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VOCINOLABS
Customer Acquisition
 & Viral Marketing
Viral marketing is not a
  marketing strategy.
‣ Develop your product

‣ Plan how to make people use it

‣ Declare viral marketing is one of n approaches
  (along with SEO, SEM, PR, etc)
Forget about adding "viral"
to your marketing to-do list
after your product is already
on the market.
You need to bake it into
your business model from
the very beginning.
CPA + COS
 must be lower than

Lifetime Value
Sustained Viral Growth
‣ Have an awesome product
   (ideally in communication or social content)


‣ Convert user growth ideas into Excel-based
  hypotheses and clear user funnels

‣ Build and track each step of your funnels

‣ Get initial stream of traffic
   (Adwords is a great start)


‣ Optimize until every user is bringing in at least one
  new user
‣ No single feature determines the viral factor of the
  product.

‣ Instead, it’s part of a viral loop that connects a
  set of functions into a cohesive motivation for the
  user to tell their friends/network.

‣ If the fundamental product doesn’t drive a viral
  motivation from its users, then it’s very difficult to
  force it.
We have Product X, how do we virally
 spread it like freaking crazy!?@#$




We have Viral Loop X, what’s the right
       product to fit into it?
‣ Not really something in the domain of PR,
  advertising and marketing people.

‣ Nor in the world of hardcore technical peeps that
  can architect systems but not consumer
  interactions.
‣ Understanding the motivations behind user
  behaviors

‣ Understanding and exploiting the technical
  loopholes to create viral loops
You’re not simply depending on
making something really cool so
   people spread the word.

   You’re making something
          automatic.
‣   Sources of traffic

‣   Landing page views

‣   % of users that register

‣   % of users that send out invites

‣   # of invites sent out, per user on average

‣   % of invites delivered successfully

‣   % of invites read by users

‣   # of virally added users, per user on average
Viral Loops
‣ What things do people share and what tools do
  they use for communication?

‣ Files, wikis, contacts, links, information, show-offs

‣ These are your viral channels
   (vs. news feeds, Facebook notifications, etc.)


‣ If your value proposition can align with a channel,
  then you might make it viral

‣ Case study:
‣ First encounter is embedded on some other page

‣ If you like it, embed it yourself.

‣ Otherwise, more relevant videos available.
What’s your viral media?



‣ E-mail, Facebook newsfeed, blogs, etc.
‣ How difficult is it to integrate into their surface
  and what’s the response rate?
‣ If response rates are low, that means huge
  difference in outcome.
What’s your funnel design?



‣ As short and accessible as possible.
‣ Each page is a barrier to leap.
‣ Assume a percentage of attrition for registration
  complexity.
‣ 2-3 Pages at the most.
Register   Use     Evaluate    Share




Register   Share      Use     Evaluate
What’s the viral hook in your product?




‣ Bad product will adversely affect viral experience
‣ Deep personal expression works best (music,
  avatar, slideshow, etc)
‣ Communication mechanism (voice, text, etc)
What are the onramps?



‣ Your site
‣ User profile
‣ User dashboard
‣ Between two other steps
‣ Before evaluation, if possible
Value Propositions for
     Viral Loops
Best value proposition is like




 ‣ Great for both parties
    (incentive and value for inviter and invitee)
Worst value proposition is like         Apps




‣ Little to no value for either party
    (lots of chum, feels very spammy)
Viral Loops
for You & Your Clients
‣ Social Proof: Quizzes, Badges, Founding

‣ Reciprocity: Top friends, eCards

‣ Scarcity: 8 invites left!
Paid User Acquisition
‣ Start with your laundry list of acquisition ideas

‣ Search, “tell a friend”, Twitter, Facebook, etc.

‣ Convert into 2 or 3 testable hypotheses
Buy users at $1




Monetize at $5
20% of registered users
will import address books




Less than 5 of their friends
        will register
‣ CPM = Cost per Thousand

‣ CPC = Cost per Click

‣ CPA = Cost per Acquisition

‣ COS = Cost of Service

‣ LTV = Lifetime Value


     Everything rolls back to how
     much it costs you to have a
           registered user.
CPA + COS
 must be lower than

Lifetime Value
‣ Cost per Acquisition

 ‣ Efficiency of media (traffic sources, CTR,
   Impressions)

 ‣ Signup funnel conversion %

 ‣ Average viral invites sent out
‣ Cost of Service

 ‣ Infrastructure (servers, bandwidth, storage)

 ‣ Employees?

