Here's Chapter Three. Please help us make it better as you have done so well on the first two chapters.
Word-of-Mouth on Steroids
“Now, the Web is enabling the market to converse again, as people
tell one another the truth about products and companies and their
—The Cluetrain Manifesto
Our friends are more influential than any advertising or marketing
campaign—always have been and always will be. They influence what
we watch, read and wear; where we live and travel. Ask a good
sales pro and she will probably tell you she’s in the
relationships business. Relationships require direct interactive
word of mouth conversations. Ask a marketing officer and he’ll
probably agree, but point out one serious flaw: conversations have
limited range. In this era of superstores, chains and global
corporations, business need to reach mass audiences, oftentimes
global in scope.
So for about 50 years, marketing departments, have put
conversational marketing in the back seat and have let broadcast
marketing drive. But the car is beginning to backfire. Broadcast,
or mass marketing campaigns may get you the customers, but they
shoot wide to hit just a few. If a TV ad or direct mail campaign
generates a mere two percent response, it’s economically to the
advertiser’s advantage. It doesn’t matter if 98 percent of the
viewers don’t like the ads, nor does it matter that so many other
companies are shooting at the same targets. It only matters if you
are part of that 98 percent.
In the middle 90s, for a brief, unfortunate time, co-author Shel
Israel consulted MCI, who at the time were running a massive
television—telemarketing campaign called “Friends and Family,” in
which millions of people were called at home during dinner hours.
After a few months, Israel advised and executive against the
program. “People really hate the intrusion,” Israel counseled. “We
don’t care,” the executive retorted. “We are getting a response of
at least two percent in all places, and as high as five percent in
some pockets. We don’t care if the other people don’t like the
Author-speaker Seth Godin (https://www.sethgodin.com) author (Free
Prize Inside, The Purple Cow, Permission Marketing et al) calls
such tactics, “Interruption Marketing, the unanticipated,
impersonal and irrelevant ads” constantly hurled at involuntary
The result is that people have not just become annoyed with these
tactics we’ve become resistant. We’ve installed mental and
technology filters to avoid exposure to marketing noise. Our
senses have become deaf and blind to marketing intrusions. We use
spamguard and TiVo to block messages to further block them out.
The result is that traditional marketing has become less effective
at about the same rate it has become more expensive. And that
trend seems to have accelerated since the Internet came in. With
the Web, ironically new tools—Instant Messaging (IM), SMS, Online
forums, e-newsletters and chat rooms and more recently blogs have
extended the conversation’s range.
As Terry Catchpole, CEO of Catchpole Corp. (www.catchpole.com), a
former journalist and PR strategist, observed, “Communications has
gone full circle. It started with conversations, evolved into ads
and PR. Now it’s conversations again.”
25 million customers virtually for free (sbhd)
In December 1996, Arik Vardi, sat with three close friends,
telling his father Yossi, a long-time angel investor, about the
“buddy system,” he and his friends developed to chat with friends
online. Two months earlier, they told 40 friends. Now, 65,000
additional people had downloaded it, all hearing about it by word
of mouth. They called it, “ICQ” (for ‘I Seek You’). With a small
investment from Yossi, they thought the project had some
potential. Yossi gave them encouragement and $10,000.
“I didn’t tell them, but I was totally blown away. I told my wife
this is the biggest thing I’d ever seen. I told her it’s going to
change the world and these kids don’t even know it yet.” He was
right. Two years later, AOL purchased Mirabilis, the company
formed with Vardi’s $10,000—f or $287 million. By the end of 1998,
and now called AOL Instant Messenger, the service had experienced
25 million downloads, less than 26 months since it had all begun.
The total marketing expenditure, amortized over time: near zero.
ICQ had printed a brochure, but never used it. They sponsored a
tech conference speaker but only because Yossi liked the guy.
ICQ’s founders never hired or contracted a marketing employee,
never launched a PR program, never even sent out a press release.
