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About Seth Godin

Permission Marketing

SNEEZERS     Some people are far more likely to spread an ideavirus than others. Malcolm Gladwell (author of the brilliant book and ideavirus, The Tipping Point) calls this the Law of the Few and breaks the key virus spreaders into three groups: Connectors, Mavens and Salespeople. What's critical in the analysis is understanding that some folks are dead ends, while others will enable and amplify your ideavirus.

In his best example, Gladwell talks about the success of Paul Revere in warning us that the British were coming. It turns out that a second man, William Dawes, went on a similar ride the same night--but his was a total failure.

Why did Dawes fail where Revere succeeded? It's because people knew Paul Revere. They trusted him. He had credibility. And so when he said something, people were willing to listen and believe. Revere was a sneezer. Dawes, a loner, tried hard but couldn't get the idea to become a virus.

Sneezers are at the core of any ideavirus. Sneezers are the ones who when they tell ten or twenty or 100 people--people believe them.

This is your uncle the insurance salesman. These are members of a hive who can be counted on to try to "sell" their favorite ideavirus to almost anyone, almost any time.

1. Promiscuous sneezers can be motivated by money or other inducements.
2. Promiscuous sneezers are rarely held in high esteem as opinion leaders, but if they're promiscuous enough, they can be extremely effective.

DEFINITION: HIVE     People are not one amorphous mass. We're self-organized into groups, or hives that have several things in common: a way to communicate among ourselves; spoken or unspoken rules and standards; a common history; fashion leaders. Some examples: Fraternity brothers at a college, orthodox Jews, readers of Fast Company, Deadheads.

Many of the Net businesses that are now being organized around ideaviruses are targeting this group (people who are willing to sell to their friends for personal gain). Companies like Mercata, All Advantage and even Amazon are offering inducements to customers that compensate them for spreading ideas to their friends and acquaintances in an attempt to acquire new customers. As the value of creating ideaviruses increases, we'll see more of this, and we'll also see more and more people becoming promiscous sneezers--basically, we're paying folks enough to corrupt them into spreading ideas in exchange for cash.

    Powerful Sneezers

The hat business is near the end of an eighty-year downward spiral to total irrelevance. Each year has brought worse news, with one manufacturer after another going out of business, and most towns left with one (if they're lucky) haberdasher.

In the midst of all this dismal news, about twenty years ago there was one bright spot. Harrison Ford. With a bullwhip. Wearing a hat.

Indiana Jones sold more hats for Stetson than any single person since the invention of the Marlboro Man. Why? Because Ford has the influence to set style, because his appearance in a movie wearing that hat coaxed millions of men who wanted to be like him into buying a hat.
       
The paradox of the powerful sneezer is that he can't be bought. Every time a powerful sneezer accepts a bribe in exchange for spreading a virus, his power decreases. When Bruce Springsteen does ads in Japan, or Whoopi Goldberg shills for Flooz, they have less leverage as powerful sneezers. The public knows that they can be motivated by more than just taste.

In fact, every time a powerful sneezer tries something new and introduces a new idea, she takes a risk. If her followers reject the virus (for whatever reason), her ability to introduce future viruses decreases. For this reason, it's difficult to manipulate powerful sneezers, and equally difficult to predict what might motivate them to adopt an ideavirus.

Here's an analogy that demonstrates the difference between promiscuous sneezers and powerful sneezers, and more important, explains how they might converge:

Anyone can buy an ad in the Pennysaver, or even write and insert a "special advertising section" in some fancy magazine. The advantage of this kind of presentation, obviously, is that it gives the marketer complete control over how the message appears and what it says. Advertising is basically paid sneezing. And because the public realizes that that's all it is, it doesn't have an awful lot of credibility. It still works, but it's not as effective as real sneezing from a powerful sneezer.

On the other hand, it's up to the editor in chief of the New York Times to decide what articles appear in the paper. No matter how much money a marketer spends (even though spending a lot might get you noticed by the editorial staff), there's no guarantee that an article will appear--and no guarantee that if it does appear, it will say what you want it to say.

Enter the web. There are plenty of websites where the line between editorial content and advertising is blurred, where sponsoring a website also gives you the right to say what you want to say....

So let's imagine for a second that the New York Times embraced this shocking idea. That they said, "Okay marketers, write your own articles! And pay us to run them!" Now there'd be some ground rules. First, the marketer would specify how much they'd be willing to pay to have a story featured. For example, a restaurant could decide it might be worth $10,000 for a feature on their new chef to appear in print.

Second, the Times would get final say over what was printed.

Obviously, a wholesale switch from powerful sneezer to promiscuous sneezer would decimate the circulation base of the Times. If the Times accepted any article, regardless of credibility and interest, just because the marketer was the highest bidder, it would totally destroy the paper within a week.

But what if the Times realized that picking only the very best articles that were submitted (maybe just a few a day) could ensure that people would still be delighted to read the paper? What if the Times knew that for every 199 badly written restaurant fluff pieces, a great one would show up? And what if the editor in chief had enough guts to pick just the great articles and resist pressure to completely sell out?

