Duncan Watts Downplays Viral Marketing Hype

A while back I quickly saw Clive Thompson's article entitled Is the Tipping Point Toast?, but didn't have the time to read it all nor investigate it any further --- until today.

Thompson's article pits Malcolm Gladwell's thesis (in The Tipping Point) against the recent research of Duncan Watts (cited below). I thought the article was well-written and adequately presented both sides of the issue. In short, Watt's claims that spending time and money marketing to influential individuals is no better than marketing to the masses.

Through all of this, Watts makes some important points such as (quoted from Thompson's article):

• The problem of popular viral marketing talk is that it is "incredibly vague"; "how an influential actually influences is not explained." "Precision matters when trying to explain highly social epidemics"
  
• "Influentials don't govern person-to-person communication. We all do."
  "Common sense is misleading"
• Thompson writes that Watts found the "rank-and-file citizen [to be] far more likely to start a contagion"

So, today I finally took the time to learn more about Watts' recent research, available at Collective Dynamics Group website (at Columbia University) as a Working paper in the Papers section. Through the years, I had previously read some of Watts' work, so I was excited to see his recent findings. In this paper he presents an approach they call "Big Seed Marketing", which in essence combines a traditional mass marketing model with a viral propagation.

The idea that there is "no free lunch" in viral marketing is useful to point out, as "there are many more unsuccessful attempts that one never hears about." He also, points out that it is "hard, if not impossible" to predict which of attempts will succeed.

The take-home message in the conclusion is that effective marketing campaigns can be produced without identifying "influentials", but simply by adding a mechanism of peer-to-peer sharing to propagate the message. (As an aside, the formalism presented in the paper is useful for discussing the problem and easily evaluating the results.)

Watts makes some good points, however, I would still argue that people with high social capital (you might call "highly influential") can heighten the network effect. This is even evidenced in Duncan's paper --- as one of Tom Mauser's 'friend' was StopTheNRA, who, in turn sent a large email blast (Table 1, footnote 1). So, Tom Mauser, had a significant enough relationship with StopTheNRA that they used their resources (their large email list) to forward his message.

Although, there is an element of hype in the presentation of "Big Seed Marketing", I find it useful as it presents a nice way of making the issue sticky and bringing to light these more subtle points. The desired effect of propagating these ideas seems to be occurring.

Update (4/23): Podcast with Duncan Watts on Buzz Marketing (mp3)

Personalized Marketing

Personalized marketing as a four phase process:

1. identifying potential customers

2. determining their needs and their lifetime value to the company

3. interact with customers so as to learn about them

4. customize products, services, and communications to individual customers

From Wikipedia, “Personalized marketing,” (Cited: Peppers, D. and Rogers, M. 1993)

Viral Marketing

Dr. Ralph F. Wilson suggests that Viral Marketing is comprised of the following components:
1. Gives away products or services
2. Provides for effortless transfer to others
3. Scales easily from small to very large
4. Exploits common motivations and behaviors
5. Utilizes existing communication networks
6. Takes advantage of others' resources
The effects of word-of-mouth, or viral marketing are motivations for utilizing the social network that customers belong in.

Customer Segmentation

Customer analysis helps a business better meet customer needs. Learning more about your customers is often benefited by intelligent segmentation. Customers can be segmented into a variety of groups. These segments can be based on behavioural, demographic, geographic, and psychographic variables. In fact customers can be segmented by any combination of these variables. Through viewing customers within such segments the problem of identifying and serving customers is simplifed. The knowledge provided by these segments is usually useful for determining actionable marketing tactics.

24 Key Database Marketing Techniques

This article is a good overview of 24 marketing methods which are useful in determining what data should be collected in order to personalize a website.