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Virality deep-dive: Virality vs. Network Effects

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What is Virality?

Virality is a phenomenon where a product or a system gains more users on account of its existing users promoting it while using it. Virality is user-generated growth. As the user base grows, so does the ability to grow it further. 

Once viral growth sets in, the growth curve crosses an inflection point and takes off non-linearly. As a result, the slope of the growth curve constantly increases while an offering is finding viral adoption. The ability to scale becomes a function of the current user base and hence keeps accelerating of its own accord, as the user base scales. 

The secret to viral growth is to rethink growth as a set of actions that users perform.

Viral businesses implement growth within product usage; they leverage users to expose their offering to more users.

Why is Virality Important?

Virality is important because it enables a system to leverage its user base to gain exponential scale. 

Virality is user-generated scale. In a viral system, the more users come on board, the faster can new internet users come on board, till a market achieves saturation.  As the user base grows, so does the ability to grow it further.

As a result, the slope of the growth curve constantly increases while an offering is finding viral adoption. The ability to scale becomes a function of the current user base, and hence keeps accelerating of its own accord, as the user base scales. 

In a networked world, businesses no longer rely entirely on push marketing campaigns. Sustainable growth comes when users get involved.

Viral growth is the promise of the networked age and the only form of scale native to the network.

What are the Benefits of Going Viral?

‘Going viral’ allows startups to scale user acquisition while constantly reducing user acquisition costs. 

Startups that ‘go viral’ demonstrate an ability to scale, which constantly increases.  As more internet users use the offering, the offering’s growth rate increases.

For example, more pictures created and shared from Instagram expose Instagram to even more users.

Instagram Virality

As users create and send out surveys from SurveyMonkey, survey recipients get exposed to the platform and come on board to create their own surveys.

SurveyMonkey Virality

KickStarter’s project creators spread the word about KickStarter every time they promote their project.

kickstarter virality

All these offerings are designed to get greater exposure through usage and that is a common design pattern that we see repeated across scalable startups. As more users use the offering, it gets exposed to new audiences, leading to greater growth.

 

Virality vs. Network Effects

Network Effects and Virality are often confused in the online content world, possibly because the two often occur together and, in such cases, end up reinforcing each other.

Network effects and Virality are, however, completely different. There are many products which have network effects but are not viral. Conversely, many viral products do not have network effects.

Quick Definitions 

Network Effects – A product with network effects gets more valuable as more users use it. They are achieved only after a certain critical mass is reached but can prove to be a very strong source of value and competitive advantage beyond that point.

Virality – A viral product is one whose rate of adoption increases with adoption. Within a certain limit, the product grows faster as more users adopt it. There are many products that exhibit virality without exhibiting network effects.

 

Same Same But Different

Both network effects and virality tend to magnify value and growth respectively as more users use the product.  This is probably why the two concepts are often confused. However, as elaborated above, the two actually mean very different things.

In fact, there are many products that exhibit virality without exhibiting network effects. A case in point being email and cross-platform communication products. A key feature here is that they are either interoperable across networks (Hotmail) or leverage an underlying network for both the viral transmission as well as delivery of the value proposition. In the case of SurveyMonkey, Eventbrite etc., that underlying network may be mail, a social network or even a blog.

There are many others that exhibit network effects without exhibiting virality. Products with indirect network effects such as marketplaces may not grow virally. In such cases, network effects are a result of aggregation of the two sides and while each side can be brought on virally through some incentive, it’s very difficult to leverage the indirect network effect to get users on one side to come on through invitations or interactions from the other side.

 The following graphic shows a quick overview of how these products stack up and should help clarify the difference between virality and network effects.

virality versus network effects

What Causes Virality? 

Virality derives its name from the viral spread of infections. Platforms like Pinterest and TikTok grow virally, in a manner similar to the spread of infections through a population. Users ‘infect’ other users, while they themselves are ‘infected’ with the usage of a certain platform.

The design principles for unlocking internet virality lie in understanding contagion theory and the fundamental factors that lead to the spread of infections.

Virality Mechanics of Viral Infection Spread

Most viral acquisition is built around incentives. Users are incentivized either explicitly or implicitly (through product mechanics) to invite other users.