Journalistic handwringing aside, this is already happening (not at the fabled Times, of course), and it's going to happen more. It's happening on websites. It's happening on television (witness the CBS coverage of iWon.com awarding prizes--CBS owns a chunk of iWon.) And far more interesting than this tortured analogy, it's already happening with people's personal sneezing ethics.

A hundred years ago, there weren't many opportunities for playwrights, actors and captains of industry to sell out. Today, Whoopi Goldberg pitches Flooz, William Shatner pitches Priceline and Gerald Ford is on the board of directors of several companies. In each case, the celebrity is shifting from role of influential, powerful, can't-be-bought-I'm-a-style-statesman to promiscuous sneezer, available for sale. William Shatner had lost his ability to set style through his actions--he was past his prime as a powerful sneezer. So the segue to paid sneezer made sense for his career. It would probably be a dumb move for Tom Cruise or Mel Gibson, though.

After I left Yahoo!, I had many opportunities to serve on boards and do endorsements. I chose not to. Why? Because I didn't want to squander the powerful sneezing points I'd earned by writing my last book. The one ad I did, I did for free. I'm still hearing about it.

Think about your own situation.... Have you ever signed up a friend for MCI's Friends and Family program? Or tried to get someone to use your Amazon affiliate links to buy books? Or join with you to buy something at Mercata.com? In every case, you're getting paid to alter your behavior. That makes you more promiscuous and less powerful.

As the Net makes it easier to measure ideaviruses and motivate sneezers, we're going to see far more people become Promiscuous Sneezers, but, at the same time, the role of the powerful sneezer will become ever more important. As available attention becomes ever more precious, we're going to be far more likely to listen to someone who's spreading a virus for non-personal gain.

Epinions.com is a fascinating model of the intersection between the powerful and the promiscuous sneezers. Here's a site where hundreds of thousands of people come to hear the opinions of thousands of sneezers. Everything is reviewed, from books to dishwashers. And the reviewers are clearly identified and constantly ranked. Promiscuous sneezers (who get paid to do the reviews) suddenly become powerful! How? If a lot of people read and like your reviews, your reviews carry more weight, regardless of your compensation scheme.

"Xyz" has posted more than 1,000 reviews and been read more than 100,000 times. She's compensated every time someone reads one of her reviews, so she certainly qualifies as promiscous. She works hard to get others to read her reviews. But at the same time, she's developing a reputation as a powerful sneezer.

Referrals.com is a business based around the idea of paying people to help with job searches. Instead of just giving some headhunter the names of five friends who might be perfect for a job (and having the headhunter collect a $30,000 fee if you're right), referrals.com turns the idea upside down. With their system, YOU send the job offer along to your friends, and if they take the job, you get a check for $4,000.

If Referrals.com only attracts promiscuous sneezers, the business will fail. Why? Because the very best people try hard not to listen to interruptions from promiscuous sneezers. The very best people know that if someone can be bought, they're not much more than a walking billboard, and just as they ignore the billboards on the highway, they're going to ignore the most promiscuous sneezers in their midst. (Aside: If you've ever been called by a headhunter, you know just how promiscuous people are willing to be in exchange for cash!)

Referrals.com is working very hard to turn powerful sneezers within very select, high-end hives into people who, on occasion, are willing to sell out for a $4,000 payoff. These are folks who might not hassle you just so they can make $5 or $10 in bonuses. But the idea of becoming a headhunter and making $4,000 in exchange for sending a few emails is too irresistible to pass up. This idea that even the powerful can become promiscuous for the right inducement and in the right setting is a key building block to unleashing the ideavirus in an organized way.

What a paradox. Powerful sneezers become less powerful when you buy them off. But sometimes, promiscuous sneezers become powerful again when they get particularly successful at it. It's a cycle, with people switching off from one to another, always trying to figure out how to be both promiscuous (read profitable) and powerful.

1. Make big promises
2. Show them how to make it up in volume
3. Describe an attainable path
4. When someone succeeds, tell the rest of them
5. Give the successful ones a way to show the non-sneezers it worked
6. Have a Mary Kay convention

Make big promises
One of the things that drives someone to become a promiscuous sneezer is the opportunity for a change in lifestyle. Certain rewards, though small, are not as enticing as slightly less certain rewards that are much larger. Human nature (especially among the optimists) will give you the benefit of the doubt on the risks, but it won't cut you any slack on the rewards.

So, I'm much more likely to help you out for a chance to get free dry cleaning for six months than I am to get a certain reward of $4 off my next dry cleaning bill.

Show them how to make it up in volume
Of course, the promise has to be believable. One of the best ways to do that is to make it clear to the promiscuous sneezer that the system can be gamed. That if they work the system, the odds of winning go way up.

If I look at the offer you make and say, "Wait. If I go to ten friends, not just one, then I'm a lock to win this great prize..." you've done it right. I may think I'm scamming you by going to so many people to adjust the odds in my favor, but actually, I'm doing just what you wanted me to do--and then some.

