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.

Not all people tell the truth, so it’s unlikely that everything you read on the web is going to be fact. To counter that, especially when in connection with something as ethereal as word of mouth information, listed here are a number of statistic’s and sources that you (if you so desire) can check for accuracy at your leisure.

1. Family and friend recommendations are more infuential when giving out word of mouth information (AdAge).

2. Traffic to a site that posts reviews will typically return to that site nine times, and are twice as likely to purchase from that website than others (source: McKinsey and Co.Jupiter Media Metrix).

3. Consumers trust close friends more than experts or even celebrity endorsements (65%, 27% and 8%, respectively; Yankelovich).

4. A Nielsen worldwide study of some 26,000 users in over 40 markets reported that consumer recommendations were the most credible form of word of mouth information advertising within the 70% plus of respondents.

5. The figure is enourmous, 116 million user generated content was made in the U.S. alone in 2008, with an additional 82 million content creators. With the extended reach and influence of Web 2.0 and social networking, these figures are sure to climb (source: eMarketer.com).

6. Social network users are three times more likely to purchase a product or service on the strength of a recommendation from an associate or friend rather than any other form of advertising. (the source: Jupiter Research).

7. 86% of people asked said they trust a friend’s recommendation over the experts, with 83% saying they trust user generated comments over a critic’s (Marketing Sherpa).

8. 66% of social networkers are more inclined to purchase due to a recommendation, compared to 52% that aren’t social networkers (Royal Mail home shipping tracker).

9. 81% of holiday shoppers read through user reviews prior to purchasing (Nielsen Online).

10. Consumers totaling 86% read reviews on businesses before buying, with over 90% saying that they trust those reviews (Kudzu.com).

11. 49% of shoppers stated that they have made many of their purchases based solely on the strength of consumer reviews. Of this total 53% bought on the strength of user reviews;48% by comparison charts;41% due to editorial reviews and comments;58% due to shared shopping lists.

12. Nearly two thirds (62%) of home-based consumers browsed on line user generated product reviews before making a purchase (Deloitte and Touche) with 62% stating that they would also browse sites with user reviews in order to make entertainment purchases (Marketing Sherpa).

13. 7 out of 10 people who read consumer generated news and reviews are highly likely to share those opinions, which amplifies the impact (Deloitte and Touche).

14. 74% of surveyed consumers state they base purchasing on user generated reviews of their customer rating for a product or company (Society of New Communication Research).

As you can see, word of mouth information coming from trusted sources such as friends, consumers, etc. is the most powerful form of advertising.

In today’s time, there are a variety of advertising options for entrepreneurs.If the marketing budget is unlimited, they can easily advertise through mass media, such as television, or radio.Internet advertising can be used if the budget is smaller.  However, in each case what will really win them over is not the advertising itself, but whether or not the offer can successfully acquire one power… the power of word of mouth.

So, how does an entrepreneur with a new company acquire the power of word of mouth, due to the fact that they will have received little puclicity?Well, first they need to examine similar companies that have had a high level of success with this strategy.Think about Avon, a brand that took word of mouth to a new hights.Using them, word of mouth marketing would be the main solution that would sell their products.Why? Simply Because they would employ it in such a way that their customers would actually become their salespeople.Avon decided to sell their product through a referral-based business opportunity, instead of hiring a staff of professional marketers and salespeople.When customers liked their products, the business could actually make more sales by selling the products to family and friends as well.

Of course, MLM is just one approach to releasing the power of word of mouth.If you have no interest to incorporate that type of business structure, you could simply promote word of mouth by giving your target market consumer free products.  If the product is decent, customers will be glad to promote your company on their own… just because they thought what you gave them was that worthwhile.

However, there are methods where you can force word of mouth marketing.For example, companies offering free laptops.So, if customers sign up for the service and refer others to do the same, they will receive a free laptop.You can use the very same concept for your own company, even for those who sell a service.

In fact, some businesses are incorporating this type of incentive marketing through their payment processing.Consider Trial Pay, one payment processor that does not accept cash, (like Paypal or Google Checkout).  Instead, the customer pays by signing up for a product or service from one of their affiliates.  You could actually be one of these affiliates to guarantee you’ll get sales, or you could offer TrialPay on your website.  If you do the latter, you will truly learn the power of word of mouth.  Why?  It’s because when people see your site, they will think of something that gives away free products.Granted, the products do have a cost.For marketing purposes, this type unique arrangement gives them the appearance of being at no-charge, which is essential for buzz marketing.

Endless referrals are possible for anyone with the advent of the Internet. Endless referrals mean for you that you have an exponentially growing business which is constantly making you more and more money while you do relatively little in order to get all that business.

There are essentially two methods of using the Internet to generate endless referrals: viral marketing and affiliate marketing. Viral marketing is essentially exclusive to the Internet. Affiliate marketing has been around for a long time, but is made easier and more powerful by the Internet.

Affiliate marketing might be difficult to make work for you if you are offering a product in a niche market. However, if you are offering a product or service that has broad appeal, such as teaching everyday people how to make serious money with minimal risk by investing in e-mini futures contracts on the stock market, then affiliate marketing will work wonders for you.

With affiliate marketing, some of your customers will turn into individuals who send business to you. Once you have great affiliate marketers, they send you most of your new business while you sit back and reap the benefits of the knowledge and training you gave out. They could be paying you a tiny amount of all the new revenues; or, you could set it up so that you pay them a huge commission for every sale they get for you, the balance is yours. So, for instance, every time they sell one of your products for you at $100, they get $40 and you keep $60.

The most important thing with affiliate marketing is that you make it possible for the affiliates to duplicate your own business model exactly, even if they are not the entrepreneurial kind by their nature. You want to have literally thousands of ?offices? open that all run like your original one. A way to get affiliates working for you is to set up the opportunity and list it as a link on your site when starting your business.

With viral marketing, you will use the power of social networking on the Internet. This will work if you sell to a niche or not, and may work better in a niche. Viral marketing works on the premise that associates of people who become your customers will listen to their recommendations and want to deal with you. This is an effective assumption.

Viral marketing operations by your making use of sites like Digg, Facebook, Twitter, Stumble Upon, Yahoo?s Buzz Up, and the ever growing array of other social bookmarking and networking sites to make yourself known in a relate-to-you oriented way rather than a sales and marketing way. People who understand your product offering and find it of interest will become a new customer. Then, they start blabbing to their friends about you, and send them to your website. After a time, your new sales (and repeat business) become effortless?for you are getting endless referrals.