Infected

Unlike traditional word-of-mouth, e-mail conversations can be tracked and measured. The results can be used to tweak existing marketing campaigns or to create new ones. The whats, whens and hows are so valuable that nearly every interactive marketing agency touts customer-behavior reports as an integral part of its services. The intelligence gained from the spread of the message is perhaps as valuable as the message itself.

Viral marketing is "probably the Internet’s most powerful marketing technique," says Michael Tchong, president of Iconocast, an online marketing company. "The good news is it works extremely well. The bad news is not too many people are using it."

That, however, is changing quickly. E-mail marketing (of which viral marketing is a part) will generate $7.3 billion in revenues by 2005, up from $164 million in 1999, according to Jupiter.

Companies are waking up to the cost savings that are gained from conducting marketing online. The savings in production costs and postage, Jupiter estimates, means it costs the typical marketer $6 to e-mail a customer, as opposed to $18 for direct snail mail.

As "get your free e-mail" tag lines and "e-mail this to a friend" buttons have become staples of the Web, a new class of interactive marketing agencies has risen. They help companies craft compelling viral messages, often competing with traditional ad agencies that have developed their own interactive-media departments. Many firms can also calibrate the results of an e-mail campaign. These "analytics," when applied to streaming media, can tell how often an e-mail recipient views a stream, at what time of day, and whether and when a stream is halted.

Streaming Your Viral Message

Streaming video and audio is on the rise as part of the e-mail- marketing mix — being used to pitch everything from perfume to restaurant recommendations to George W. Bush.

During last year’s U.S. presidential campaign, one of Bush’s speeches was streamed and sent to 1.5 million supporters. Thirty percent of those who opened it passed it on, says Jay Stevens, marketing director for Radical Communication, which managed the effort. Radical Communication is a technology provider that works with ad agencies to develop so-called "transactional e-mails" — rich media ad campaigns that facilitate e-commerce and give the e-mail receiver just one click to a purchase.

Ad firms are taking notice of such campaigns. According to a recent survey of 100 advertising executives by The Yankee Group, 65 percent intended to recommend streaming media advertising to their clients this year. Furthermore, 90 percent of respondents expect clients that have already purchased streaming media advertising to do so again in the next 12 months.

Perhaps that’s because streaming ads get noticed. According to Blair Lyon, chief executive officer of digital marketing firm TMX Interactive, streaming ads tend to be four to five times as viral as traditional text ads. In addition, online brand research firm Millward Brown Interactive, in a study to be released in May, found that streaming ads are consistently better than banner ads at increasing brand awareness and ad recall.But while the effectiveness of streaming advertising is increasingly documented, measuring the success of viral marketing remains anecdotal. Every online marketer has a favorite success story showing high pass-along rates for their clients, ranging from the low teens to as high as 70 percent. Many have had success adding new names to an in-house customer database. None, however, have shown that a viral marketing campaign has translated into profits or better market share.

Part of the reason is that e-mail analytics are so new and marketers haven’t fully harnessed their power. Of the marketing directors interviewed for this story, only one could name an instance where information gleaned from analytics helped retool a campaign in progress.

"Clients are still in the aggregation stage," says Stevens. "They aren’t using (data) to tweak messages."

For example, e-marketer Bigfoot Interactive got a respectable 20 percent pass-along rate for a stream it sent out on behalf of client Calvin Klein — a perfume commercial deemed too racy for television. But since Calvin Klein’s sales and viral marketing databases aren’t connected, it’s impossible to tell what the company’s return on investment is, says Kate Leahy, Bigfoot’s director of marketing. Still, getting the word out virally can’t hurt, she adds.

"Getting (more) eyeballs on my brand is not a bad thing," Leahy says. "Marketers are saying, ‘How can I use e-mail as a springboard for our other interactive activities, such as customer service, e-billing, e-commerce, [and] visits to the site.’"

Sometimes viral efforts, though, have clearly produced flat results, as in the case of Stanford University football, which distributed an interactive game to its 15,000-person database to promote its opening game last year. The interactive game, in which viewers would attempt to kick a football through the uprights, was interesting enough that recipients passed it on to others. But though it was coupled with a deep discount on tickets, sales stayed flat, says Wayne Guymon, a Stanford marketing associate.

"People seemed to enjoy the game," he adds, "but it didn’t encourage people to buy."