Many of the online affiliate programs work this way. These programs offer a commission for referrals that result in a sale. First designed as a cheap way to get new customers referred from relevant web sites, they've evolved into something far bigger. If you're at an online pet store, for example, and you see a link to a book about training dogs, you can click on the link and buy it from Amazon.com. Amazon then sends the affiliate (the online pet store) a commission. Small businesspeople have looked at these programs and said "Wait! If I build a site that does nothing but sell books and Barnes and Noble does all the work, I'll scam the system and make a ton of money." Of course, the online bookstore doesn't care a wit about where the customers come from. They're just happy to have them. In essence, hundreds of thousands of entrepreneurs are now building businesses dedicated to finding customers for other merchants.

Describe an attainable path
Alas, trust is in short supply, even among optimistic promiscuous sneezers. Thus you've got to make it clear to potential sneezers that there is in fact a way for them to profit from this adventure.

This is especially true for offers where you don't have a lot of time to make your case. By showing the sneezer how smooth the system is, by making it trivially easy to forward that email or whisper to that friend, you're far more likely to get their initial enthusiasm. The first few sneezes are the most difficult to get an individual to perform.

When someone succeeds, tell the rest of them
This is so important and so overlooked. I'm presuming that you've gained permission to talk with your sneezers on an ongoing basis. So now talk to them! I'm a member of several online affiliate programs, but not one of them does this. Why not send announcements detailing how the most effective affiliates are doing? Why not invite me to visit their sites and see them in action? By making it really clear that some sneezers are happily profiting, you dramatically increase the chances you'll get better performance from the rest of your sneezers.

Give the successful ones a way to show the non-sneezers it worked
Mary Kay cosmetics gives its best salespeople a pink Cadillac. This is no accident.

There are plenty of ways to pay off a promiscuous sneezer. Why do it with a pink Cadillac? Because it is a persistent amplifier of this sneezer's success. Because it attracts new sneezers to the fold. Because it's proof to the rest of your organization and to the world that you can get rich by selling cosmetics to your friends.

Have a sales convention
Just because it's a new century doesn't mean we should abandon the idea of getting together in real life. Zig Ziglar tells the story of how Mary Kay went to a sales convention when she was a struggling salesperson. She didn't even have enough money to eat the meals there... she brought her own crackers and cheese. But at the final banquet, when the salespeople queued up to shake the company president's hand, Mary Kay looked at him and said, "Next year, I'll be back as the #1 salesperson." The president, who could have easily brushed off the claim, stopped what he was doing, paused for a full thirty seconds, looked her in the eye and said, "Yes, yes, I believe you will."

And the rest is sales history. But without the convention, I seriously doubt this would have occurred. How can you get together with your best promiscuous sneezers?

In addition to these six principles, there are two things you can do to totally and completely wreck your network of promiscuous sneezers:

1. Change the rules in the middle
2. View the relationship as an expense

Don't change the rules in the middle
Alladvantage.com is one of the fastest growing websites on the planet. The idea was to create a multi-level marketing organization where each member would get paid for the ads they saw and, more importantly, for the ads seen by the people they recruited. This led to a classic MLM (multi-level marketing) network marketing business, where people made more money bringing in new salespeople than they did actually using the product.

After growing to more than five million registered users, the company took a look at the numbers and realized that the path to profitability was going to be hampered by the high rates they were paying. So, well within the fine print they had published when they first started, they changed the rates.

All hell broke loose. The very best sneezers started sneezing against the company. The growth rate hiccupped. Bad news. They'll survive, and they might even continue their record growth. But far better to have run the numbers in advance and had a payment schedule they could live with forever.

Don't view the relationship as an expense
It's so easy to move your relationship with promiscuous sneezers from investment to expense. After all, at the beginning it's great because these people are dramatically cutting your acquisition costs and helping you grow. But once you do grow, it's easy to assume your growth might be able to continue without the "high cost" of paying your sneezers.

In practice, there are two terrible side effects. The first is that you'll inevitably try to trim the benefits you offer your sneezers as well as the effort you put into keeping them happy. Better to just cancel the program outright than to start disappointing these critical allies (remember, an unhappy promiscuous sneezer can quickly become an angry powerful sneezer).

Second, you'll find yourself trying to grow using techniques that you haven't evolved, tested, measured or practiced. And more often than not, that means failure.

A better strategy is to put a cap on your new sneezer acquisition efforts at the same time you love and reward your existing sneezers. During this interregnum period, get really good at tapping other ways to grow. Only after you're confident that you've got the transition working should you start to phase out the sneezers who got you there in the first place.

1. An idea merchant understands that creating the virus is the single most important part of her job. So she'll spend all her time and money on creating a product and environment that feeds the virus.
2. An idea merchant understands that by manipulating the key elements of idea propagation--the velocity, the vector, the smoothness, the persistence and the identification of sneezers--she can dramatically alter a virus's success.
   
   Definition: PERSISTENCE Some ideas stick around a long time with each person, influencing them (and those they sneeze on) for months or years to come. Others have a much shorter half-life before they fade out.
   
