Viral Marketing within Social Networking Sites

Master's Thesis 2012 88 Pages

Communications - Public Relations, Advertising, Marketing, Social Media


Table of Contents

List of tables

List of Illustrations

List of Abbreviations

1 Introduction
1.1 Background
1.2 Objective
1.3 Approach

2 Literature Review
2.1 Etymological Roots of Viral Marketing
2.2 Evolution of Viral Marketing
2.3 Theoretical Foundations
2.3.1 Word-of-Mouth
2.3.2 Electronic Word-of-Mouth
2.3.3 Epidemiology
2.3.4 Memetics
2.3.5 Diffusion of Innovations Theory
2.3.6 The Tipping Point
2.3.7 Social Networks
2.3.8 Conclusion
2.4 Defining Viral Marketing
2.4.1 Amplitude
2.4.2 Characteristics Communication Carrier of Information Diffusion-Channels Message and Content
2.4.3 Conclusion
2.5 Setting Up a Viral Marketing Campaign
2.5.1 Targets of Viral Marketing
2.5.2 Elements of a Viral Marketing Campaigns
2.5.3 Evaluation of a Viral Marketing Campaign
2.5.4 Conclusion
2.6 Classification of Viral Marketing
2.6.1 Viral Marketing within the Marketing-Mix
2.6.2 Viral Marketing within the Communication Mix
2.6.3 Classification to Related Fields
2.6.4 Conclusion

3 Viral Marketing in Social Networks
3.1 Method
3.1.1 Research Model and Research Questions
3.1.2 Research Design and Dataset
3.2 Survey Results
3.2.1 Stage 1: Receipt of a VMM
3.2.2 Stage 2: Decision Point - Consumption
3.2.3 Stage 3: Consumption of Message
3.2.4 Stage 4: Decision Point - Forwarding
3.3 Reflecting the Research Questions
3.3.1 Effects of Social Networking Sites on Viral Marketing
3.3.2 Preferred Types of Viral Marketing
3.3.3 Characterising Attributes

4 Conclusion
4.1 Limitations
4.2 Outlook

Reference List


List of tables

Table 1 "definitions of paraphrases"

Table 2 "VMC evaluative criteria"

List of Illustrations

Figure 1 "Marketing subdivisions"

Figure 2 "Typology of eWOM channels"

Figure 3 "Triangle of Epidemiology"

Figure 4 "Adopter Categorisation regarding their Risk Aversion"

Figure 5 "Three Models of Network Structure"

Figure 6 "Viral growth"

Figure 7 "VMC evaluation framework"

Figure 8 "Sherwin Marketing Matrix"

Figure 9 "Typical VMM Episode"

List of Abbreviations

illustration not visible in this excerpt

1 Introduction

Already in the 19th century Victor Hugo, a French poet, noticed how powerful ideas can be since he imputes intangible thoughts more power than armed forces. Translating this onto marketing, the classic mass-media marketing can be seen as an army trying to whip brand awareness into the potential customers mind to stimulate sales. Effortlessly transferring a contagious idea into a customer's mind, though, is the idea of Viral Marketing.

1.1 Background

Since new media and the Internet have entered our everyday life the marketing environment has changed vastly. On the one hand, marketers' possibilities to solicit their products have risen widely. On the other hand, consumers are getting flooded with an ever-increasing number of marketing stimuli everyday (Brassington/Pettitt 2006, p. 668). No wonder brains start to prevent themselves from overstimulation by setting up perceptual filters. Otherwise they would not be able to process all the information of about 2.500 to 5.000 affecting advertising messages everyday (Solomon et al. 2009, p. 129; Langner 2009, p. 14). According to Langner (2009, p. 14), experts estimate that about 75% of the money spent on advertising to attract customers attention are out of all proportion, whereof about 22bn of the 29bn Euro spent in Germany drain away, unnoticed by any consumer. Though, classic conditioning marketing does not seem to effectively affect consumers anymore. One could even argue that the opposite will happen: the consumer learns subconsciously to ignore certain kinds of advertisements. This is where Viral Marketing (VM) comes into play. Among some other new marketing trends, Viral Marketing tries to address consumers directly. Since people gather information by communicating with their friends and acquaintances, word-of-mouth became one of the most influential leverages of consumer decisions (Langner 2009, p. 16). Viral Marketing utilises the principle of word-of-mouth. Appealing messages or products are passed along from consumer to consumer, whereby an impersonal advertisement gets replaced by a personal recommendation or directly addressed message. High trust and consumer tailored information, hereby, are only two of many advantages.

Viral Advertising, as a part of VM, uses any kind of media, such as video, picture or text-message, to advertise a specific product, brand or company. Viral Marketing as a whole furthermore includes viral products and services. These are mostly digital and designed in a manner which makes the user recommend the product to his friends and acquaintances, e.g. by integrated notification functions, personal invitation options, etc. (Aral/Walker 2011, p. 34f.). The product utility thereby mostly depends on network-effects which means, the consumer benefits rise with the amount of friends using the pro-duct, too. Social games take a special position in the group of viral products.

1.2 Objective

The Internet as a technological pillar enables a fast and far-ranging diffusion of information. The rapid developments in the Internet technology, thus, have high influence on Viral Marketing. When it became apparent that Viral Marketing was highly efficient, many marketers jumped on the bandwagon to give it a try while theory about the motivation, attitudes, and behaviours of the people engaged in it only started to be analysed afterwards (Phelps et al. 2004, p. 333). This led to disagreement about the definition of viral marketing because marketers often had slightly different conceptions (Golan/Zaidner 2008, p. 961). Accordingly, a first objective of this study will be an analysis on the topic of Viral Marketing to set up a definition that fits its actual purpose and delineates it from adjacent fields of marketing.

The fast developments of online technologies do not only comprise the hardware technology, but also the offered services online. Since social networking sites were almost inexistent ten years ago, a modern world without them would be unimaginable today. Research on Viral Marketing within social networking sites is rather rare since most of the actual studies focus on the distribution via email or blogs (e.g. Phelps et al. 2004, De Bruyn/Lilien 2008, p. 156). Though, secondly, an empirical study was set up to evaluate Viral Marketing within social networking sites, respectively within Facebook as the biggest and most common example. It focuses on the influence social networking sites have on the way a Viral Marketing message is diffused, and additionally on characteristics of the sender, receiver, and the Viral Marketing message itself.

1.3 Approach

At first a literature review will give a clear view on Viral Marketing and the adjacent topics. After describing the etymological roots of Viral Marketing, a brief conclusion of Viral Marketing's history and evolution will give first understandings of what Viral Marketing is. Hereupon, the following theoretical foundations will illustrate the underlying theories and give deeper insights on functionality of Viral Marketing. In chapter 2.4 a selection of 25 definitions will be analysed to set up a practicable definition for this study. Then, the setup of a Viral Marketing campaign with a focus on the targets, campaign elements, and campaign evaluation will be shown. To conclude the theoretical part, a classification will show the integration of Viral Marketing in the marketing mix and furthermore its classification to adjacent fields of marketing.

The third chapter addresses the empirical study. At first a research model was developed and research questions were formulated. Then the research setup is explained before the survey results are evaluated lace in chapter 3.2. The discussion of the findings with regard to the research questions is shown in the last sub-chapter before a conclusion completes the study.

2 Literature Review

Since broadband Internet found its way into almost every household and new Web 2.0 technologies boosted possibilities of online-communication and interaction, VM quickly became interesting for the marketing branch. But as it is still a quite new topic, not much research has been done yet. However, many marketers try to create viral marketing campaigns because it became famous as a cheap but far-reaching marketing method during the new economy boom. The term "Viral Marketing" is manly used in practice which is why there are many different apprehensions among practitioners and also why theoreticians have not come to a mutual understanding yet (Oetting 2008, p. 67f.).

The following chapter reflects some of the most common views to define a general understanding of Viral Marketing. Furthermore, this literature review will explain the underlying theoretical principals and put them into context as to how they affect VM.

2.1 Etymological Roots of Viral Marketing

Viral, the adjective of the noun virus, is a derivation of the Latin word "vīrus", which earlier acceptation was "slime, poison; akin to ooze" (Dictionary 2012a). Today's etymologic sense of viral is: "of the nature of, or caused by, a virus" (Dictionary 2012a) and is further notionally related to a biological virus or a computer virus.

However, the term Marketing is not that easy to define as it is manifold and its philosophy has evolved and changed over the years. The roots of marketing can be traced back to the beginning of the 20th century when it was basically a functional discipline to stimulate sales in the agricultural sector. Modern marketing was elaborated from the 1950s onwards. With the development of the 4P's concept (Price, Product, Place and Promotion) in the early 1960s, McCarthy accounted for the development of the modern marketing with the change from a function-oriented view to a rather management-oriented state of mind (Meffert 1999, p. 5f.).

In the late 1960s and the early 1970s Philip Kotler, a main representative of the modern marketing, delineated the "Generic Concept of Marketing. He categorized three stages of marketing consciousness whereby the third, all-embracing, stage specifies Marketing as "[…] a relevant subject for all organizations in their relations with all their publics, not only customers." (Kotler 1972, p. 47). Pepels (2004, p. 3) adopted Kotler's approach of "Generic Marketing", but subdivided it in more detail. He defines "Generic Marketing" as the overall term of marketing, Kotler's third stage of consciousness alike. The next stage, "Social Marketing" excludes all private transactions and thus is about all altruistic and also economic factors. Furthermore, as the Figure 1 shows, he subdivides it into "Business" and "Non-Business" Marketing whereby the latter equals the first stage of consciousness of Kotler's approach.

Figure 1 "Marketing subdivisions"

illustration not visible in this excerpt

Source: adopted from Pepels (2004, p. 3)

In addition, Pepels segregates this last stage into "Instrumental" and "Corporate Marketing". While Corporate Marketing is about presenting the company in public, Instrumental Marketing is more about the packages of measures itself to influence the market, respectively the suppliers or buyers.

As identified, marketing is not just a field of functions but a complete management view. How far this can be applied to Viral Marketing will be shown in the sequel of chapter 2. Prior to this, a short view on the history of Viral Marketing in praxis and theory as well as theoretical foundations will give insightful information about the evolution and the actual scope of Viral Marketing.

2.2 Evolution of Viral Marketing

The first time the term "Viral Marketing" came up was in PC User magazine in 1989 (Okazaki 2008, p. 118; Kirby 2006, p. 89):

"At Ernst & Whinney, when Macgregor initially put Macintosh SEs up against a set of Compaqs, the staff almost unanimously voted with their feet as long waiting lists developed for use of the Macintoshes. The Compaqs were all but idle. John Bownes of City Bank confirmed this. ‘It’s viral marketing. You get one or two in and they spread throughout the company.’" (Carrigan 1989)

Thus, in its hour of birth Viral Marketing was seen as a method of seeding a product to get others involved to copycat it. Seven years later in 1996, when Jurvetson and Draper (1997) analyzed the marketing campaign of Hotmail’s free email service[1], they specified VM plainly as "network-enhanced word-of-mouth" (Cruz/Fill 2008, p. 745). Pastore (2000) agrees with Jurvetson and Draper as he also sees word-of-mouth in charge for the online success of the Hotmail campaign. He calls the new online-version of word-of-mouth "e-fluentials" and denotes the main difference in comparison to the old, "offline-world" word-of-mouth in the potential to influence more friends.

On the contrary, Helm (2000, p. 159) defined it a bit differently:

"Viral Marketing can be understood as a communication and distribution concept that relies on customers to transmit digital products via electronic mail to other potential customers in their social sphere and to animate these contacts to also transmit the products."

In Helm’s opinion, Viral Marketing is not just about online word-of-mouth but rather about the distribution of a product, which should be offered for free and via no other distribution channel than the Internet (Helm 2000, p. 159). Thus, her definition encourages viral marketing to be a method of both, marketing and distribution but also limits it to only digital products (Porter/Golan 2006, p. 27). Much cited, Wilson (2000) describes Viral Marketing in a broader sense as:

"[...] 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."

As one can notice, a variety of different definitions exist. This might be due to the fact, that in this early stage almost all literature focused on related success stories but neglected definitions and backgrounds (Helm 2000, p. 158).

Major influence on Viral Marketing, as it is known today, was brought through the Web 2.0. Schultz et al. (2011, p. 218) state that with the beginning of the Web 2.0 era the importance of Viral Marketing rose even further. O'Reilly (2007, p. 24.) notes in his essay about the first Web 2.0 Conference in 2004 that "network effects from user contributions are the key to market dominan-ce in the Web 2.0 era". Although he is not directly referring to Marketing, network effects and user contributions are two main influencers which changed the online marketing environment for marketers. For example social media platforms, which are stated by O'Reilly (2007, p.18) as a part of Web 2.0, are declared to have strong influence on a "marketing managers' control over the content, timing and frequency of information" (Mangold/Faulds 2009, p. 359f.) as they amplify consumers ability to communicate among each other while being completely independent from third parties. Though, according to Mangold and Faulds, the consumers' behaviour has been profoundly affected, as well as the consumers' power within the market rose through the new possibilities of Web 2.0. This bestows further strength on VM. Phelps et al. (2004, p. 334) outs it down as

"[...] the process of encouraging honest communication among consumer networks, and it focuses on email as the channel."

The second part of his definition reveals that back then in 2004 social networking sites had no big influence on Viral Marketing yet. One year later, Dobele et al. (2005, p. 144) specified VM as

"[..] a strategy whereby people forward the message to other people on their email lists or tie advertisements into or at the end of messages. From a marketing perspective, it is the process of encouraging individuals to pass along favourable or compelling marketing information they receive in a hypermedia environment: information that is favourable or compelling either by design or by accident."

Still, the influence of social media platforms is not directly named, but can be interpreted as the hypermedia environment. However, Dobele et al. see the widespread use of SMS as the main accelerator for word-of-mouth in this time.

Nowadays, communication through online social networks outreach all previous ways of communication by far with respect to time of information spread and reach. Kaplan and Haenlein (2011, p. 253f) back this up with the "Old Spice" campaign of Procter & Gamble from July 2010. Over 23m people watched the video on youtube within only 36 hours. In comparison: the biolo-gical virus H1N1 had a worldwide circulation of just under 190.000 infections per week during his peak level (WHO 2011). Golan and Zaidner (2008, p. 961) linked the success of Viral Marketing to online communication platforms as they see the definition of VM hooked on the evolution and development of peer-to-peer communication on online communication platforms.

Kaplan and Haenlein (2011, p. 254) express a strong relationship between word-of-mouth, social media and Viral Marketing and consequently define Viral Marketing as:

"[...] electronic Word-of-Mouth in which some form of marketing message related to a company, brand or product is transmitted in an exponentially growing way, often through the use of social media applications."

Thus, to define Viral Marketing, word-of-mouth as its fundamental mode of operation, but also theories of information diffusion must be considered. To gain a deeper understanding of Viral Marketing, these topics will be analysed in more detail in the following chapter before finally setting up a practicable definition.

2.3 Theoretical Foundations

This chapter briefly analyses the theoretical foundations to gain a general understanding of related topics prior to adequately define Viral Marketing in this study. As previously mentioned, word-of-mouth is strongly linked to VM (see also Cruz and Fill 2008, p. 746) and needs deeper insight. Furthermore, as the process of the spread of a message is elementary to Viral Marketing, theories and models related to its diffusion will be introduced: General Information about Epidemiology will be followed by "Memetics" - Dawkins model about cultural information transfer. Then, Rogers "Diffusion of Innovations Theory" as a model of growth with saturation and Gladwell's "The Tipping Point" as an utilisation of the previously named models to explain the spread of information will be introduced. The theoretical framework will be concluded with a chapter on social networks which form another important piece in the framework of Viral Marketing.

2.3.1 Word-of-Mouth

The Oxford English Dictionary dates the first written occurrence of the term "word of mouth" back to 1533 by defining it simply as "oral communication" (Nyilasy 2006, p. 163f.). From a marketers point of view the information exchange is restricted and somehow related to a company, brand, product or service. Arndt (1967a, p. 3) defined it accordingly as:

"Oral, person to person communication between receiver and a communicator whom the receiver perceives as noncommercial, concerning a brand, a product or a service".

