of people want to see. On the other end of the spectrum, a miracle drug for a serious, yet-unaddressed disease, doesn’t need a large sales force – those in need will find it.

Notes on value added:

  • It can be purely positive or anti-negative – Funny video vs. medicine
  • Narcissism adds value – “I like showing how awesome I am”
  • Giving adds value – “I feel good helping my friend” (or “I’ll get returns in the future”)
  • Value altered by timing – Send a link when a user needs the product

Conclusion

We’ve all heard about the usual suspects going viral with quality content, but I want to reiterate that Sharing Friction and Reciprocity are the unsung heroes of viral strategy.

While you’ve already determined your target audience and are striving to create quality content, eliminating friction and raising reciprocity can really boost your virality.

Have thoughts on what you think REALLY makes something viral? Good examples I should add? Let me know in the comments!

Customer Acquisition Is Your Biggest Problem

You’re not going viral, so stop it

There are three main ways first-time entrepreneurs seem to think they’re going to acquire users:

  1. It’s going to go viral (everyone needs it)
  2. I have a lot of friends who will use it
  3. I have a ton of facebook and twitter friends/followers who will share and retweet me

Unfortunately, telling a sophisticated investor that you’re going to go viral and that you’ve got Twitter/Facebook personalities is basically saying “I have no idea what I’m talking about.”

Even more unfortunately, that’s one of the most difficult things to convince a new entrepreneur.

Going one step further – if someone who knows what they’re talking about asks you “What’s the most important issue you have to solve for your consumer web business”, the answer is “Customer Acquisition”. (Shout out to Shawn Broderick of TechStars and Allan Tear of Betaspring, for giving me the smackdown on this one.)

THE REAL QUESTION ISN’T “HOW?”…IT’S “HOW MUCH WILL IT COST?”

It turns out, the most important inequality in your life is:

LTV > CPA

LTV = Lifetime Value of the Customer
CPA = Cost Per Acquisition

You need to determine if, over time, your business model can support a LTV higher than your CPA. If this isn’t possible, your business won’t turn a profit. Maybe more importantly to the budding entrepreneur, if you don’t have a good argument why long term LTV > CPA, you’re not going to raise any money.

At the beginning of your startup, you won’t have much data here. If there are similar, established companies in your industry, you can try to determine their numbers.

Ways to do this include:

  • Google AdWords costs
  • Financial statements can sometimes be used, if available
  • Blog entries or other primary research on their business
  • Ask folks in the industry, or investors who may have a general feel for that industry

But realistically, you won’t have much data at the beginning, and this will be difficult. That’s part of the reason why you so often hear of investors asking to see “traction” before becoming seriously interested in a relatively new entrepreneur. Not only do they want to see proof that you can get users, but you will begin to build data on your LTV and CPA that can help them understand if your business can be profitable.

HOW YOU’RE REALLY GOING TO GET USERS

There are a number of strategies with which you’ll acquire users (though obviously no magic bullet exists to capture either businesses or consumers). Major examples include:

  • Helping users find you (Inbound Marketing)
    • Search Engine Optimization (SEO) – Making sure you appear high up in search engine results for relevant searches
    • Blogging – Helpful with SEO, building brand
    • Social Media Marketing – Using social media channels to spread marketing messages, blog posts
    • Viral Effects – Rare, but possible. E.g. viral hooks used by Zynga (“Help your friend by…”). Only launch will tell if this can be achieved
  • Going out and getting users (Outbound Marketing)
    • Search Engine Marketing (SEM) – Purchasing search engine advertising like Google AdWords
    • Display/Video Advertising – Finding where your users are and paying to put content there
    • Email Marketing – Creating useful content and educating users about your product, and making it simple for them to buy
    • Direct Sales – Having a live sales force who directly reaches out to individual consumers (in person, via phone or web)
  • Getting help from others
    • PR – Getting into blogs, newspapers, journals, TV
    • Strategic Partnerships – Partnering with other businesses to market your product or service
    • Widget – Low-touch version of partnering – create a value-adding widget to be easily added to other websites to extend reach

WHEN YOU’RE VERY EARLY STAGE – DON’T PAY FOR MARKETING

One of the most interesting pieces of advice we received was from two media executives – one was the head of a major TV network’s interactive division, and another was the former CEO of one of the web’s most popular news sites.

Their tip: Early stage, pre-Seed Round startups shouldn’t have to spend ANY money on marketing. There are just so many ways to reach audiences, via inbound marketing, smart PR, and partnering.

In addition, paid advertising is in many ways dominated by large companies. Another advisor from one of the world’s largest online travel companies advised us: Don’t even try to fight the big guns at SEM – they have full teams of people with huge budgets who spend all their time optimizing Google AdWords spend. There are certainly places where SEM makes sense for smaller companies, but these are generally companies who have raised money or have significant cash flow to plow in. Paid advertising can be very important, but gets very expensive very quickly.

YOUR CUSTOMER ACQUISITION STRATEGY WILL CHANGE – FIGURE OUT HOW AHEAD OF TIME

Eventually though, you will most likely have to pay for marketing.

At this point, even if you are able to find scalable ways to acquire users at a reasonable price, each incremental user will become more and more expensive. Given the size of your business and resources available, there will be shifts in the types of marketing you use, and which are most effective.

Keep this in mind as you plan your marketing strategy – it’s very unlikely that you will succeed with the same strategy in the long term, and you’ll want to understand how this strategy will shift to continue to accumulate users where LTV > CPA.

A few helpful resources: