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The economics of viral distribution

March 10th, 2009

I had a meeting this morning with Ed Baker, CEO of Demigo, and viral expert par excellence. He made an important observation: your viral factor is a sum over all your distribution channels. Why is this observation so important?

First, adding channels is basically a linear cost. There is a certain overhead to learning how to use Facebook Connect. Within Facebook, there are certain costs for figuring out how to integrate with each of the internal channels they provide (e.g., newsfeed, profile, notification, invites, etc.). Individually, these channels boost your marketing potential but perhaps not enough individually to achieve viral lift off. And after facebook, you can also add channels by distributing on other networks like open social, twitter, AIM, etc.

Second, when the sum of these channels creates a viral factor greater than 1.0, you will grow *exponentially*. When you have this happy occurrence, you will reach millions of people in a matter of weeks or less. So, his recommendation for SocialFeet.com is to keep at it. Don’t be discouraged if you aren’t viral on the first go around. Prioritize and optimize viral channels. Keep working on it, because those linear costs may in the end create an engine for repeatable viral growth.

Linear costs, exponential revenues. That sounds like the kinda business I want a piece of! :)

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