There are various forms of incentives that prompt users to invite other users based on the value that the user receives:

Network Value

Communication platforms (Skype) and platforms that are based on social connections (Facebook, LinkedIn) provide an incentive to connect with others through invites.

Turn-based games like DrawSomething allow users to invite friends because they get interesting opponents in the longer run but also get immediate gratification when the friend plays her turn.

Urgency

Groupon’s strategy to make the deal tip only after a minimum number of users buy it isn’t just about guaranteeing minimum footfalls to the merchant. In its early days, it was also about implicitly incentivizing users to get their friends over to make the deal tip. With time, of course, most deals started tipping, and there was less incentive for users to spread the word.

Interaction Value

Every platform has interactions and a currency for those interactions. By far, the most common way for platforms to incentivize virality is to provide users with more currency to engage in such interactions.

Groupon is a marketplace where the primary interaction is buying the deal. Groupon incentivizes users to invite friends by giving them the currency needed for these deals: Groupon credits.

PayPal offered $10 to every new person signing up. This, again, drove the invite acceptance rate very high and spurred its adoption.

In social games, players interact with other players using various equivalents of gaming power. These gaming networks typically incentivize users to invite others by providing them more gaming power to get better at those in-game interactions.

Single-Player Value

Platforms that work both in Single-Player mode, as well as Multiplayer mode, may give the user single-player incentives for inviting other users.

Dropbox incentivizes users to invite their friends by giving the user an extra 250MB of space for every accepted invitation. While the users also benefit from having friends on the service when they use it as a collaboration platform, the added incentive of extra space has helped drive virality.

Dropbox Virality

Mutual Value

Users hate spamming friends. It was all fine to begin with when only a few services required them to send out invites, but as every new service asks for an invite to be sent out, users get more discerning. Dropbox, again, has a brilliant way around this by incentivizing not only the user but also the invitee when he signs up.

Micro-Celeb Value and Social Proof

If a platform helps a user to be creative and prompts her to share her creations, there is an additional emotional incentive to get the word out about the platform. This psychology may seem obvious in the case of, say, YouTube, which really got big when users started creating and putting up their video and getting the word around. DrawSomething is another service that grew virally by making it easy for its users to get creative. Instagram allowed users to instantly produce cool pictures using a (thus far) crappy camera and distribute them. In all these cases, virality was baked into the value proposition of the service. There was no need for artificial incentives to be layered on top of this to promote virality.

Of course, platforms may use a combination of the above strategies. Dropbox uses a combination of Network Value, Single-Player Value and Mutual Value to incentivize users. Groupon uses a combination of Immediate Value, Interaction Value and, to some extent, Mutual Value.

Further reading: Incentives to create viral growth

One of the most common confusions: viral growth vs. network effect

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    How can I increase my virality?

    With a clear understanding of virality as mentioned above, it’s also important to better understand the factors that contribute to virality.

    We look at two key factors below that drive organic virality. 

    Incentives

    Sender incentives need to be aligned with the core interaction on the platform. The more closely this action is aligned with the core interaction on the platform, the more likely is the platform to succeed with crafting the right sender incentives for achieving viral adoption.

    A user uploading a video on YouTube is likely to be motivated by the potential for self-expression or self-promotion (or both) on that platform. The user benefits further by spreading the video on an external network, like Facebook.

    Project creators on Kickstarter want their projects to be seen by as wide an audience as possible. This encourages them to spread the project page on their personal social networks. 

    In a similar manner, survey creators on SurveyMonkey spread their surveys via email, blogs and social networks as this helps them get responses.

    Teachers who create courses on SkillShare spread the message about their courses on their social networks to sell these courses to their followers.  

    Aligning the content sharing act with the core interaction is the first key principle to building for viral adoption. 

    Further reading:

    Incentives to create viral growth

    Getting incentives wrong – Social spamming

    Zynga’s Fall And Facebook’s Evolution As A Viral Marketing Platform

    Inherent Virality  

    Word of mouth can work for any offering, irrespective of whether it is physical or digital, but viral adoption only occurs when the platform’s core value unit is inherently spreadable on an external network.  

