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There's one marketing vehicle developed in the offline world that works great online: viral, or "refer-a-friend," marketing.
We all recognize the power of a referral, and naturally a referral is a lot more qualified when it comes from someone you know and respect. The best part of it is, of course, that it costs virtually nothing.
With ad budgets tightening up second by second over the past seven months, you have to recognize and take advantage of everything and anything you can to
maximize your exposure at a low cost. A viral marketing push is, in essence, a freebie once it's set up.
Viral marketing is an old concept, even on the web. Nearly every major content publisher offers an "email this article to a friend" option, and
many contests offer incentives to refer a friend.
Some of the best results we've had come from contests including a viral component at the start-up stage for a client company whose user base is only as big
as the staff in the company's office.
The Size of the Prize
We all understand the value of an incentive program in driving sales or other types of conversions. What a lot of people do not know is that very often how
impressive the prize is doesn't matter. Frequently, the smallest incentive works well, and the value of each registrant grows exponentially when you include a "refer five friends" option.
We've run and promoted contests for clients by giving away a variety of items as incentives. For example, Tripeze.com launched in May 2000 with a contest
giving away two free airline tickets every day for over three months. The response and redemption rates were fantastic. The giveaway was a great way to generate interest in the company's services and was hugely
successful.
Danier, a leather retailer, also ran an online incentive program around that time. But the incentive it offered was pretty modest -- a $500 voucher for its
products. The contest generated a response rate similar to that of Tripeze.com's promotion. At the other extreme, I've seen contests giving away as much as $500 in cash every day that have completely flopped and
created very little awareness. FreeScholarships.com gave away a $10,000 scholarship EVERY day, but soon lost its sponsors, even though it was getting 1.5 million visitors daily. The problem was that only about 8000
visitors daily were unique (first time visitors).
The difference here is the viral component. The prizes were not even comparable in value, yet the ROI gained from the efforts was similar. When visitors
were brought to the sign-up page for the Danier.com giveaway, they had the opportunity to have their names thrown into the hat up to five additional times for each friend they referred. A highly qualified referral
is something that will always bear more weight than an ad thrown in your face amid a clutter of other ads competing for your attention.
Still, many contests today do not take advantage of this opportunity to leverage the value of the existing audience. Viral marketing costs very little time
and effort to develop and is essentially free of charge once implemented. In terms of ROI, it can be the key component of your online contest and should be implemented to maximize reach and returns.
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