 ‣ Support?
‣ Lifetime Value

 ‣ Retention metrics

 ‣ Revenue mix

 ‣ Viral factor
Source   Ads   CTR     Clicks   Signup % Action %   Users   Cost   CPA


 G       1M    0.5%     5k       20%      50%       500     $5k    $10
 Ad      20M 0.10% 20k           10%      50%       1k      $20k   $20



                      G = Google Adwords
                      Ad = Advertising.com
Type                     Options              Importance

 Source of Traffic      Ad networks, publishers          ++

   Cost model              CPM, CPC, CPA                 +

User requirements         Install, plug-in, flash      +++++

Audience and theme       Horizontal vs. vertical        ++

   Funnel design      Landing pages, length, fields      +++

  Viral marketing     Facebook, OpenSocial, email     +++++

A/B testing process   None, homegrown, Google         +++++
‣ How are you paying for traffic? (CPM/CPA/CPC)

‣ What do the intermediate metrics look like?
  (Impressions/CTR/etc)

‣ How does your signup funnel perform?

‣ How much are you spending for the users you end
  up registering?
Optimize Funnels by
Brainstorming Levers
‣ Newly registered users come in (both paid and
  viral)

‣ Some % of these users convert into paying users

‣ Some % of these users send off viral invites

‣ Revenue is generated by building up a base of
  paying users

‣ Cost is generated by building up a base of active
  users (paying or not)
Optimization isn’t obvious.

‣ The placement of the button?

‣ The color of the button?

‣ The fact that’s it’s a button and not a form?

‣ The fact that it’s “Add to your network”
  rather than “Add a friend”
the ultimate lever
   is retention
LTV =
rev + rev*R + rev*R^2 + rev*R3 + …




LTV = 1/(1-R) * rev
At a 50% retention rate:
LTV = 1/(1-0.5)*$1*1000 = $2000



   At a 75% retention rate:
LTV = 1/(1-0.75)*
$1*1000 = $4,000
‣ Product design

‣ Notifications (optimize, optimize, optimize)

‣ Ease of use (kill frustration whenever possible)

‣ Saturation effects
reinvest in
acquiring more
     users
‣ Paid user acquisition is usually an upfront expense
  whereas the revenue comes in over time

‣ Your revenue per paying user depends on a mix of
  revenue sources

‣ You pay “cost of service” across all users, paying,
  free, visiting, etc.
Further Reading
  & Research
‣ “Viral Loop”
  Adam Penenberg

‣ “Influence: The Psychology of Persuasion”
  Robert Cialdini

‣ “Landing Page Optimization”
  Tim Ash

‣ “Metrics for Social Games”
  David King & Siqi Chen

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Customer Acquisition and Viral Marketing