Instead, they used a series of creative, low-cost tactics to
ignite enthusiastic conversations. For example, whenever a new IM
software version was ready, they’d contact 1000 randomly selected
users, giving them each the same “secret password,” and urging
each to reveal it only to their two best friends. As the company
suspected, users ignored the two-friend limit and spread the word
far and wide. By giving users a sense they were insiders, the
company sparked frenetic evangelical zeal.
Another successful touch was inserting slightly sexual “Uh-AH”
sound, whenever a user received an instant message. A teenager
would be talking on the phone, and as a new message came in, the
grunt-sigh sound would be heard. It sparked conversations and the
conversation generated more downloads.
ICQ also pioneered the tactic of using other websites as a
distribution channel. They offered ICQ “communications panels” to
webmasters. Visitors downloaded ICQ so that they could chat with
web hosts, as well as other ICQ users. This resulted in a quick
new 100,000 downloads.
Observers estimated in April 2005, the instant messenger service
had over 400 million customers with tens of thousands of daily
downloads. Still spending next to nothing on marketing, the IM
service is supported now by contextual advertising, which produces
While AOL declines to discuss margins, downloads or any other
numbers, we would assume 50,000-a-day is a conservative guess.
What would that cost with a traditional marketing campaign, say
direct mail (DM)? DM pros claim efficiency when the spend 80 cents
per mail piece and their still happy with a two-percent response.
On that math, they need to send out four million pieces a day. The
company would have to spend about $3 million daily. Free vs. $3
million a day? You choose.
Until blogging came along, Instant Messenger was considered the
last great killer application. Although its current owner,
TimeWarner is enjoying huge margins by inserting inoffensive
contextual advertising, the adoption rate was of course helped by
the fact its publishers were offering the product for free. But
there was something else going on, something that Vardi marveled
at. End users sent love letters to the service — not the people,
but the service. Vardi called this phenomenon, “tool lust.” In
his view, people develop emotional attachments to things that
empower new, faster, easier, better or cheaper activity. He sees
blogging’s magic as the next incarnation of tool lust. “What ICQ
did for one-to-one conversations, blogging does for one-to-many.
“Blogging’s a tool that let’s you stay in touch with the whole
world,” he observed. “That invokes passion.”
Talk is Cheap [sbhd]
Back in 1996, ICQ had the capability to let people talk to each
other over the Internet by voice, but because users were still on
dialup, connection was slow, costly and rare. That was probably a
good thing for Skype (www.skype.com) (rhymes with ‘Ripe’), today’s
most popular Internet telephone service. Downloads reached 25
million just 19 months after starting up, breaking ICQ’s benchmark
record. But then, Skype used instant messaging and blogs to
market, which didn’t exist for ICQ in 1996.
Like ICQ, Skype primarily used word-of mouth to invigorate
adoption, although they made a few minor investments into
traditional marketing programs such as conference sponsorships.
Skype, like other companies emulated ICQ tactics, to convert its
user base to a global unpaid sales force. Skype uses tell-a-friend
programs and distinctive sounds as well. The low-cost marketing
strategy has been lethal against other Internet telephone players,
such as Vonage who advertises on TV.
But Skype has bigger plans. It hopes to unseat formidable
traditional phone carrier incumbents. The challenger is adding
low-price, paid services—such as inbound and outbound calling to
and from conventional phones. In that light, the upstart start-up
faces a steep climb against entrenched bigger companies with far
greater money, customers and brand recognition, not to mention
friends in regulatory agencies.
Skype believes it has two competitive advantages. First, most
customers love the service. Few people seem to express love for
Verizon, SBC or WorldCom. Second, tool lust . It has unleashed
word-of-mouth efficiencies that give Skype a huge
price-performance advantage in acquiring new customers. With a
gaunt marketing budget Skype is acquiring each new customer for
fractions of a penny. Analysts estimate a new customer costs a
wireless carrier about $125.
This may all change. Skype recently announced it will begin brand
recognition advertising and promotional campaigns. How big an
investment this will become, and whether it is a wise strategy
remains to be seen.