A recent definition of the American Marketing Association (AMA 2012) defines word-of-mouth communication as:

"[..] information imparted by a consumer or individual other than the sponsor. It is sharing information about a product, promotion, etc., between a consumer and a friend, colleague, or other acquaintance."

As it was to be expected the understanding of word-of-mouth has not changed over time. Still today its main characteristics are the personal communication, the commercial regard to product, brand, or service, and non-commercial motivated communicators. Bruyn and Lilien (2008, p. 152) furthermore state influence not only on consumers' purchase decisions (Arndt 1967b, p. 295) but also on the consumer pre-consumption expectations (Anderson/Salisbury 2003, p. 122), pre-consumption product judgments (Herr et al. 1991, p. 456) and post-consumption product judgment (Bone 1995, p. 215f.).

But, since not only positive information about products and services is passed on, WOM can be split into positive word-of-mouth (PWOM) and negative word-of-mouth (NWOM). Herr et al. 's (1991, p. 460) study showed that NWOM weights even heavier than PWOM. According to them, negative information about only one product attribute biases judgement stronger than many positive exhibited features. Regarding to East et al. (2008, p. 116) other studies support this fact. However, they also claim that the previous studies missed out the higher frequency of positive WOM. As a result, the position of most message-addressees is positive which gives negative WOM higher impact. With a new designed set-up, balancing out the disparate amount of PWOM and NWOM, their survey revealed a higher impact of PWOM. However, this illustrates the powerful impact WOM can have and the chances it offers to marketers to use this phenomenon for their purpose.

The motivations why people forward WOM are also interesting. Canarella and Piccioni (2008, p.126f.) mention for example personal engagement, commitment towards others, personal improvement, altruism, loyalty and many more. East et al. (2008, p. 217) furthermore state satisfaction and dissatisfaction as catalysts of WOM but identify the main trigger as 'perceived need' and 'random occurrence during conversations'.

Furthermore, WOM can be differentiated between amplified and organic word-of-mouth. Organic WOM refers to naturally appearing WOM while amplified WOM is artificially generated by a company (WOMMA 2007, p. 5). With regard to VM only the latter is relevant to this study.

2.3.2 Electronic Word-of-Mouth

With the evolvement of the Internet the variety of communication channels has broadened enormously and since new communication platforms affect the characteristics of word-of-mouth. Thus, to describe the new phenomenon new terms such as "word-of-mouse", "Internet WOM", and eWOM or "electronic word-of-mouth" (Helm 2000, p. 159) were used. Henning-Thurau et al. (2004, p. 39) define it on the basis of Stauss (2000, p. 243) as

"[...] any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet."

Accordingly, the main characteristics are still today the personal communica-tion, the commercial perspective, and non-commercial motivated communi-cators. But according to Helm (2000, p. 159), Internet technologies opened up new areas for word-of-mouth. WOM is no longer bound to personal networks but can potentially reach an unlimited number of Internet users (Stauss 1997, p. 28) since the Internet facilitates one-to-many and many-to-many communications. Furthermore, information sharing among unacquainted consumers can now take place as well. The possibility on almost all major online shops to read product reviews before buying and rate the bought product later on, exemplifies the information exchange among unbeknown. Besides the broader scope of eWOM it also facilitates asynchronous communication. The following illustration shows the new communication channels of eWOM sorted by either scope of communication and level of interactivity:

Figure 2 "Typology of eWOM channels"

illustration not visible in this excerpt

Source: adapted from Litvin et al. (2008), p. 9

WOM most commonly takes part as a synchronous one-to-one communi-cation, e.g. a conventional chat or telephone call between two friends. But also others, such as synchronous many-to-many communications, e.g. panel discussions, or asynchronous one-to-one communications, e.g. letters, are present. The essential improvement of eWOM is due to something else: it is the location, now it is online! This changes the structure of information because now it is stored on the web. It becomes searchable and storable and, hence, accessible from all over the world, independent of time and place, and at very low costs (Litvin et al. 2008, p. 10).

