As the avian flu continues its steady march around the globe, the world is becoming acutely aware of the power of a virus. The same is happening in the marketing world, where viral marketing, the Internet version of word-of-mouth marketing, increasingly has the power to make  — or break — brands. Pipeline spoke to Richard Spalding, CEO of Kontraband Ltd. recently about his firm’s work with Fortune 500 firms in their efforts to take advantage of the trend.

Pipeline: Tell me a bit more about Kontraband.com  — how it got started.

Richard Spalding: We started off about six years ago as an online library for funny jokes, games, videos and pictures. Then we shared it among friends, and about two years ago it started to get quite a bit of traffic, people started talking about it quite a bit and we got profiled on TV. Then the server costs were getting expensive, so we thought we had better do something. Basically, our income is made from seeding viral marketing for clients like BMW, Intel, Microsoft and Sony. We have a large network of other entertainment and gaming sites around the world, and we now have about 400,000 views a day on our site. Alexa.com, which is a barometer of how popular Web sites are, says we are at around the 2,000 mark. So we’ve just kind of grown and grown. In Europe viral marketing has been around for a couple of years and more and more clients are starting to use it as another form of advertising. Now it seems to be getting more popular in North America.

Pipeline: Where is the company based?

RS: We have an office in North London and a sales office in New York.

Pipeline: How does viral marketing work exactly?

RS: We’ll get approached by an advertiser or media company. They come to us and say, ‘we’ve got this clip we’d like to get out to our audience; this is the budget we have.’ We’ll say, ‘this is what you’re looking at. This is where we can place it,’ and we send it out to our networks, we put it onto our sites and then we track it on a media service and it registers all the views and what people say about it. It can be anywhere from 100,00 in a week to two million in a week, depending on how viral it is.

Pipeline: It sounds like this is attractive because it’s something you can measure.

RS: It’s very measurable. The difference between online and offline advertising is you can directly measure online advertising. Clients can judge you as a business, whereas in a magazine it’s how many people you sell to rather than how many people look at an ad. It’s the same with TV. So it’s very measurable because clients can see what people are saying about their brand. We had a case recently where we did something for (a company). We did four viral e-mails for them. The third viral e-mail wasn’t that brilliant and people were saying quite negative things about the brand, and the client got a little concerned because they could see people were saying negative things about their brand and generally they wouldn’t know that from a TV commercial. What’s interesting is you have a tracking system that allows you to see how many people have watched it and what they’re saying about it. It’s brilliant feedback for brands, especially online. You could use viral e-mail to test a TV ad and see what people say about it rather than spending $25,000 to $50,000 doing research.

Pipeline: Where do you see the opportunities particularly for IT companies?

RS: One of the biggest opportunities is the whole tracking system. The trouble we have is we can only track QuickTime at the moment. One of the things we’ve been looking at for about a year now is trying to track Windows files. I think there is great opportunity as far as interactivity goes with viral, just generally making the technology work better for gaming and things like that. One of the things we’re experimenting with at the moment is interactive games on mobiles. We have a lot of content on the 3G mobile network and there is a video short code service that is interactive. It’s quite basic but what we’re trying to do is see how far we can push that. We’re getting gamers to come up with ideas to make it more interactive.

Pipeline: This is a completely different approach to advertising. Where are we with it in terms of acceptance?

RS: I think it’s slowly evolving.  We see viral marketing as an evolution in online advertising. The problem with a lot of online advertising is it’s very aggressive in one sense and passive in another – there are pop-ups, which are aggressive, or very passive in the sense it’s a banner on Web page. What viral does is it encourages the user to interact. The way we sum up viral is that it allows the audience to disseminate your brand through their own network actively and voluntarily; rather than your pushing the brand onto someone, they push it around for you. I think the Internet is getting much more of a focus on youth culture and at the moment I think advertisers are generally quite lazy with their advertising on the Internet. They allow banner advertising companies just to sell a lot of banner space. They don’t really have strong strategies, they’re very used to having their outlets being on TV and in posters and sponsorship and press, and I would say viral advertising is probably closer to something like branded sponsorship within a TV program or film.

Pipeline: What are the risks?

RS: The risks are that you’re letting your brand out into the wild west. There was a case where Ford commissioned some ads for their car and one was a pigeon being splattered on a hood. The other was a cat getting its head chopped off in the sun roof. Ford didn’t want that one to go out. They let the pigeon one go out but they didn’t want the cat one to go out — but it did. On a corporate level there was a lot of protest and everyone was up in arms, but actually the reason they did those ads was they’re trying to appeal to a younger audience. And even though they didn’t want to endorse it the fact is it does give their brand good credibility, because their (target) age group might find it a bit sick but they’re laughing at it, and that’s who they’re trying to appeal to. I think where brands have kind of lost their way a bit is they’re very confused about how to talk to their new audience. I think viral marketing is a good way of talking to a youth audience because it has to be funny and challenging. There was another case with the Volkswagen Polo suicide bomber. Polo is a small car here. Their marketing strategy is “tough but strong.” The director and some creatives got together with an idea about this guy dressed like a Palestinian suicide bomber who drives around London and then blows himself up outside a café, but the bomb just explodes within the car. It was only about six months ago. Volkswagen was up in arms. It was filmed very well, it looked like an ad. Volkswagen threatened to sue these guys, and the guy who directed it had to go into hiding. But even though Volkswagen was up in arms about it, they were getting their brand out there to a market that saw what this was really about. Even though Volkswagen could never be seen to be commissioning something like this, it didn’t do them any harm. It does some harm on a corporate level but on a brand level it doesn’t. There is a danger. You could be spoken about negatively if it fails. Generally what happens is if the viral is not very good it just fails, it doesn’t go anywhere. What we do is we give it a helping hand. We place it, we put it onto sites that the audience these brands are trying to reach spend their lunch break looking at. There are dangers, but ultimately it’s a low risk, and if you get it right, it can be very successful and it’s an incredibly cost-effective way of marketing.

Comment: pipeline@itbusiness.ca

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