Skype estimates about one in five free users will use the paid
additional services. Their costs are so low, they maintain, that
this will enable them to build a next-generation dynasty.
Skype’s record of 25 million customers in 19 months was
short-lived. Firefox an Internet browser, considered simpler and
more secure than Microsoft’s Internet Explorer (IE) reached 25
million downloads less than four months after launching
exclusively from a blog.
The Firefox story is worthy of a book in itself. Its development
team was never paid to work fulltime on the project as it bounced
around through four parent organizations. It emerged as a
lightening rod for anti-Microsoft sentiment, and Open Source
technology—software built to allow tinkering by end users and
third-parties for whatever reasons. The combination created a
worldwide grassroots army of supporters-in-waiting.
Blake Ross, now 19, dropped out of high school to join the Firefox
development team. He started to blog as an outlet for his
frustrations with the turnstile ownership tenures of Netscape, AOL
and TimeWarner. Eventually named, “SpreadFirefox,”
(www.spreadfirefox.com), the blog became a hub for a series of
no-cost marketing activities and would become one of 2005’s 10
most popular blogsites. Each week on the site, Ross would
announce a new “community marketing campaign.” For example, one
week they’d announce an effort to attract college students. All
they had to do was announce the campaign, then readers would do
the rest, resulting in thousands, and eventually millions, of new
downloads. “Most campaigns were wildly successful,” Ross, who is
now attending Stanford University, recalled, “SpreadFirefox
ignited a groundswell of support,” that erupted organically.”
Firefox reached the 25 million mark six times faster than ICQ,
using similar tactics enhanced by new tools, broadband and access
to many millions more people who had come online in the decade
between the two. For example, early on, they offered download
buttons to other blog and websites. Within a few months, more
websites were linking to the Firefox page via these buttons—than
were linking to the IE site. Today, if you go to Google and type
in “Internet Browser,” Firefox comes up before IE.
Firefox users were so evangelical that they took a collection to
post the first ad — a full-pager in The Sunday New York Times.
According to Hewitt, the ad produced “a nice little blip,” but was
insignificant to the solid, steadily rising rates SpreadFirefox
was generating. By April 2005, the blog was the fountainhead for a
word of mouth system generating 200,000 daily downloads. With each
Firefox download, you also get a free blog. “Our members use these
blogs to invent, discuss, coordinate and execute enormous
marketing campaigns,” said Ross.
Press coverage has been astounding. If you laid all the clips and
cover stories end-to-end, they might extend from Firefox’s Silicon
Valley home, to the doorstep of Microsoft’s Redmond headquarters.
The team is convinced word of mouth did more to accomplish this
than did the solitary press release they’ve put out.
Firefox exemplifies what the blogging denizens call, “the passion
chamber.” It’s a recurring theme in conversational marketing.
People, motivated more by sharing something with friends than the
promise of revenue, start something new. Friends try it, like it
and pass it on. Ross told us, “Firefox was born because it had to
be born, because this product took residence in our minds and
gnawed at us during work, at dinner and on the weekends.” Added
Hewitt, there was no thought of unseating incumbents or the
resulting blazing fame. “We just wanted to build a good browser
that we could use ourselves and share with our friends.”
Word of mouth is at its most viral when the words credibly relay
such passion. The danger of the Passion Chamber, however, may be
the Echo Chamber, as was evidenced in the abrupt rise and fall
of the Howard Dean presidential campaign, ignited by word of
mouth, followed by passionate ubiquitous blogging that raised
millions of dollars and generated media speculation of a victory
that never even came close. In fact, Dean’s passionate supporters
never managed to cross the traditional chasm between early
enthusiasts and mainstream voters who generally had not yet turned
to blogs for information and conversation.
While Firefox has taken the tech community by storm — grabbing 8.5
percent of the total browser market in less than its first six
months, IE still held 87.28 percent, according to OneStat,
(www.onestat.com) a web-analytics company. Webside
Story(www.websidestory.com), another analytics firm, observed
shortly after that the rate may be starting to taper off. By
contrast, InfoWorld, a trade publication reported that BoingBoing,
( https://www.boingboing.net/stats/#browsers) one of the most
popular blogs, estimated that 38 percent of its site visitors were
already using Firefox, a five point margin over Explorer, and a
revealing a sharp contrast to the general market.