   Definition: VECTOR    As an ideavirus moves through a population, it usually follows a vector. It could be a movement toward a certain geographic or demographic audience, for example. Sometimes an ideavirus starts in a sub-group and then breaks through that niche into the public consciousness. Other times, it works its way through a group and then just stops. Napster vectored straight to college kids. Why? Because they combined the three things necessary for the virus to catch on: fast connection, spare time and an obsession with new music.
3. The idea merchant remembers that digital word of mouth is a permanent written record online, a legacy that will follow the product, for good or for ill, forever.
4. An idea merchant realizes that the primary goal of a product or service is not just to satisfy the needs of one user. It has to deliver so much wow, be so cool, so neat and so productive that the user tells five friends. Products market themselves by creating and reinforcing ideaviruses.
5. An idea merchant knows that the ideavirus follows a lifecycle and decides at which moment to shift from paying to spread it, to charging the user and profiting from it.

Once It Does Spread, An Ideavirus Follows A Lifecycle. Ignore The Lifecycle And The Ideavirus Dies Out. Feed It Properly And You Can Ride It For A Long Time.

Tom Peters co-wrote In Search of Excellence nearly twenty years ago. Through some smart marketing moves (not to mention a great virus) the book became an epidemic and turned into the bestselling business book ever written. 

Tom's career could have followed the arc of almost every other business writer... a big hit followed by a long decline into obscurity. But instead of ignoring the lifecycle, Tom insisted on riding it. 

And he's still riding it today.  Every few years he unleashes a new ideavirus. He writes mindblowing articles (like the "Brand Called You" cover piece for Fast Company a few years ago) and follows up with books and exhausting worldwide speaking tours. When he shows up in a town to give a speech, perhaps a third of the people there are dyed-in-the-wool Tom Peters fans. And the rest of the audience? Brought there by the fans, exposed to his virus, ready to be turned into fans. 

By leveraging the base that his first book brought him, Tom has built a career out of launching new ideaviruses. Sure, none of them were as big as In Search of Excellence, but the vacuum keeps getting smaller, so the opportunities are smaller. 

Other companies and ideas have ridden their first wave and then disappeared. People no longer clamor to dance the Hustle or to get into Studio 54. They don't visit the once hot jennicam website or pay a premium for front row seats at Cats. Why? Because instead of institutionalizing the process of improving, honing and launching new ideaviruses to replace the dying ones, the "owners" of these viruses milked them until they died.

1. How big do you launch?
   
2. How smooth is it?
   
3. How can you turn trial into persistence?

1. How many people know about it before the spreading starts?
You can launch big or you can launch small. Vindigo (a viral phenomenon discussed in detail later) launched their Palm ideavirus with just 100 people. Within weeks, that number had grown to 3,000, and then quickly to more than 100,000. All without advertising. However, if you're entering a vacuum and there's plenty of competition on the horizon, launching big (while more expensive) can increase the chances that you'll succeed.

How to launch big? With traditional interruption advertising. With sponsorships. With free samples. One of the dumbest things marketers do is put artificial barriers in the way of trial. For example, it's obvious that one of the best ways to kill sales of a new car is to charge people $100 to take a test drive.

But charging for a test drive is just as dumb as a politician charging people to hear a speech, or a movie studio charging for the coming attractions. When you launch an ideavirus, the more people who can see it fast, the faster it will spread.

2. The importance of smoothness.
In addition to being persistent and cool, an ideavirus spreads the fastest when it's smooth. Persistence matters because the longer people are sneezing about your idea, the more people they infect. Cool is critical because if it's not virusworthy, it's just not going to take off. But smooth is essential because if you make it easy for the virus to spread, it's more likely to do so. In viral marketing (for products like the Polaroid camera and Ofoto.com) the ideal solution is to build smooth transference tools right into the idea--which can be difficult.

But that doesn't mean you shouldn't try. Amazon tried with "Member Get a Member" promotions, in which they bribe members to tell their friends to buy books from Amazon (get $5 for your friends and $5 for you!). ZDNet puts a button next to every story they publish on their website: click here to send this article to a friend. Smooth.

Tupperware built an entire company around the smooth transfer of product enthusiasm from one friend to another. When you have a Tupperware party you are simultaneously hanging out with friends, demonstrating products you like, selling them and recruiting other people to do the same to their friends. By focusing obsessively on how to make it smooth, you can dramatically increase the velocity of the ideavirus.

3. Turning trial into persistence.
Sooner or later, you've got to turn momentary attention into an embrace of your idea, and then, hopefully, into conversion of the user into a sneezer.

Permission marketing becomes a critical tool in working people through this transition. The Hare Krishnas have grown their sect by inviting people to eat a vegetarian dinner with them. Intrigued or just hungry, people give them momentary attention and then permission to talk to them about this new way of life.

Sometimes people leave, having done nothing but eaten dinner. Sometimes, people listen to what's being said and decide to embrace the ideals being discussed. And sometimes, they become converted and turn into sneezers, volunteering to go out and invite other people over for dinner the next night.

Note that they didn't start by walking up to a stranger and proselytizing about their religion. Instead, they used a gradual technique to sell their idea effectively and turn it into a virus. Are there religions that are not viruses? Sure, the Shakers were. They didn't try to convert at all. That's why there are no Shakers left.

On the web, this multi-step process is too often overlooked by companies facing short-term financial pressure (combine this with the legendary short attention span of entrepreneurs and you can see why this happens). Instead of building a virusworthy cool product or service, identifying a hive, promoting an idea, and making it smooth and persistent, they just spend a few million dollars to buy advertising.