But the new technology also has its downside. Communicators do not have to appear in person but can instead post their arguments anonymously which might lead to purposely misleading messages (Litvin et al. 2008, p. 10). Furthermore all the previously named advantages of eWOM also apply to its negative counterpart. Negative eWOM can occur on consumer opinion sites (e.g. www.ciao.de), on special websites or so called 'hate sites', e.g. www.unitedbreaksguitars.com[2], but also in forums, chats etc. whereby multiplication effects arise as well (Helm 2000, p. 159). Furthermore the non-verbal gestures of communication cease to apply.

2.3.3 Epidemiology

The word epidemiology comes from the three Greek words "epi", meaning "on, upon, or befall", demos, meaning "the people", and logos, meaning "the study of". Thus, epidemiology literally refers to "the study of that which befalls people" - or simply as "the basic science or foundation of public health" (Merrill 2010, p. 3). It involves descriptive methods to characterise the distribution of health-related states or events and also analytic methods to identify causes of health-related states or events (Merrill 2010, p. 3).

Hippocrates (460-377 BC) is said to be the first epidemiologist as he deviated from the general belief of supernatural fate and started to explain disease occurrences from a rational perspective. He introduced the terms epidemic and endemic (Merrill 2010, p. 24f.)

An epidemic is defined as an increase of health-related states or events above a common or expected occurrence-level in a defined population while an endemic is specified as the expected or usual level of health-related states or events within a community or region. If an epidemic visits upon many regions, across whole continents or even the whole world, it is called a pandemic (Merrill 2010, p. 6).

Figure 3 "Triangle of Epidemiology"

illustration not visible in this excerpt

Source: Timmreck (2002), p. 7 and Merrill (2010), p. 8

Whether an epidemic happens or not depends on a multitude of circumstan-ces. The model of the "epidemiological triangle" reduces the complexity to four different influencing parameters: First, the agent: He is the cause of the disease such as bacteria, viruses, etc. Second, the host: It is an organism that harbours the disease, e.g. a human or an animal. Third, the environ-ment: It depicts the biological, social, cultural, and physical aspects of the surroundings and conditions around a host which can cause or allow a disease to happen. Fourth, the time: It accounts for different aspects of time, such as incubation periods, life expectancy of the host, and duration of the course of the illness or condition (Timmreck 2002, p. 6ff.).

The transmission of a disease can occur through direct physical contact to the host or its waste products, but also indirectly. Hereby it can be differenti-ated between Airborne transmission, infecting the host through microscopic pathogen-carrying droplets in the air, Vector-borne transmission, transmitting the infection through an arthropod (e.g. a mosquito), and Vehicle-borne transmission, infecting the host through fomites such as food or water (Merrill 2010, p. 12). To stop an epidemic it is sufficient either interfering, altering changing or removing one element of the triangle (Timmreck 2002, p. 8).

To express epidemics in numbers several different ratios or rates are used in the theory of epidemiology, especially to illustrate infectivity, recovery and mortality. To keep the theoretical extent in check, those will not be analysed deeper in this chapter. Instead, appropriate ratios will be explained in sequel with regard to the according topic.

2.3.4 Memetics

In 1976 Richard Dawkins published the first Edition of his book The Selfish Gene in which he coined the term Meme, analogous to genes, as little units of information. Accordingly, Memetics is about the replication of memes and their self-propagation by jumping from brain to brain. Dawkins illustrates this process furthermore with the words of his colleague N. K. Humphrey as parasitized brains which serve as hosts and, thus, help the memes to propagate (Dawkins 2006, p. 192). As an example he states the "idea of God" as it is not known when this meme arose but anyhow it survived many years through spoken and written word because of its psychological appeal and its "superficially plausible answers to deep and troubling questions about existence" (Dawkins 2006, p. 193).

Furthermore, Dawkins defines a meme pool as the sum of all existing memes and assigns a meme complex as a subcategory to it. Thus, a meme complex is formed by many associated memes. Thereby these memes support each other since they have better chances to survive as a complex. Dawkins again uses the "God meme" to illustrate this and states an "organized church, with its architecture, rituals, laws, music, art, and written tradition" as a stable meme complex of mutually assisting memes (Dawkins 2006, p. 197).