When the Passion Chamber gets too passionate, it can turn into an
Echo Chamber where the same people are talking to each other at an
accelerated rate, while thinking the owrd is continuing to go out.
Continuing to spread the message is key to the Firefox strategy to
have technologists seed the mainstream. “I don’t get excited when
I hear a developer is using Firefox,” says Hewitt. “I get excited
when I hear he went home and installed it in mom’s computer.”
Firefox is counting on third-party developers to help them down
the technologist’s creek into the mainstream. Twenty percent of
the world’s web developers adopted Firefox in its first 100 days.
The Firefox team is hoping they’ll produce all sorts of add-on
products making it irresistible to more and more non-technical end
The tactics, initiated by ICQ, adapted and refined by Firefox, are
starting to be emulated by other start-ups hoping to be replicated
by an increasingly large pack of hopefuls including: including
SpreadOpera.com, SpreadNetscape.com, SpreadIE.com,
SpreadSeamonkey.com, SpreadMozilla.com, SpreadOpenSource.com,
SpreadOpenOffice.org, SpreadLinux.com, SpreadFreeBSD.com,
SpreadMambo.com and SpreadUbuntu.com. While these hopefuls may
experience some success, observers express doubts that any will be
catapulted from oblivion to the top tier, as did ICQ, Skype and
So that means you may not get 25 million customers in under 120
days like Firefox, but there other lessons to learn here. You need
to offer something so unique, valuable or compelling that people
will just have to tell others about it. While “tell-a-friend
campaigns” may gain some traction with rewards and incentives,
they aren’t the primary motivator. What turbo charges
word-of-mouth is loyalty to friends—not companies. People come
across something and they just have to tell colleagues about it.
They like to be first and have influence. But none of this matters
unless the product or service is really remarkable.
Remarkable or Invincible [sb hd]
“The new reality of the marketplace is that consumers have a
choice,” author Godin, told us. “They can ignore you. They can
ignore your ads, your letters, your web banners and your
salespeople. As a result, you and every other marketer face a
choice: you can make something worth talking about or you can
”There are now millions of blogs, and each one is edited by a real
person. If you create something remarkable, something worth
remarking about, then they may choose to remark about it. And if
they do, the word spreads.”
The new phenomenon of the remarkable, which author and blogger
Seth Godin calls a Purple Cow, is based on two fundamental truths:
1. Ideas that spread and win. Because it's so difficult for a
marketer to directly contact the people who can actually purchase
something from them, he or she must now rely on people telling
people. The single best way to accomplish this is not with a
clever website or tell-a-friend software or cash rewards. No, the
best way to do this is by making something worth talking about.
Marketing is now about product development, not product hype.
2. Remarkability is in the eye of the consumer. If the marketplace
doesn't think your product is remarkable, then it's not. It
doesn't matter how hard you worked on it or how important it is to
”Not only are bloggers suckers for the remarkable, so are the
people who read blogs,” said Godin, “This is the most curious
segment of the population, the people who are seeking out the new
and the useful. This is the audience that doesn't need to be
interrupted because they are already listening. They are alert, on
the lookout for the next big thing. No need to yell. If you've
invested the time and the energy and the guts to make something
remarkable, this audience can't wait to hear about it.
From Free to Billions [sbhd]
There is one other factor about our three examples that
traditional marketers will be quick to note: freeware. Each is at
a different point in the process to monetization but they all
began with services that were free to the end users who
evangelized it. So did Google. eBay and Amazon.com did not, but
they used the internet to give users amazing efficiencies.
Not every company can offer free products at the outset in the
hopes of monetization later. Many companies successfully try
limited time or quantity free trial offers, but starting free then
asking for money later has been a short route to the cemetery for
Companies like Google, eBay and Amazon.com. learned early the
incredible power of word-of-mouth marketing and still use them now
that they are publicly traded multi-billion dollar entities.
