Saturday, February 25, 2017

Why Good Marketing Campaign Costs Continue To Rise

marketing-campaign-costsEvery time I challenge a business plan with little or no budget for marketing, I get the answer that they will be using “viral” marketing, which costs nothing. The founder explains that the product is so “buzz-worthy” that usage will spread rapidly through word-of-mouth only, meaning people loving it and recommending it to their friends.

First of all, Seth Godin pointed out a long time ago that viral marketing does not equal word-of-mouth. His view is that word-of-mouth is an unsolicited consumer action, positive or negative, which usually fades quickly, like a good or bad restaurant review.

Viral marketing is a deliberate marketing action, designed to grow attention at a compound rate, without further stimulus, by word-of-mouth. It usually implies an opportunity to win big, like a lottery, or experience something sensational, like an incredible video or free product.

At any rate, “buzz-worthy” and “viral” are marketing illusions that cost big money to create, and these are only the beginning. In a business plan these are only one of the many marketing campaigns which continue to rise in cost. Here are three key cost elements of just the viral marketing campaigns:

  1. Hire brand evangelists. Think of a brand evangelist team online as people blogging about your product, or posting links to it in every forum. Brand evangelists offline talk up your product lines at cocktail parties or recommend your services to friends while watching their kids' soccer game.

  2. Develop viral content. Someone has to design and create those entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by e-mail. It’s harder than it looks to exploit people’s propensity to share humorous, enjoyable or useful information - jokes, special offers, and games.

  3. Seed viral activity. People are more demanding and have more choices than ever before. This means spending more money on search marketing (SEM) to make it look like the buzz is working. It also means making the content appear omnipresent on the Web and in the marketplace, including dedicated video sites and blogs. In addition, special offers and competition prizes may be required.

As a result of the rising popularity of viral campaigns, the cost of developing one has increased significantly, and the increased ‘viral clutter’ has made it more difficult to stand out from the crowd. However, despite this, viral marketing can indeed be more cost effective than traditional marketing when done well.

Seeding is the most expensive aspect of a viral marketing campaign, with some video sites charging in excess of $10,000 to be featured on their home page for one week. Only a few years ago a humorous video or unique toy could be seeded into a couple of relevant online communities, and it would be hugely popular. However, the cost of entry has gone up as the concept of viral marketing has become pervasive.

In general a well-executed viral marketing campaign can cost anywhere from $100K to many millions. There is a reason that sites like Priceline.com Europe and Facebook, which everyone believes were made popular by viral marketing, have spent at least $50 million each becoming a household name.

Some startups not only ignore this and don’t budget for it, but they actually plan on the free viral marketing to generate enough revenue from click-through advertising to fund operations and future growth. That’s a double death wish.

We have all heard of a few cases where viral marketing resulted in a message “spread through the Internet like a cold in a kindergarten,” but counting on this can just as quickly lead to the death of your startup. Unless you have very deep pockets, plan for some very significant marketing costs to kick-start your dream.

Marty Zwilling

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