    When the founders of Hotmail inserted: “P.S. I love you. Get your free email at Hotmail” at the bottom of every email generated on Hotmail, they were adopting a design choice that would be repeated across multiple viral platforms. Every email (core value unit) created on Hotmail would travel to users of other email providers and act as a demonstration of the free email value proposition that Hotmail championed.

    Viral videos from YouTube embedded in Facebook feeds have accounted for the success of viral videos like Psy’s Gangnam Style, the many Harlem Shake videos and the ALS Ice Bucket challenge, to name a few.  

    However, not all value units on all platforms are spreadable. A business exchange platform enabling exchange of proprietary documents may not have units that are spreadable. Users are unlikely to be interested in sharing confidential documents the way they would share photos on Instagram. 

    B2B Software-as-a-service applications often show low virality, especially when the core use case involves confidential information. Accounting and invoicing applications are unlikely candidates for viral growth.

    To unlock viral growth with such applications, we need to look for other spreadable units that are non-core to the actual use case but are likely to spread well. 

    Mint.com is one of the best examples of this strategy. Mint is a personal finance application that integrates users’ financial accounts and serves them relevant analytics. The core use case around personal finance involves confidential information which users are unlikely to share.

    To counter this, the company created an alternate spreadable unit. It gave early influencers special access to the app if they displayed a Mint “badge” on their blog or social media page. This helped Mint spread across the blogosphere with more than 500 blogs participating in the early days. 

    Many other companies like HubSpot and Kissmetrics have used other forms of content as spreadable units. HubSpot launched Twitter Grader, a diagnostic tool that generates reports of Twitter influencers. It measures influence based on follower counts, usage frequency, and level of follower engagement. These reports helped educate potential HubSpot customers on better using social media for business.

    Users would use Twitter Grader to calculate their influence scores. Twitter influencers started sharing people sharing their Twitter scores with their followers. This kick-started a viral cycle with users checking their Twitter influence and sharing it with others. This content served as a spreadable value unit even when the original use case of HubSpot didn’t afford such spread. 

    HubSpot and Mint.com present great examples of creating virality through complementary content when the core use case of your offering doesn’t involve viral spread. 

    Core value units remain the most important, yet least understood, element of designing for viral adoption.  

    Further reading: Inherent virality: How To Design Your Platform For Self- Expression

     

    How is virality measured?

    To measure virality, we need to measure two key factors: the viral coefficient and the viral cycle time. 

    What is the virality rate or viral coefficient? 

    Virality coefficient (or the virality rate) is the number of customers a single user converts and brings on board. A high value of the virality coefficient indicates one or more of (1) a high motivation of existing users to bring in other users, (2) a high likelihood of spread, or (3) a high conversion rate.

    To calculate the virality coefficient

    1. Identify the initial number of users, conversion rate to shares and number of shares by each user.
    2. Calculate the viral coefficient as in the infographic here.
    3. Determine the number of cycles required to reach the target user base.

    The virality coefficient is the product of the number of shares, propensity to spread, and the average conversion rate. Hence some important measures to improve vitality coefficient are:

    1. Number of shares by a user – This can be impacted by setting up the right incentives as mentioned earlier in this guide. Meaningful integrations with sharing platforms like Facebook, WhatsApp etc also have a positive impact on viral growth
    2. High conversion rate – A provocative call to action (CTA) on the share helps increase conversion rates.

    What is the viral cycle time?

    Viral cycle time is the duration it takes for an existing user to convert a new user. A shorter cycle time period allows an increased number of cycles within a particular time frame to further improve the impact on customer growth. 

    It is important to ensure that the number of steps between first exposure to shared content on an external network, and the start of a new cycle, is minimized. This ensures that users move from being recipients to initiators of a new cycle without much friction.

    Chain emails are the best example of content going viral because the effort required to start a new cycle is minimal. Of course, the ominous footnotes foretelling death and other mishaps on a user who does not spread the word, definitely help start new cycles at an alarming rate.  

    Sometimes, newly acquired users may start a new cycle instantly, as in the case of Instagram or WhatsApp. In other cases, users may need a few visits to the platform before they are nudged towards a new viral cycle.

    Deep-dive on virality

    “A startup is a company designed to grow fast… The only essential thing is growth. Everything else we associate with startups follows from growth.”

    Paul Graham 

     

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