The viral marketing business model was first described by Tim Draper and popularized in 1997 to describe Hotmail’s practice of adding advertising to the outgoing mail of their users. Viral marketing had been around for ages. So, it is word-of-mouth marketing.

It is in the nature of a person’s tendency to “tell their friends”. It is really just the terminology that is new. Surveys tell us that the average individual online has at least six close friends they communicate with on a regular basis. If they have a good experience with a product or a service provider, they will tell those six people about it.

Those same surveys tell us that when an internet user finds something valuable, informative, funny, interesting or free on the internet, they will share that with 12 of their “online friends”. Thus the internet is the stage for most viral marketing business models that are successful.

We have also been told by the pros that in order to sell something, you need to give something away. I recently read a free e-book about dieting. It made perfect sense. It was written by the marketing department of a supplement manufacturer. He suggested that you share the book with all of your friends. His main motivation was to sell supplements.

He could have sold the book. It contained just as much information as some of the diet books out on the market, but he realized the value of giving something away, what he would get in return would be far greater. Not only do people love give aways, they have a tendency to put trust in people or companies that give them something of perceived value with no strings attached.

You will see countless software programs on the web that offer a free versions and a “ultimate” version. This is another example of a viral marketing business model. If a person sees any free software program, they usually share it with up to 12 people they know would like to try it as well.

Social networking is becoming increasingly popular. People on MySpace and Facebook literally have hundreds of online friends and they “share” things with them on a daily basis. If you can provide something that they want to share, then you may have struck it rich.

There are other elements of a successful viral marketing business model. Coming up with something free that allows individuals to share it with others is the most important.