Important with respect to the replication of the meme is the ability of humans to imitate. As humans are not able to review every correlation in daily life they adopt and imitate memes of others. As with genes, they can also mutate or, respectively, be imitated incomplete or modified. Furthermore the memes can differ in their lifespan. Some memes spread rapidly but do not last for a long time, while others can survive for thousands of years (Dawkins 2006, p. 193f.). Here parallels to the process of natural selection of Darwin's Theory of Evolution can be drawn (Langner 2009, p. 20f.). Dawkins (1982, p. 111) added later on that the survival success of a meme also depends on the other memes within the meme pool. For example, if a society would be dominated by "Marxist or Nazi genes", the success of the replication for new memes would depend on their compatibility with the other memes within the pool.

2.3.5 Diffusion of Innovations Theory

Everett M. Rogers analyses, in his book Diffusion of Innovations from 1962, how innovations can be disposed successfully and what needs to be considered. Hereby, he defines innovations as "an idea, practice, or object that is perceived as new by an individual or other unit of adoption" (Rogers 2003, p. 12) and describes its diffusion as "(1) an innovation (2) that is communicated through certain channels (3) over time (4) among the members of a social system" (Rogers 2003, p. 36).

(1) As an innovation to be successful, i.e. to spread within a population, Rogers states five determining attributes (Rogers 2003, p. 15f.):

- Relative Advantage: The perception of the innovation must excel the idea it displaces.
- Compatibility: The idea must be compatible to the existing norms, values, and practices to ensure a rapid adoption.
- Complexity: The ease of use of an innovation must be simple in such a way that no new skills need to be developed to adopt it.
- Trialability: The reduction of the uncertainty of a possible adopter.
- Observable results: The reduction of uncertainty and to encourage word-of-mouth.

(2) To communicate an innovation, Rogers differs between mass media channels, which are more effective in creating knowledge, and interpersonal channels, which in contrast are more prosperous in influencing a customer's attitude towards an innovation. As consumers mostly prefer subjective evaluations of close peers instead of an expert's opinion, the communication structure between consumers is important. Rogers hereby emphasises that most communications are not heterophily, but homophily (Rogers 2003, p. 18f.). That is the degree of which the communicating people are similar in specific sociographic attributes, such as education, social status, beliefs, language, etc. The more homophily people are, the easier they can communicate amongst each other. Thus, homophilous communication networks are efficient in horizontal communication within their group, but impede vertical communication to other groups within a social system. On the contrary, heterophilous communication links are less efficient but allow the (vertical) diffusion of innovations through social systems (Rogers 2003, p. 305f.)

(3) Furthermore, he describes the "innovations-decision-process" as an information-seeking and -processing process to decrease uncertainty about a new idea. He illustrates this process in five steps (Rogers 2003, p. 20):

1. Knowledge of the existence of an idea and its functionality.
2. Persuasion can form a favourable or unfavourable attitude of an individual towards the innovation.
3. Decision whether to adopt or to reject the idea.
4. Implementation is the start of usage of innovation.
5. Confirmation is quested by the consumer to reinforce the decision. Otherwise a reversion to the previous decision might be the result.

(4) A social system is a network of interrelated units with the goal to jointly solve problems. Within it, the diffusion of innovations depends on its social and communication structure. Norms are an important aspect of structure as they illustrate established behaviour patterns for the members. Important ones are the change agent, who tries to influence consumer's innovation-decisions according to his sake whereas the aide is pretty much alike, just in a less professional way. Thereby, Opinion Leadership is the degree of the influential power, e.g. socioeconomic status or technical expertise (Rogers 2003, p. 26ff.). With these structures in mind, Rogers specifies three types of innovation-decisions (Rogers 2003, p. 28f.):

1. Optional innovation-decisions: The decision, whether to adopt or reject an innovation, is discretely made by a member of the social system independent of others.
2. Collective innovation-decisions: The members of a group jointly come to a decision whether to adopt or reject an innovation.
3. Authority innovation-decisions: A few people within a group are in the possession of opinion leadership and decide whether to adopt or reject an innovation.
4. Contingent innovation-decisions: Those decisions are a sequential combination of at least two of the previous innovation-decisions whereby choices are made after one of the prior innovation-decisions.