The hope, of course, is that somehow by spending enough money on clever ads, they'll magically create a critical mass of positive energy that will turn their idea into a virus. They're looking for a shortcut, and as a result, leading their companies to doom. Building a virus takes insight, talent and most of all, patience.

After a consumer is interested enough to visit ZDNet or Google.com or some other neat new site, what should these sites do to augment the ideavirus? Three things:

1. Get permission to follow up: make it easy for me to learn about why I should embrace this idea over time. All those ads you ran are a great way to get someone to your site, but it might cost your site $100 in marketing expenditures to get that one visit from just one consumer. If you don't get permission to follow up, the entire $100 is wasted.
   
2. Make as many supporting manifestos available as possible, in whatever forms necessary, to turn consumers from skeptics into converts. This can include endorsements, press reviews, even criticisms and commonly made objections. Think of the Hare Krishnas at dinner. The more they can expose you to during that hour, the better the odds of spreading the virus.
   
3. Make it easy for consumers to spread the ideavirus by providing a multitude of tell-a-friend tools, as well as overt rewards for becoming a sneezer.

1. Have we chosen a hive we're capable of dominating?
   
2. How likely are the powerful sneezers to adopt our virus?
   
3. Do we know who the powerful sneezers are and how to contact them?
   
4. What can we do to our product to make it more virusworthy?
   
5. Are we rewarding promiscuous sneezers sufficiently to get them on our side?
   
6. Have we figured out what we want the sneezers to say? How are we teaching them to say it?
   
7. Even if our product isn't purely viral by nature, is it possible to add more viral marketing elements to it (or to our marketing approach)?
   
8. Do we know how to get permission from people once they've been touched by the virus? Do we know what to say after we get permission?
   
9. How smooth is the transfer of the ideavirus?
   
10. Is our offering good enough to wow this hive?
    
11. Do we have the resources and time to dominate this hive before others rush in to fill the vacuum?
    
12. Have we built in multiple feedback loops so we can alter the virus as it moves and grows?
    
13. Have we identified the vector we want the virus to move in, and have we built the tools and plans to keep it moving in the vector we'd like?

1. Go full viral. The more you use it, the more you market it (whether you want to or not). In essence, using the product is the same as marketing it.
   
2. Pay off the promiscuous.
   
3. Make it smooth for the powerful.
   
4. Digitally augment word of mouth.
   
5. Altruism...reward the friends of the promiscuous.

1. Go full viral. This is the holy grail of ideavirus marketing. The beauty of viral marketing is that if you properly construct the virus, you can grow like a weed and dominate the market--if you can do it before the competition.

Polaroid and Hotmail are the poster children for viral marketing, but there are a few other that are worth looking at:

Blue Mountain Arts was a pioneer in creating a virus around the idea of sending electronic greeting cards. The virus is simple to understand--in order to send a greeting card successfully, you've got to send it to someone. Of course, once someone receives the card, if they like the idea, they're just a click away from sending someone else a card!

Even though the cards featured by Blue Mountain Arts could charitably be called "cheesy," the virus caught on. People got the idea that it might be fun to send electronic cards to their friends... and the idea spread. The company started small, with no real advertising. Just a few people sent the first batch of cards.

But then the magic of viral marketing kicked in. Let's assume that each person sends cards to five people. Let's also assume that those recipients have a 50% chance of being interested enough in the concept to go to the site and send cards to five of their friends. If we start with ten people, the generations look like this:

10 people send 50 cards
which means that 25 people get the virus and send 125 cards
which means that 63 people get the virus and send 315 cards
which means that 162 people get the virus and send 810 cards
which means that 405 people get the virus and send 2025 cards...

Now, that may seem like a slow start, but if you assume that each generation takes three days to occur (I send out ten cards and within three days, five friends show up and do the same thing), then you'd have 58 million users in 54 days!

Of course, that doesn't really happen. It's unlikely you'll be able to continue to get a 50% conversion rate. And it's certain that you'll soon hit duplication, with individuals starting to get cards from different people. But the math is nevertheless stunning.

The key number in the equation is the percentage of people who convert. If you lower it from 50% in the Blue Mountain Arts example to 30%, the number of users drops from 58 million to less than 10,000. Which is why conversion is so critical.

The battle between Hallmark and Blue Mountain in this space is fascinating. Hallmark and American Greetings, both old-line card companies, were well aware of the potential of the Internet. But they were also unable to imagine a world in which cards didn't cost money--so they made the cards they sold online available for a fee.

As a result, no virus emerged from the Hallmark site. If someone was charmed by a card and came to the site to send a few, they discovered that they'd have to pay to do that. They didn't convert. Conversion fell below the magic number and the virus never ignited.

You can compute the magic number by multiplying the number of cards the average user sends (in the example above, it's 5) by the percentage of people who convert (50%). In this case, the magic number is 2.5, which is how much bigger each generation will be than the one before. Until the magic number exceeds 1.2 or 1.3, it's hard for a product to get viral fast enough to beat the competition.

