Ramblings on my MBA thesis: Framework for creating a successful dot com with minimal capital

CPC Model

The Cost (or Pay) Per Click model *usually* provides a great gang for the buck when one is looking for traffic. If you can match your company to specific keywords (and cheap ones if you are lucky), then this is a great model to grow on. Examples of this modality are Google Adwords and Yahoo Search Marketing. These campaigns do not require normally a minimum investment, so they will let any entrepreneur start small and increase the budget looking at the campaign’s results.

CPM Model

The pay per 1000 views of your ad model is the eternal player on the online advertising market. This model is (or was) pretty much defacto for increasing traffic to your site. It can either perform outstandingly or be a total flop. The outcome pretty much comes down to the quality of the creative piece and the ability to surprise the user. This method is used for branding as well, especially through Rich Media campaigns.

(Disclaimer: I work for United Virtualities)

PPP (Pay Per Post)

This “newcomer” allows you to reach the blogosphere by paying bloggers to write about your company/product/service. It is many times perceived negatively, however it could be an effective medium if you know where your audience is in the blogosphere. (PayPerPost , ReviewMe)

CPA

If you are looking strictly for conversions, CPA is the best way to go since you don’t pay unless you get conversions. For this method you must really know your business and know exactly what is the optimal costumer acquisition cost you can manage (balance between getting more affiliates and still making a good profit). (CommisionJunction , ClickBank)

Viral Marketing / Word of Mouth

“Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message’s exposure and influence.” (Dr. Ralph F. Wilson, 2000)[i]

Basically just give a good reason to your existent user base to spread the word about your company. The Hotmail.com Example:
The classic example of viral marketing is Hotmail.com, one of the first free Web-based e-mail services. The strategy is simple:

1. Give away free e-mail addresses and services,

2. Attach a simple tag at the bottom of every free message sent out: “Get your private, free email at http://www.hotmail.com” and,

3. Then stand back while people e-mail to their own network of friends and associates,

4. Who see the message,

5. Sign up for their own free e-mail service, and then

6. Propel the message still wider to their own ever-increasing circles of friends and associates.

Viral marketing is the cheapest (and maybe even free) method to increase your existing user base and as such, the most recommended. This method is convenient for almost all purposes of company exposure. The only catch is that you have to be *very* careful in the technique you use so you don’t end up losing your costumer base and end up looking like a fool.

Media Buzz

To create as much buzz as possible is a necessary task. The more buzz you create, the bigger the news media that will pick up your story will be. At the beginning you will always start preaching your start up to your family, social friends and industry friends. Your start up will usually will be first picked up by blogs that do not have much following but who will be highly helpful by giving you feedback on your start up and will have their network of connections, although rather small, notice you. Then if the cards are played correctly and you catch a break, a big name blog, one of the industries’ must such TechCrunch, will post about you. These bloggers are the ones that are followed by the movers and shakers of the industry, the kind of people who have all the contacts you might need and are the ones referenced by the main stream media. The next step, although rare, is to have one’s story picked up by a major outlet, such as NYT or WSJ. Know, if the mainstream media has covered you, chances are you are more than a successful startup.

Now the question is, how does one create media buzz?

Network of Contacts

Guy Kawasaki wrote a post about how he created Truemors with very low cost entitled “By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09” where he cleverly mentions:

· $0. I spend $0 on marketing to launch Truemors.

· 24. However, I did spend 24 years of schmoozing and “paying it forward” to get to the point where I could spend $0 to launch a company. Many bloggers got bent out of shape: “The only reason Truemors is getting so much coverage is that it’s Guy’s site.” To which my response is, “You have a firm grasp of the obvious.”[ii]
(Guy Kawasaki, 2007)

What Guy is obviously stating here, is that connections come a long, long way. The more you are connected or the more prominent you are in the industry, your story will be picked upped faster. For instance if Steve Jobs or Bill Gates create a new company, every single news outlet, big and small, will quickly pick up the story without hesitation. If Caterina Fake (founder of Flickr) or Evan Williams (founder of Blogger and Twitter) create a new start up, all the major online media outlets and bloggers will cover the news immediately, but not probably the mainstream media. Now if you are a start up founder that does not have many contacts or previous recognition, not to worry, there are many other ways to attract media buzz.

Beta testers

A very common practice nowadays is to pre-release closed versions of your startup to a few select individuals. These pre-releases are usually called alpha (really green) or beta (more mature, but not quite there and with still a few bugs) versions. These pre-releases are usually given to the first users who have signed up to become beta testers of your site and your contacts who you know will start creating buzz.

Screenshot of the webservice twine inviting users to sign up to their beta program. This screenshot exemplifies a typical beta program sign up sheet.

These beta testers will not only provide valuable feedback of your development but if they like it, chances are they will spread the word.
Another practice is to leave your development in closed beta for a long while, only allowing current users to invite other users by giving them a small amount of invitations. Gmail, Google’s web mail solution, made this modality of beta testing popular which attracted many users due to the exclusivity that being a member meant. Michael Arrington (2007) wrote “Startups love this, of course. They’ve created scarcity around a virtual good and that creates buzz. The most successful products can count on invitations being sold on eBay - something we saw with Gmail in 2004 and more recently with Pownce.”[iii]

New Features

Once you have gained a bit of attention, the next step is to keep your users expectations in place and hopes high while delivering. The best way to achieve this continuity is to give back to the users what they want. You must hear and process all feedback, both positive and specially the negative, to understand how your users feel about your services and to continue building from there. This is your one chance you have to keep your users compelled and to come back to you. The more users keep coming back, the more they will recommend it, the bigger your user base will become and the more media buzz you will attract.

Tell a Story

The final stepping-stone is to have an attractive story that has not been heard before. It must be the type of story the masses love, not just the early adopters. If you have a compelling story, your service are in an all time high usage and you have been getting rave reviews, chances might increase that you will be mentioned in the mainstream media. A good how to advice can be found in Penelope Trunk’s post: How to get your blog (or yourself) mentioned in print[iv].

Being printed on mainstream media is a major cornerstone in a company (both offline and online) since it usually marks that your start up has Crossed the Chasm. The main benefits of being printed were best expressed by Darren Rowse[v]:

· Branding/Profile/Awareness

· Contacts

· Flow on media attention

· Credibility

· Widening circles of influence

There is, of course, no universal *best value* for marketing and advertising, the most effective method will vary from company to company.

---

 

[i] The Six Simple Principles of Viral Marketing, Dr. Ralph F. Wilson, January 2000, http://www.wilsonweb.com/wmt5/viral-principles.htm

 

[ii] “By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09”, Guy Kawasaki, June 2007, http://blog.guykawasaki.com/2007/06/by_the_numbers_.html

 

[iii] “Get An Invite To Any Private Beta “, Michael Arrington, July 2007 http://www.techcrunch.com/2007/07/12/get-an-invite-to-any-private-beta/

 

[iv] “How to get your blog (or yourself) mentioned in print”, Penelope Trunk, December 2006 http://blog.penelopetrunk.com/2006/12/20/how-to-get-your-blog-or-yourself-mentioned-in-print-media/

 

[v] “The Benefits of Being Featured in Mainstream Media”, Darren Rowse, Octobre 2007 http://www.problogger.net/archives/2007/10/29/the-benefits-of-being-featured-in-mainstream-media/