Amazon CEO Jeff Bezos recently declared his company will eschew TV
advertising because Amazon considers it ineffectual compared with
word-of-mouth campaigns. Amazon also has found an inoffensive way
to financially reward bloggers for sending business their way.
Bloggers can join the affiliate program, and split profits on any
book sales their site generates.
Google, the last dotcom company began at the apex of buzz
marketing in 1998. When startups were spending tens of millions
on marketing and advertising, they spent very little. At a time
when home sites were starting to use gimmicks that popped up, made
noises and wiggled, they introduced a uniquely sparse home page
containing less than 30 words. People gave it a try. When they
did, they discovered remarkable search capabilities when compared
with incumbent offerings of the time. More recently, they
introduced Gmail, Internet email with gargantuan storage
capabilities. But they used ICQ tactics to jumpstart. They allowed
selected applicants a few beta copies and created a
pseudo-scarcity by asking each to invite just a few friends. These
select invitations somehow became sufficiently abundant to be
auctioned off on eBay.
Apple Computer most certainly incorporates traditional advertising
and observers would say it is one of the few computer companies to
ever produce remarkable ads. But its iPod, a portable music
listening device, was sufficiently exciting and different to get
the blogosphere to sing its praise in choir-level harmony. They
also had the vision to create details that provoked conversations.
For example, white headphones. The color added no real user
benefit except that it provoked conversation. On a recent jet
flight, two strangers sat side-by-side listening to music on their
own devices. One asked the other about the white headphones. It
got a conversation going. Other people in the row joined in.
People asked to try and listen on them to see if they sounded any
better. In fact, portable audio devices are rapidly becoming a
commodity category. But touches like these keep people talking and
builds the perception of “remarkability.” Apple also, spends in
non-traditional ways that generate word-of-mouth. If all you knew
about computers was what you saw in movies and television—you’d be
convinced that Apple Macintosh held about 97 percent market share
instead of less than three percent. This is because of its
aggressive product placement program with the entertainment
The ‘Awesome-Sucks’ factor
If anyone knows how to spend big bucks for promotion, it’s
Hollywood. They’ve been known to invest up to $500 million in
support of big budget movie premiers. Now small clusters of
teenagers, armed with cellphones, are disrupting—and even
destroying—these expensive efforts. Small groups get in to the
first daytime showings of a new movies in neighborhood theaters.
After the first few minutes, they start transmitting SMS messages
to a few friends outside the theaters. These messages are brief
and to the point, such as “awesome,” or “sucks.” Friends receive
the message on their phones and start blogging about the movie.
Before credits roll, these bands of youthful influencers, loyal to
their peers, and out of Hollywood’s control enormously impact the
movie’s fate before the first Saturday night showing.
Why do people go through such efforts to help others who are
mostly people they’ve never met? Why do people loan headphones to
strangers on planes, or tell their life stories to cab drivers?
Vardi told us the world’s second favorite entertainment is story
telling, but the top is conversations. Even if we don’t have TiVo,
we let a phone call interrupt our program watching or we lay down
our books. It seems it is human nature to collaborate and at least
one research experiment would indicate it’s because collaboration
turns us on.
Dr. Gregory S. Berns, an Emory University professor of psychiatry
and behavioral sciences uses functional MRI and other
computer-based technologies to study how the human brain responds
to various stimuli. In short, his team wires the brain to see how
the brain is wired. A few years back, they studied the interaction
of biology and altruism. Berns used a functional MRI to scan the
brains of 36 women playing the behaviorist’s game of “Prisoner’s
Dilemma,” in which participants are rewarded according to the
choices they make. Berns found these women displayed cooperative
behavior even when they knew they’d receive greater rewards for
not cooperating. The technology revealed that the striatum, a
primitive brain sector, grew active during collaboration. In fact,
it secreted five times the normal level of dopamine, the chemical
that activates during such stimulating activities as sex and
gambling. In short, humans are wired to collaborate. Altruism
turns people on even more than making money.