By focusing on smoothness (it's only three clicks to send a card and it's free, so go ahead and try it), Blue Mountain built an amazing conversion machine. As a result, the site grew and grew until Excite bought it for nearly a billion dollars worth of stock. Whatever Blue Mountain's goal--to make a lot of money, to affect a lot of people or to spread their idea far and wide--they've succeeded.

Hallmark and American Greetings have seen the light, and now they, along with Yahoo! and others, offer free greeting cards. The challenge that they face is that there's no longer a vacuum, so their ideavirus can't spread as fast, and their magic number is far lower than that which Blue Mountain Arts enjoyed at its peak (the number must go down as the population of untouched people approaches zero).

Another example of viral marketing worth looking at is Ofoto. Ofoto is an Internet alternative to Fotomat. Instead of dropping your film off at the corner, you send your digital camera files to Ofoto and they send back beautiful prints.

This is a compelling story, but there isn't enough money in the world to communicate it through traditional marketing means. Kodak spends $100 million a year in advertising (and has been advertising for a hundred years). On top of the huge amount of noise out there, there are just no easy media channels Ofoto can use to spread its message in a cost-effective, fast way to the target hive: digital photography users.

So Ofoto also launched a digital photo album. This album lets you post your favorite digital photos online, for free, and invite friends to come see them. Here's the good part: a digital photo album with no one looking at it is worthless!

Thus, once you upload your photos, you've got to motivate your friends and relatives to stop by and see the photos. You become Ofoto's #1 marketing weapon.

Take pictures of your kid's soccer team. Upload them. Tell everyone on the team where to find the photos.

Some of the parents will like the photos so much they'll click a button and buy a print. Ofoto has a new customer. Interestingly, the content was created by someone else --not the person who bought the photo. This is an effect that never happens to Kodak.

Even better, some people who see the photos of the soccer team will realize that they too would like to be able to post pictures for friends. So the torch passes, and Ofoto has added another photographer to its ever growing stable.

It's worth noting that the conversion rate for Ofoto is almost certainly going to be lower than it was for Blue Mountain Arts. First, it's much less smooth. In order to spread the word that you've posted someone's picture, you've got to find that person and tell them about it, and then they've got to hustle themselves to a computer and go look at it... not as clean as the all-electronic approach of Blue Mountain.

Second, the virus is less smooth. If I want to buy a print, I've got to enter my name and address, AND I've got to pay for it. If I want to upload photos, I've got to figure out how to use my digital camera upload files, or I've got to mail in my traditional film to Ofoto for developing.

Despite these obstacles, Ofoto has a very positive magic number as demonstrated by the fact that they've amassed more than 500,000 users in less than 12 weeks.

The astute reader has probably noticed a critical difference between Hotmail and Blue Mountain Arts vs. Ofoto.

Hotmail and Blue Mountain Arts are self-referencing ideaviruses. The virus spreads with the use of the product whether the user wants it to or not. When you first start using Hotmail, the self-promoting signature line promoting Hotmail is automatically included in every email you send. You didn't choose to do that (though you can turn it off), it just goes along anyway.

In the case of Blue Mountain, the symbiotic relationship between the product and the marketing is even more obvious. The card is the marketing, so using it is, by definition, promoting it.

Ofoto, on the other hand, does no such thing. You could quite happily use Ofoto for developing, sorting and storing your photos and never recommend it to anyone.

Clearly, if the marketing element is benign and totally integrated into your offering, your magic number is going to be much higher; the symbiosis pays off with big dividends. The product has 100% efficiency...every user becomes a promoter. The challenge is this: it only works for a very select group of products and services--probably not yours.

Why have I gone to great lengths to point out that viral marketing is merely a subset of ideavirus marketing? Because while very few of us will ever be lucky enough to enjoy the full fruits of a viral marketing campaign, most of us can unleash an ideavirus.

2. Pay off the promiscuous.
Paying powerful sneezers in an effort to make them promiscuous (but have them keep the power) is an extremely difficult balancing act, but if you can do it successfully, you can turn it into a billion dollar business.

Some people call it network marketing or multi-level marketing. Others think of it as a paid celebrity endorsement. But it can be as simple as member-get-a-member for your local health club.

The basic idea is simple: If your recommendation is going to help my business, I'm happy to pay you to recommend me.

The implementations vary all over the map. When Nike paid the coach of the Duke University basketball team millions of dollars (for him, not Duke) to coerce his team members to switch to Nike shoes, they were turning a formerly powerful sneezer into a promiscuous one. Why? When people see what the Blue Devils wear, they might decide to wear the same thing.

On the Net, technology makes it easy to take this model and make it much more personal. Amazon's affiliate program, in which Amazon pays users a portion of the book revenue they generate through referrals, is built around this model.

Go to www.permission.com. There, at the bottom of the page, is a link where you can buy a copy of Permission Marketing. Click on it and it will take you to Barnes & Noble or Amazon--right to the page on the site that sells Permission Marketing. Both stores give me a kickback on every sale.

