Marketing Coined by Marketing Guru Jay Conrad Term Paper

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Marketing

Coined by marketing guru Jay Conrad Levinson, guerrilla marketing is marketing that is unconventional, nontraditional, not by-the-book, and extremely flexible. The nine major differing factors from conventional marketing provided in "360 Degree Internet Marketing - Think Outside the Box for Minimum Cost, Maximum Results," (2001), are:

Instead of investing money, you invest time, energy and imagination.

Instead of guesswork, you utilize our expertise and experience.

Instead of measuring your success in terms of traffic, responses or sales, you do so in terms of profits - your bottom-line.

Instead of ignoring customers once they've purchased, you follow-up for cross-sales, up-sales, and referral sales with great persistence.

Instead of only concentrating on making sales, you are dedicated to making relationships, which result in many more sales over the long-term.

Instead of focusing on a single strategy, you utilize a combination of many.

Instead of growing large and diversifying, you grow profitably and maintain focus.

Instead of aiming messages at large groups, you target individuals and small groups.

Instead of growing only by adding new customers directly, you lean upon the enormous referral power of your customers to grow exponentially."

As early as 1999, research firms such as Forrester Research ("Forrester Report," Affiliate Marketing.co.uk) had began to understand the power of online guerilla marketing as a channel with high utility and growing usage, recognizing the effectiveness of affiliate marketing, e-mail and opt-in email as shown in the following table.

Rank

Method

Usage

Effectiveness

Affiliate Marketing

Customer Email

Public Relations

Television

Outdoor

Email (opt-in)

Magazines

Radio

Direct Mail

Sponsorships

Buttons

Banners

Source: Forrester Research April 1999.

Effectiveness ratings based on 1 (poor) to 5 (good).

This paper explores the pros and cons of these online guerilla marketing techniques as well as low-cost methods including viral marketing, banners, search engine optimization, and mobile commerce enablement. The relationship between online guerilla marketing and more traditional offline channels is also summarized. In addition to describing channels to promote web sites, this research briefly covers newer infrastructure technologies that enhance the customer experience on the web site.

Viral Marketing

Venture capital firm Draper Fisher Jurvetson claims credit for creation of the viral marketing strategy in 1997, defining the term as a network enhanced word of mouth (Jurvetson 2001). Viral marketing is used to describe any online strategy that encourages individuals to pass on a marketing message to others. The original inspiration came from the launch of Hotmail in 1996 when Draper Fisher Jurveson persuaded this company to include a promotional pitch for its Web-based email with a clickable URL in every outbound message sent by a Hotmail user. Thus, every Hotmail customer becomes an involuntary salesperson simply by using the product.

The power behind viral marketing lies in its ability to create exponential growth in the message's exposure and influence. According to Jurvetson, a first-order model for viral spread is:

cumulative users = (1+fanout) ^ cycles

The exponent cycles is the number of times the product is used in the time period since launch (or frequency x time) and fanout is the number of new users. In Hotmail's example, this company fanned out to about two new users every month, so one seed user grew to three users at the end of the first cycle, nine by the second, twenty seven by the third, etc. Juvertson also factors in the variables that describe the success of the recruiting message and the retention rate as percentages:

Cumulative users = [(1+fanout * conversion rate) * retention rate] ^ frequency * time

Ideally, viral marketing will communicate with many people, will convert a high percentage of them to new users, will retain a high percentage of them and will also be used frequently. A more accurate second-order model must consider decay functions on variables that reflect novelty and saturation effects.

Wilson (2000) defines six effective viral marketing strategies. The first is to give away products or services such as e-mail, information, "cool buttons," and software programs to get widespread attention. Viral marketers practice delayed gratification to generate immediate interest with the hopes of future profit and customer loyalty. Revenue can come from future product sales, the value of the collected e-mail addresses, advertising revenue and other electronic commerce sales opportunities.

Secondly, Wilson recommends that viral marketing should provide for the effortless transfer to others by taking advantage of e-mail, websites, graphics and software downloads. The reasons viral marketing works so well on the Internet is because instant communications is easy and affordable and digital formats simplify replication.

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Marketers should make their message simple so that it can quickly understood and transmitted easily without performance degradation.

The third viral marketing strategy that Wilson identifies is to use a transmission method that can scale easily or to plan for increasing scalability as part of the viral marketing model. He cautions that the virus can multiply only to kills the host before spreading, as is the case with mail servers. Wilson also suggests leveraging existing communication networks. People on the Internet develop networks and relationships by collecting email addresses and their favorite website URLs. These can be exploited by affiliate programs and permission e-mail lists to multiply message dispersion.

As with any marketing campaign, viral marketing requires the ability to exploit common motivations and behaviors. and, Wilson believes that the most effective viral marketing plans use the resources of others to get the word out such as placing text, graphics, links, and article on other websites. This has the advantage of not only having another's webpage convey your marketing message, but also provides the ability to use someone else's resource rather than depleting your own.

Case studies and research suggest that viral marketing can be a huge success. For example, in the initial use of viral marketing by Hotmail (Jurvetson, 2001), this company grew its subscriber base from zero to twelve million users in eighteen months, more rapidly than any company in world history. and, it did so with only a budget of $50,000. Like Hotmail, instant messenger ICQ reached close to the same number of subscribers in eighteen months via viral marketing. MTV, the inventor of music television, has also experienced success with viral marketing when it created a MTV viral Christmas card to cut through all the Christmas promotional noise ("Case Studies," the Viral Factory). The goal of the viral card was to generate goodwill for the MTV brand name and to increase Web sit traffic. In the first three weeks, 30,000 people downloaded the clip and an estimated 6.6 million people watched the MPEG file by summer 2002.

General statistics provided by Sepos (2003) show that eighty percent of online firms are already using viral marketing and are experiencing the following behavior:

Eighty-one percent of viral email recipients pass them to at least one person

Forty-nine percent send email messages to two or more people

Five to fifteen percent of viral recipients click through Fifty-six percent of browsers find new sites through viral marketing

Jurvetson (2001) asserts that viral marketing is more effective than third-party advertising because it conveys an implied endorsement from a friend. One key element of consumer marketing is usage affiliation or wanting to be a member of a group that uses a product.

Despite the many advantages of viral marketing, it does have disadvantages as pointed out by Krishnamurthy (2000). He admits that viral marketing can allow companies to build a customer base at a low acquisition cost and that it allows companies to move from a marketer-to-consumer communication to consumer-to-consumer communication. but, he believes that companies must understand what they are giving up when they engage in viral marketing. For starters, he states that companies lose control over their brand because messages often end up in undesired audiences and because individuals can modify the original message. Krishnamurthy continues to explain how viral marketing can lead to unanticipated growth paths. As an example, he described how many Hotmail became widely used in India as individuals started emailing friends who lived there, but it's not clear if that's what Hotmail expected or wanted. it's also difficult to measure viral marketing campaigns because you can't always track emails.

One of the most problematic aspects of viral marketing is when does it cross the line and become spam. Foster (2002) cites AllAdvantage as one company with a business model that may have gone overboard. AllAdvantage pays customers fifty cents an hour to display its display ads on their desktops. but, AllAdvantage also pays ten cents for each hour that someone that you refer to their services uses the display ad and five cents an hour for anyone who your referral then signs on to the service. These pyramid referral credits can go down four levels and some customers earn more than $5,000 per month. Critics argue that this is acquaintance spam and that it is a misuse of an individual's email who had only given permission to send information of a personal nature.

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