That makes blogging the sex god of the Information Age. While
word of mouth has always been the most effective way to expand
awareness and adoption, blogging fits into all this as the most
powerful word of mouth delivery mechanism to date. As Vardi, and
others say, “Blogging is word of mouth on steroids.
To give us historic perspective, he observed the three strongest
brands to come out of his native country, Israel are The Bible,
Christianity and ICQ, according to a Google search. Each depended
upon passionate people spreading the word about them. To reach
their current levels of recognition and strength, the Bible
(including the Old Testament) took 2700 years; Christianity did it
in 2000 and ICQ reached global acceptance in less than 10. He
pointed out that ICQ claimed no greater relevance. It just came
into being at a time when the tools had further evolved.
The point: blogging is faster and more effective than walking from
village to village and knocking on doors.
Blogging’s Key Advantages [sbhd]
Blogging is one huge word of mouth engine. Instead of being
relegated to the back seat it now is efficient, powerful and fast
enough to drive the whole car. Actually, two cars would probably
be more accurate, because it drives in two directions—outbound and
It lets you listen to what people are saying about your product,
company, or category and respond. At little cost, you can “feed”
conversations. The end result is that your business becomes
connected to a new kind of smarter, more efficient word-of-mouth
network. It lets you:
1. Find and Join the Conversation. Nearly in realtime, blogging
lets you extract comments relevant to your business through search
engines like Technorati, Feedster and PubSub, each of whom track
millions of blogsites in a similar way that Google tracks billions
of websites. Except these search engines are faster and usually
deliver results in hours or even minutes. These search resources
let you see what people are saying pro or con, about your market,
product and company. The fact is tat people are talking about
these things already and you will be wise to join the
conversation. As Microsoft’s Mike Torres told us, people are much
more respectful when they know you’re listening.
Picture the impact of joining the conversation. Imagine you are a
car enthusiast and you see a cool new Corvette at the Detroit Auto
Show. You post a blog about it, maybe even put a photo or two up
about it. Within an hour or two, Bob Lutz, GM vice chairman and a
blogger, sees your post, passes it around to the Corvette team and
then posts a link on their blogs and perhaps a comment on yours.
Imagine the kind of brand loyalty it creates when a big company
notices your blog and links to it. Then there are the catch-all
blog that watch an entire industry categories—in this case
Autoblog (https://www.autoblog.com). They see it, post and link to
yours. Thousands of car enthusiasts are now driving directly to
You started with a single post. You’ve spent nothing and if you
had, it would have made little or no difference. But you started
an interesting or valuable conversation. You got recognized and
now you have much greater influence.
2. Feed the Network. This term once referred to provocative
advertisements such as Apple’s 1984 SuperBowl screen-smashing
commercial. They still work, although there seems to be a real
paucity of ads worth talking about these days. On the other hand,
blogs let you feed the network, at far lower cost and as a more
credible source. Let’s look at GM’s Lutz. His first blog was about
GM’s Saturn which scores highly in customer service rankings. He
posted it just before a big auto show where a spiffy new Saturn
was being introduced. The blogosphere exploded with conversation
on the fact that Lutz was blogging, on the fact that he responded
to comments on whether the attractive new car was real or
prototype—and so on. At last count, there were more than 200
comments under his posting, and almost an equal number of links to
it— mostly from average people who enjoyed joining and extending a
conversation with a prominent Fortune 50 executive. The automotive
media also picked up on it. How did this posting, which probably
required less than an hour of the executive time, feed the word of
mouth food chain compared with a Saturn ad? If Lutz were quoted in
an official press release, we doubt it would have been noted, but
his blog was news. By the way, there is a new Saturn TV ad
campaign. Do you recall seeing it? Neither do we. What fed the
network better—the blog or the expensive ad campaign.
Vardi was right. Blogging is indeed word of mouth on steroids.
Unlike Major League Sports, this is a good thing for businesses of
all sizes and people everywhere.