  • 2. Customer Acquisition & Viral Marketing
  • 3. Viral marketing is not a marketing strategy.
  • 4. ‣ Develop your product ‣ Plan how to make people use it ‣ Declare viral marketing is one of n approaches (along with SEO, SEM, PR, etc)
  • 5. Forget about adding "viral" to your marketing to-do list after your product is already on the market. You need to bake it into your business model from the very beginning.
  • 6. CPA + COS must be lower than Lifetime Value
  • 8. ‣ Have an awesome product (ideally in communication or social content) ‣ Convert user growth ideas into Excel-based hypotheses and clear user funnels ‣ Build and track each step of your funnels ‣ Get initial stream of traffic (Adwords is a great start) ‣ Optimize until every user is bringing in at least one new user
  • 9. ‣ No single feature determines the viral factor of the product. ‣ Instead, it’s part of a viral loop that connects a set of functions into a cohesive motivation for the user to tell their friends/network. ‣ If the fundamental product doesn’t drive a viral motivation from its users, then it’s very difficult to force it.
  • 10. We have Product X, how do we virally spread it like freaking crazy!?@#$ We have Viral Loop X, what’s the right product to fit into it?
  • 11. ‣ Not really something in the domain of PR, advertising and marketing people. ‣ Nor in the world of hardcore technical peeps that can architect systems but not consumer interactions.
  • 12. ‣ Understanding the motivations behind user behaviors ‣ Understanding and exploiting the technical loopholes to create viral loops
  • 13. You’re not simply depending on making something really cool so people spread the word. You’re making something automatic.
  • 14. Sources of traffic ‣ Landing page views ‣ % of users that register ‣ % of users that send out invites ‣ # of invites sent out, per user on average ‣ % of invites delivered successfully ‣ % of invites read by users ‣ # of virally added users, per user on average
  • 16. ‣ What things do people share and what tools do they use for communication? ‣ Files, wikis, contacts, links, information, show-offs ‣ These are your viral channels (vs. news feeds, Facebook notifications, etc.) ‣ If your value proposition can align with a channel, then you might make it viral ‣ Case study:
  • 17.
  • 18.
  • 19. ‣ First encounter is embedded on some other page ‣ If you like it, embed it yourself. ‣ Otherwise, more relevant videos available.
  • 20. What’s your viral media? ‣ E-mail, Facebook newsfeed, blogs, etc. ‣ How difficult is it to integrate into their surface and what’s the response rate? ‣ If response rates are low, that means huge difference in outcome.
  • 21. What’s your funnel design? ‣ As short and accessible as possible. ‣ Each page is a barrier to leap. ‣ Assume a percentage of attrition for registration complexity. ‣ 2-3 Pages at the most.
  • 22. Register Use Evaluate Share Register Share Use Evaluate
  • 23. What’s the viral hook in your product? ‣ Bad product will adversely affect viral experience ‣ Deep personal expression works best (music, avatar, slideshow, etc) ‣ Communication mechanism (voice, text, etc)
  • 24. What are the onramps? ‣ Your site ‣ User profile ‣ User dashboard ‣ Between two other steps ‣ Before evaluation, if possible
  • 25. Value Propositions for Viral Loops
  • 26. Best value proposition is like ‣ Great for both parties (incentive and value for inviter and invitee)
  • 27. Worst value proposition is like Apps ‣ Little to no value for either party (lots of chum, feels very spammy)
  • 28.
  • 29. Viral Loops for You & Your Clients
  • 30.
  • 31. ‣ Social Proof: Quizzes, Badges, Founding ‣ Reciprocity: Top friends, eCards ‣ Scarcity: 8 invites left!
  • 33. ‣ Start with your laundry list of acquisition ideas ‣ Search, “tell a friend”, Twitter, Facebook, etc. ‣ Convert into 2 or 3 testable hypotheses
  • 34. Buy users at $1 Monetize at $5
  • 35. 20% of registered users will import address books Less than 5 of their friends will register
  • 36. ‣ CPM = Cost per Thousand ‣ CPC = Cost per Click ‣ CPA = Cost per Acquisition ‣ COS = Cost of Service ‣ LTV = Lifetime Value Everything rolls back to how much it costs you to have a registered user.
  • 37. CPA + COS must be lower than Lifetime Value
  • 38. ‣ Cost per Acquisition ‣ Efficiency of media (traffic sources, CTR, Impressions) ‣ Signup funnel conversion % ‣ Average viral invites sent out
  • 39. ‣ Cost of Service ‣ Infrastructure (servers, bandwidth, storage) ‣ Employees? ‣ Support?
  • 40. ‣ Lifetime Value ‣ Retention metrics ‣ Revenue mix ‣ Viral factor
  • 41. Source Ads CTR Clicks Signup % Action % Users Cost CPA G 1M 0.5% 5k 20% 50% 500 $5k $10 Ad 20M 0.10% 20k 10% 50% 1k $20k $20 G = Google Adwords Ad = Advertising.com
  • 42. Type Options Importance Source of Traffic Ad networks, publishers ++ Cost model CPM, CPC, CPA + User requirements Install, plug-in, flash +++++ Audience and theme Horizontal vs. vertical ++ Funnel design Landing pages, length, fields +++ Viral marketing Facebook, OpenSocial, email +++++ A/B testing process None, homegrown, Google +++++
  • 43. ‣ How are you paying for traffic? (CPM/CPA/CPC) ‣ What do the intermediate metrics look like? (Impressions/CTR/etc) ‣ How does your signup funnel perform? ‣ How much are you spending for the users you end up registering?
  • 45. ‣ Newly registered users come in (both paid and viral) ‣ Some % of these users convert into paying users ‣ Some % of these users send off viral invites ‣ Revenue is generated by building up a base of paying users ‣ Cost is generated by building up a base of active users (paying or not)
  • 46. Optimization isn’t obvious. ‣ The placement of the button? ‣ The color of the button? ‣ The fact that’s it’s a button and not a form? ‣ The fact that it’s “Add to your network” rather than “Add a friend”
  • 47. the ultimate lever is retention
  • 48. LTV = rev + rev*R + rev*R^2 + rev*R3 + … LTV = 1/(1-R) * rev
  • 49. At a 50% retention rate: LTV = 1/(1-0.5)*$1*1000 = $2000 At a 75% retention rate: LTV = 1/(1-0.75)* $1*1000 = $4,000
  • 50. ‣ Product design ‣ Notifications (optimize, optimize, optimize) ‣ Ease of use (kill frustration whenever possible) ‣ Saturation effects
  • 52. ‣ Paid user acquisition is usually an upfront expense whereas the revenue comes in over time ‣ Your revenue per paying user depends on a mix of revenue sources ‣ You pay “cost of service” across all users, paying, free, visiting, etc.
  • 53. Further Reading & Research
  • 54. ‣ “Viral Loop” Adam Penenberg ‣ “Influence: The Psychology of Persuasion” Robert Cialdini ‣ “Landing Page Optimization” Tim Ash ‣ “Metrics for Social Games” David King & Siqi Chen