Leskovec, Jurij and Adamic, Lada and Huberman, Bernardo. The Dynamics of Viral Marketing.

“Viral Marketing exploits existing social networks by encouraging customers to share product information with their friends.”

It has been difficult, the authors say, to measure the accuracy of previous research highlighting the effectiveness of social networking in the adoption of a product. The effectiveness of recommendations however is something that they were able to study in this article!

Some Examples
Hotmail only spent about $50,000 on traditional marketing and still they managed to grow from 0 to 12 million users in a year and a half.

GMail captured a significant amount of the market share years later, despite being an “invite only” service.

A Lucid marketing study suggests that roughly 68% of individuals consult a friend or relative before making a home electronics purchase (which is more than the 50% that used search engines for similar research.)

The article also brings up an important variable in the viral chains. Initially, the chances that the customer will purchase a product will increase with additional recommendations coming in. However, a saturation point is reached. Once that point has been reached, the likelihood of a purchase will decline.

“In many epidemic models, it is assumed that as individual interact they have equal probability of being infected. Contrary to this, we observe that the probability of infection decreases with repeated interaction.”

Also, unlike many other “high traffic” nodes in common epidemic models (such as needle sharing or sexually transmitted diseases), it seems that in the research conducted here that the effectiveness of a person who is “high traffic” drops with the more recommendations they send out.