What is The Network Effect?

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Understanding the Network Effect is almost critical to the life of a marketer focusing on long tail / edge-centric models.

Here is a live example of the effect in progress.

Yesterday I wrote a somewhat controversial post on this blog. Here is the traffic that resulted:

Just to be sure, yes, it’s all traffic for one post (seen below)

The thing is — almost all of these people have never visited Green & White before. So how did they hear about the blog? Why did they choose to come?

The evidence is here:

Notice all of the gmail, yahoo, and lums squirrelmail accounts.

So what does this example have to do with marketing?

Doesn’t controversy sell? Ok seriously.

Everyone who read the post proabably forwarded it to their friends and their friends and their friends.

If this was a product, I would just have to market this to one person — and the news would spread across the social networks to where people will be diving over each other to buy the product.

Provided ofcourse, that the product is actually valuable. Scratch that .. that the story around the product is valuable.

So, the product is a blog post, but maybe the story in these emails was “This raving madman is shunning lums — all students: organize yourself in groups to march out and burn buildings until he stops because we will be destroyed unless we defend our university”

That’s a good story, and it certainly drove people here in hordes with pitchforks and silver stakes.

A good actual physical product can do the same thing: A good product will automatically create a good story around it that people would want to

  • explore for themselves to make their own opinions about
  • give them an incentive to participate in the story of the product (by either sharing with others, or refining it for themselves)

Did anyone hear about or use this software Napster? Did you know they only ever marketed that product to 50 people?

They called up 50 students in 50 fraternities in 50 universities in America. “Hey man, there’s a cool new software which lets you share music files with your buddies”. That was their total marketing cost.

How many users did they have when the illegal version was shut down — 5M? 50M?

So now you know what a network effect is — the challenge: How to make one for something not controversial.

Facebook comments:


  • also it might help if the target persons were willing to share this and had the technology and resources (this includes time) to do that. as in the above case all the comments probably came from people who had access to internet and had time to write a comment.

    a good example is in these days if you want some thing to spread among teenagers and young people try floating out an SMS and you will be amazed at how far it goes. off course it has to be interesting to that age group.

  • True, controversy sells. Both of these examples LUMs and Napster were kindda able to create that tide. But how does the network effect work, if you have to sell something very ordinary. How does the word of mouth support something very ordinary like a toothpaste. There a million toothpaste brands, each offer probably the same ingredients and features as the other. Ok some might create a difference by calling them toothwhiteners or toothpaste for smokers. Yet everyone knows its pretty much the same product. How does the network effect apply here. Can you quote examples of ordinary products following cheap marketing strategies like, word of mouth.

  • Asim,

    Good question, and there are a number of great examples.

    I will highlight a local success story of viral marketing: Captain Safeguard.

    What could be more commoditized than soap? Yet, Safeguard has been able to create a compelling niche.

    Now, every time a child goes to his school friend and talks about Captain Safeguard, that is marketing that Safeguard isnt paying for.

    If you look at the Safeguard campaign between October and December of 2006 you will basically be able to see the network effect in action — take a look at their “Safeguard Army” numbers.

  • yes. Safeguard has done a wonderful job. Even I used to watch that animated show. Now that is innovative marketing. my personal opinion, safeguard should be on your kudos list. The campaign was amazingly successful.

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