While deciding whether to adopt or reject the innovation, a member always has to bear in mind the consequences which the adoption of an innovation entails, as the innovation brings changes to the individual himself and to the whole social system.

Figure 4 "Adopter Categorisation regarding their Risk Aversion"

illustration not visible in this excerpt

Source: Rogers (2004), p. 281

While each adopter can come to a decision by following this process, the moment of decision still can differ. The particular rate of adoption depends on the behaviour of the people respectively to their risk aversion whether they see little danger in adopting innovations very early or whether they are unwilling to take risks and must be persuaded over a long time. Figure 4 illustrates this by dividing the adopters in groups according to their risk aversion (Rogers 2003, p. 281): Innovators, Early Adopters, Early Majority, Late Majority, and Laggards.

2.3.6 The Tipping Point

In the book The Tipping Point - How Little Things Can Make a Big Difference from 2000, Malcolm Gladwell advances the view that diseases and trends respectively memes diffuse after the same rules (Langner 2009, p. 21f.) He comes to this conclusion by analysing the diffusion of several information-epidemics. In doing so, he detected three "agents of change" which are enablers to reach the "Tipping Point" or the critical mass from whereon the epidemic starts to spread exponentially (Gladwell 2000, p. 12f.):

1. The Law of the Few is about the people who spread ideas. A few "exceptional people" exist which have great influence on their peers. This can arise from many different things, e.g. how sociable, energetic, knowledgeable or influential they are (Gladwell 2000, p. 21).

In detail Gladwell differentiates between three different types:

- Connectors: People with many friends and acquaintances. Their social circles are often four to five times larger than those of others (p. 41). They are highly connected to many different worlds, subcultures and niches (p.48) as they are "masters of the weak tie".[3] This makes them socially powerful (p. 54) and enables them to start word-of-mouth epidemics (p. 59).
- Mavens: They accumulate knowledge about many different products and prices (p.60), they are socially motivated to help and educate their acquaintances (p. 62) but not to persuade them (p.69), and they have many social ties (p. 62). By also providing social skills they are able to start word-of-mouth (p. 67).
- Salesmen: They have skills to build trust and rapport in a very short time which makes it hard to resist them (p.84). In doing so, they can persuade others if they are unconvinced of what they have heard (p.70).

2. The Stickiness Factor describes the characteristics of successful ideas: A memorable message which sticks to a mind and "doesn't go in one ear and out the other" (Gladwell 2000, p. 24f.), is essential to create a contagious message.

3. The Power of Context is about the environment: Conditions and circumstances, e.g. the place and time, have great influence on the occurrence of epidemics. Already the smallest change in context can either tip off or impede an epidemic (Gladwell 2000, p. 139f.)

Those three factors combined can lead to the critical mass, threshold, or boiling point. From this point on, "ideas and products and messages and behaviours [can] spread like viruses do" (Gladwell 2000, p. 7).


[1] Bhatia and Smith developed the free online e-mail client in 1996 with a seed capital of 300.000 US$. Within just 18 month and a marketing budged of just under 500.000 US$ they gained 12m customers by simply adding the advertising slogan "Get your Private, Free Email from Hotmail at http://www.hotmail.com" to each email sent by a customer (Rosen 2000, p. 30; Jurvetson/Draper, 1997).

[2] During a journey United Airlines broke the expensive guitar of Dave Caroll, a Canadian local musician. After United doggedly refused to replace it, he threatened them to produce three music videos about this story and to put them on youtube. In July 2009 he did so. After some media got wind of it, the videos spread virally and were viewed over 10m times. Today still a homepage exists and offers workshops on how to harness social media (Carroll 2012).

[3] Granovetter analysed stronger and weaker ties in his paper The Strength of Weak Ties. He comes to the conclusion that stronger ties breed local cohesion while weaker ties are "indispensable to individuals' opportunities and to their integration into communities", meaning that they connect various different groups and, though, facilitate a broader availability of information (Granovetter 1973, p. 1378).


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University of Siegen – Fakultät III
Viral Marketing Facebook social network




Title: Viral Marketing within Social Networking Sites