Hotmail was the first internet company to benefit from so called ‘viral marketing’. The term was coined because the pattern of the spread of new Hotmail subscribers resembled nothing more strongly than the spread of an organic viral outbreak. Essentially, the news of Hotmail was spread by word of mouth, from person to person. Just as your business will grow with professionally designed business cards in the hands of your network of business contacts.

Hotmail’s subscribers grew from zero to over l2 million users in just under 18 months. A traditional print publication would hope to reach somewhere around a hundred thousand or so, within a few years of launch. Hotmail is now used in over 150 countries, despite the limitation that it is only available in English.

This rapid saturation of subscribers, means that Hotmail spread more quickly than any other company in history. With a modest advertising budget of just $50,000 Hotmail became the largest email provider in several countries where it had done no advertising whatsoever – India being the main example of this phenomenon.

A key element in viral marketing is that every subscriber who uses the product becomes a salesperson for the company and products. Essentially customers do the selling. In the case of Hotmail, a clickable link was placed at the end of every email message. This was an exceptionally clever psychological trick. Although the link is clearly shown as an advertisement, it carries with it an implied endorsement from a friend, the person sending the email.

The person receiving the Hotmail message knows two things, that the product works, and that their friend is satisfied with it and is a subscriber. Another important point is whether the person receiving the email wants to become part of this group, the group of friends using Hotmail.

Every Hotmail user has to sign up and complete a detailed demographic and psychological profile, which includes questions on occupation and salary. The completed applications provide an unprecedented supply of highly personal information.

It is not easy to persuade people to part with such intimate and private information. Applicants face a decision in deciding to share their private information with an online company – as yet, unknown. And the applicant may not be at all certain at this point whether the product is worth the effort involved. There are undoubtedly considerable difficulties in asking detailed personal questions of prospective subscribers. It is incredible that Hotmail overcame all of these difficulties, with highly limited funds. Their secret weapon? Viral marketing.

There are several books on viral marketing, so those entrepreneurs wishing to catch a dose of viral marketing, should make it their business to read up on the subject. Who knows, maybe it’s contagious?