Did I send you to Amazon just because I'm going to get a kickback? Nope. It doesn't do me any good to recommend a bookseller where you won't end up buying the book--I'll end up with no kickback and no book sales either. I recommended Amazon because you're likely to have one-click shopping already set up, increasing the chances the book will get sold. I also recommended Barnes & Noble, because their affiliate program is at least as good, and some of my customers would prefer to shop there. But the kickback still influenced my decision, and has clearly motivated hundreds of thousands of individuals and businesses to set up links to their favorite books at Amazon and at Barnes & Noble.

This approach is far less risky than Nike's. Nike has no idea if the Blue Devils actually sell shoes. They also have to pay for the endorsement in advance, with no refunds if they're wrong.

Amazon and other affiliate marketers, on the other hand, are using the power of the Net to create a deal with no losers and no downside. You can set up an affiliate link in a few minutes. For free. If it works, you get paid. If it doesn't work, you don't. And it doesn't cost Amazon a dime.

Because of this risk model, affiliate programs are flourishing. Be Free, a leading provider of services to marketers using this approach, calls it Performance Marketing. They currently list 235 websites that are offering affiliate programs.

While it may be interesting to earn a dollar or two on a sale (interesting, that is, if you can sell thousands a month), some companies are taking a different tack.

Woody Chin, founder of Referrals.com, thinks he's found a way to change the way people interact when it comes to job hunts and other sorts of business-to-business commerce. Instead of paying people a nickel or even a buck, he's paying people $1,000 to $5,000 each for that priceless commodity: a referral.

Here's how job filling works before Referrals.com: Hire a contingency headhunter. Offer to pay a third of the final salary, but only if you hire someone the headhunter brings along. So the hunter stands to earn $20,000 or more.

Now, the headhunter hits the phones. She calls everyone she can, and basically begs for leads. There's no obvious benefit to the referrer, except for the possible goodwill that occurs when you find a friend a job.

Woody and Referrals.com are aiming to change that.

With Referrals.com, the hiring manager sends out a description of the job to people she thinks might know good candidates. These referrers can be people she knows in the industry, company insiders or super-agents (and anyone can be a super-agent--read on). The key here is that the referrals are from people whose opinion she values. The description includes a bounty she is willing to pay for a hire as well as a limit to how deep and how wide a referral tree she desires.

It's fascinating to see that Referrals.com is building in a limit to the ideavirus! They don't want any given job search to get out of control and start being passed from friend to friend ad infinitum. Instead, they artificially limit how deep a job search can go into the community. This limit ensures that employers can focus their searches on a certain hive without it running amok throughout the entire population. The web has turned what might have been a multi-level marketing business into a carefully regulated ideavirus.

Anyone who gets involved in referring can sign-up to be a "super-agent." Once you sign up as a super-agent, your performance ratings will be available to hiring managers (in recruiting) looking to find experts to help with their search. And of course, you get first crack at the new job listings.

Let's say the company wants a CTO. Let's say they're willing to pay $5,000 for a successful hire. And let's say they're only willing to go two levels down the referral tree.

Now, a super-agent can send an email to five people he knows who might be perfect for the job. If one of them takes the job, the super-agent gets $5,000 just for sending five emails.

But let's say none of the recipients want the job. But one of them knows someone who does. Bang. He forwards the mail a second time, and this time it lands on the desk of the perfect hire. Assuming this guy gets the job, the first super-agent and the second referrer split the money.

All of a sudden, you've monetized word of mouth! Referrals.com could create a class of thousands of "super-agents" who spend their time doing nothing but finding people through networking. Essentially, it lets just about anyone become a contingency headhunter. (Now, I know what you think of contingency headhunters... but the small scale of each person's tree makes it unlikely it'll ever get that bad!)

Of course, it goes deeper than this. If it works for headhunting, maybe it works for finding new clients for Viant, or for people who are looking to take a cruise. Or what about real estate? If everyone could become a contingency broker, doesn't life online get interesting? If the Internet succeeds when it monetizes previously random analog events (like garage sales at eBay) then this may just be the killer app for this space.

Does Referrals.com work? I actually have no idea. It's just launching. We don't know if the promiscuous will overwhelm the powerful and pollute the whole system. We don't know the velocity of the idea or how long this particular virus will last. But it's clear that something will replace the current model of headhunters spamming powerful sneezers and essentially stealing their rolodex.

Alladvantage.com wanted to take the multi-level marketing approach instead. Each person they signed up got a commission on the revenue generated by the people those people signed up. And so on.

They got off to a very hot start, signing up millions of users in a very short period of time. But now, according to the Wall Street Journal, they've discovered that maybe they were paying these promiscuous sneezers too much to make any money in the end. So Alladvantage just announced new rules in the way they pay their sneezers.

The result was predictable... their most important sneezers were outraged. When you pay people to refer on your behalf, you've got to expect that they are indeed motivated by money, and when the money goes, so will your sneezers.

Multi-level marketing has gotten a bad reputation among powerful sneezers. Why? Because individuals are encouraged to suspend their judgment and embrace the idea that several generations down the pike, they'll be rich.

While this is a fine choice for an individual to make, it's problematic for those who are friends with this individual. Why? Because the personal interaction is no longer on a level playing field. Person A uses his friendship with person B to encourage her to buy or use something that isn't necessarily in her best interest. If she agrees, then person A sees a significant return, while person B inevitably sees LESS of a return. If she resists, the friendship is strained.

