WEB MARKETING: When is a virus a good thing?

Using word-of-mouth `viral marketing’ to promote your Website

Although word of mouth has long been an effective means of promotion for catalogers, getting the word out can take some time. But the popularity of the Internet and e-mail has given new immediacy and a new term – viral marketing – to word-of-mouth marketing.

Chances are that many catalogers are already practicing viral marketing (also known as digital word-of-mouth promotion) without even knowing it. Online features and capabilities such as e-mail and gift registries allow customers to almost unwittingly introduce or promote a Website to their friends, so that awareness of the company spreads like a virus (albeit a constructive, not destructive, one).

Online greeting card companies such as Egreetings, Blue Mountain Arts, and Regards.com have essentially pioneered the concept of viral marketing. Typically when a customer sends an online greeting card via e-mail, the recipient will visit the Website to e-mail a card back to the sender. And some greeting card companies, rather than e-mailing the card itself, send the recipient an e-mail with a URL for access to the card, ensuring that the recipient visits the Website.

“It’s a natural instinct for people to send another card once they receive one,” says Derrick Chen, director of venture investing at New York-based Web developing and marketing company Rare Medium Group, which owns Regards.com. “For visitors to send an online card they must first become a member. We register new members every time someone sends out an online card. That’s how we know viral marketing works for us.”

Low budget, solid returns

Part of the appeal of viral marketing is that it’s cheap. Costs are pretty much limited to the initial investment in an e-mail or gift registry software program. “We promote our company through other people without spending money on advertising,” says Stephanie Healey, interactive sales manager at food cataloger Omaha Steaks.

The $225 million Omaha-based marketer uses viral marketing in its e-mail newsletter program by adding a P.S. at the bottom suggesting the recipient pass the newsletter to a friend. “It’s the best way to attract new customers, since most existing customers have friends just like them in terms of demographics and spending habits,” Healey says.

Marketers can use traditional direct marketing techniques, such as applying source codes to certain programs, to determine the general effectiveness of their viral marketing efforts. Still, “we can’t pinpoint exactly what efforts increased sales, so we have to look at the whole scope of our marketing efforts,” Healey says.

But catalogers can track the number of new users to the Website after a program launches. Bolt.com, an online community and commerce Website aimed at teenagers, claims to register 5,000 new users every day, mainly through viral marketing efforts such as e-mails and wish lists, says its vice president of marketing, Brad Mehl.

For example, a few weeks before a Bolt.com user’s birthday, the New York-based company sends an e-mail message asking him or her to create a gift wish list. Bolt.com then encourages the user to e-mail the wish list to friends and family, thus sending them back to the Bolt Website to buy the product. And if one person builds a list and sends it to five people, a few of those people will likely be prompted to create their own list, further spreading the marketing virus.

“Viral marketing puts the focus on the audience – I call it `word of mouse,'” Mehl says. “And it’s faster than offline word of mouth.” Since launching in 1996, Bolt.com has grown to 3 million registered users.

Spreading the word

Indeed, customer referrals are the number-one source of Website traffic for jewelry and tabletop gifts cataloger Ross-Simons, according to vice president of marketing Peter Howard. And considering that nearly 10% of the company’s catalog orders come from “pass-alongs,” in which a customer gives the print catalog to a friend, the potential to attract prospects via e-mail is strong.

Although the $205 million-plus Cranston, RI-based cataloger doesn’t actively engage in viral marketing, it does have 10,000 registered subscribers to its e-mail program, and Howard suspects that many of them are passing the e-mails to friends. “The power of e-mail marketing is significant because it’s simple to just forward the message to others,” Howard says. At press time, Ross-Simons was planning to add a “friend of a friend” referral program to its Website, but no details were disclosed.