With an estimated 533 million Internet users worldwide and a projected global Internet population of 945 million by the year 2004, to say that online advertising is irrelevant seems a tad impetuous.

But that's how many advertisers feel, a fact that is reflected in ailing Internet budgets and a reluctance to embrace new online models. Once bitten, twice shy it appears.

However, two companies, London-based Digital Media Communciations (DMC) and LA production company Whitespeed, are reaching consumers online through viral marketing.

"What's good about viral advertising is that it has been generating response," says DMC managing director Justin Kirby. "But if you can't quantify it, you're missing one of the great benefits that the Web offers."

Eight-year-old DMC has been tracking viral marketing since early 2001, working with clients, agencies and production companies to come up with viral video clips, which are embedded with code and strategically placed on select non-commercial Web sites (alpha sites). Each time the video clip is downloaded, a signal is sent to DMC from the server.

DMC helps produce an idea, or will simply distribute a finished product from an agency, as was the case with Microsoft's Xbox from BBH, London. The costs for viral marketing through DMC come in at around £20,000.

"One myth of the Internet is that if the content is good enough it will reach millions on the Web," Kirby says. While that may have been true a few years ago, he says, users are more discriminating. Thus, videos are placed on alpha sites where active downloaders (alpha mailers) go to find the next cool thing to pass along. "You have to think about the sender's experience as well as the receiver's. They're less likely to pass it along if they think everyone else has already seen it," he says.

Kirby says that this methodology provides a snapshot of what happens to the video clip once it's released, noting that for privacy reasons, DMC does not tap information from multiple-generation pass-alongs. "What we're trying to do is help clients determine whether their material is being spread virally or not."

This model was highly successful for Microsoft's promotion of the European launch of the Xbox. The slickly produced 51-second "Champagne" was placed on four alpha sites beginning January 31. Within four weeks DMC tracked over 200,000 views through viewer endorsement, representing 3,074 hours of pro-active advertising, a number that excludes views from Xbox's www.playmore.com. Beyond this, it is estimated that the clip was viewed over 500,000 times. "Though these figures do not tell you the total number of people exposed to our film, they do provide a quantified measure of exposure and an indication of widespread peer-to-peer endorsement that the campaign has had," says Harvey Eagle, European advertising manager of Xbox. (See Clientology, pg. 16)

Aside from quantifiable results, Kirby says another benefit of viral is economic: "This is an area where [agencies] can afford to do something without committing huge sums."

Whitespeed takes a "less is more" approach to online advertising, with equally beaming results. In less than a year, the five-person company counts Microsoft, Arista Records, Calvin Klein, Guess, Charles Schwab, Nestle, Nissan, GM and NBC among it's clients.

Founded by Susan White, former EVP marketing and advertising at Calvin Klein worldwide and former president of DKNY, Whitespeed is a streaming e-mail marketing technology that mirrors video with stills, special effects and Flash.

White first came up with the idea as an alternative to streaming online commercials, which she feels are still too technical: "Shoving video down a phone line doesn't work."

Instead, messages are sent as a link embedded in an e-mail, which automatically launches a browser when clicked. Whitespeed - the name of the company and their technology - can detect the recipient's e-mail capabilities and alter the delivery accordingly.

"We bring a bigger picture and the expertise of my marketing background. We try to help re-allocate their budgets so they get the most out of a campaign," says White.

"I think [clients] should be committing 10% of their advertising budget to the Internet," she adds.

White can create an ad from the ground up or will take an idea or existing spot and translate into e-mail form, pulling in outside companies when necessary. Costs range from $15,000 to $100,000 depending on the complexity and take an average of 10 days to two weeks to produce.

The success of the Whitespeed model has been remarkable, and the proof is in the numbers. When Arista Records approached Whitespeed to help them promote their Underground Army - a group of young people who promote Arista artists online - they had an existing database of 689 members. Within 10 days of the Whitespeed e-mail Arista had 800 new registrants. And from May to December 200, the database had grown to 8,000.

Similarly, a Babyface piece for Arista had a 62% pass-along rate and Microsoft enjoyed a 4% conversion for an e-mail advertising an expo they were having - an incredible rate by e-commerce standards.

So what does this all mean? Viral marketing is a viable advertising strategy bearing quantifiable results.

Webfiles:
DMC> http://www.dmc.co.uk
Whitespeed> http://www.whitespeed.com