If the pyramid is steep enough (if there's enough money promised at the end of the tunnel), this sort of approach can work. But it usually leaves scorched earth in its path, and disappointments in the form of broken friendships or financial promises not reached.

To date, very few companies--online or off--have figured out a way to turn network or multi-level marketing into a large, sustainable business. Those that have, like Rexall, Amway and perhaps Alladvantage, now have to work even harder to undo the bad reputation that this approach has earned.

3. Make it smooth for the powerful.
One of the most elegant ways to take advantage of the new tight networking among consumers is to identify the powerful members of a hive and make it as easy as possible for them to tell each other about an ideavirus.

When online content sites first debuted, they were extremely hesitant about sharing their articles. Some of them went so far as to make it impossible to copy and paste the text in an article. They were petrified that one person would copy an article and no one else would come to the site and see the ads.

What they soon learned, however, was that the easier they made it to share, the more likely people were to tell their friends. And if someone came in to read one article, they were likely to read more. ZDNet.com was one of the first sites I encountered that used this technique. In one promotion my former company Yoyodyne did for them, they found that more than 20% of the people exposed to a compelling piece of content actually forwarded it to a friend.

Fast Company magazine--devoted to bootstrapping start-ups--does the same thing. Visit www.fastcompany.com/team/wtaylor.html and you can see a list of the articles that co-founder Bill Taylor has written for that magazine. They're all there, unabridged, and you can read them for free.

But the smooth part of this wannabe ideavirus is the little button on the bottom that says "Click here to send this page to a friend." All you have to do is type in their email address and your email address and--boom--it's done. If his articles contain ideas that are virusworthy, the Fast Company site is doing a good job in helping them go viral.

Inside.com, which sells subscriptions to its online media newsletter and website for $200, is happy to have people send these pricey articles to non-subscribing friends. In fact, there's a big "send to a friend" button on the bottom of every article. The reason is obvious. Once you've read one, you might be willing to pay for more. All they need is a few of the ideas they publish to become viral and suddenly the business of selling subscriptions will get a lot healthier.

In essence, Inside.com is hoping that its readers will market the site for them, spreading ideas that might go viral and then bringing in new paying customers as a result.

4. Digitally augment word of mouth.
This is a really interesting way of looking at the fundamental change that's occurring, and understanding how word of mouth is different from an ideavirus.

If I was delighted by a movie in the old days, I'd tell a friend or two. My comments would end up influencing three or four or six people.

There are plenty of books on this topic and marketers have always been enamored by the potential of word of mouth. Alas, without amplification, it usually peters out.

Today, if I like a movie, I can post my comments on a variety of online movie sites. Or I can email ten friends (who can each forward the mail to ten friends). Later, when the video comes out, I can post my review on Amazon, where hundreds or thousands of people might read it.

Using a service like Epinions.com, I can go online and search out opinions on everything from BMW motorcycles to summer camps.

What's neat about digital word of mouth (let's call it word of mouse) is:

1. It is extremely persistent. Unlike a comment at the watercooler or over the phone, a comment in a newsgroup, on Epionions or Amazon lasts forever.
   
2. It has much greater velocity. The number of ripples my stone makes when dropped in the pond of public opinion is far greater online. Why? Because if I tell you I like my car, it might be months before that sort of car comes up again in conversation. But online, conversations are happening 24 hours a day, and the "conversation" on any given web page is precisely about what that page is about. As a result, the number of interactions multiplies geometrically.
   
3. It can have more credibility. At first, the opposite was true. An anonymous stock tip or other form of online recommendation was totally suspect. The sneezer could be a paid mole, or worse, someone with horrible taste. But now, thanks to rating systems and the presence of powerful sneezers, it's possible to know how congruent your tastes are with those of the sneezer, so it ends up having a ton of credibility.

Amazon is now rating the reviewers! A visit to www.amazon.com/exec/obidos/tg/cm/member-reviews/-/AFVQZQ8PW0L/102-7235345-2994174 shows me that Harriet Klausner is the top ranked reviewer on the entire site. Harriet, a retired librarian, has written more than 500 reviews and has received more than 5,000 votes from other folks who agree with her taste. If Harriet likes a book that you like, you're certainly going to give her sneeze some credence in the future.

5. Altruism.
Several years ago, a hot chef in Chicago decided to go out on his own and open his first restaurant. Realizing how competitive the market was, he did a neat thing. He never opened it to the public. He refused to accept reservations from strangers.

If you wanted to get into Les Nomades, you had to be a member. And how did you do that? Well, the first 500 people were given memberships because the chef knew them as regular customers at his old job, and he personally invited them.

Then he told each member that they were welcome to sponsor other members. All they had to do was vouch for someone and he'd make them a member too.

So, what's in it for the member to nominate someone else? Simple. They scored points with their friends as powerful sneezers because they could "get you in" to the hottest restaurant in town.

Of course, this wouldn't have worked if the restaurant hadn't been spectacular. But it was. And it was exclusive. But by allowing his members to do his marketing for him, by giving them an altruistic tool that increased their power as professional sneezers, the chef was able to get out of the way and let his customers sell for him.

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