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Richard Spalding is the MD and co-founder of Kontraband  - owner of the popular distraction site of the same name and viral marketing agency The 7th Chamber. The company's currently self-financing but has just appointed investment bank GP Bullhound to secure funding for an assault on the US.

We asked Richard about his plans for the future, and why viral is still an under-thought-of part of the marketing mix....

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What are the common elements that you see running through successful viral campaigns?

I think engagement. There are two campaigns that have been interesting recently but haven’t been funny or shocking.

One is Dove’s Campaign for Real Beauty. What is interesting about that is that they engaged you through quite a provocative statement – starting a debate about how people use cosmetics and Photoshop to create beauty – and it’s been written about quite a lot in the press. It’s done over 5m views now.

The other one was the Threshers 40%-off discount, which was an absolutely superb bit of marketing. What they did really well was to totally manipulate the press. All year, Threshers is 33% off, so it was only an extra 7%. Then they said it had got out of hand, and was only meant for friends and family, and that they had to put out a profit warning. Then they got more press at the end of the campaign about how successful it had been. They really worked the media and that won’t have cost anything.

When you show that to agencies they just don’t want to know. But it was massively successful. It didn’t engage anyone with the brand. It was just about cheap booze, and that Threshers is a place for cheap booze.

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When you speak to clients, do they still see viral marketing as a bit experimental?

Some of them do. Depending on who the client is, some see it as very experimental, and some see it is an important part of the marketing mix. People like Shell, when they want to do a global campaign, they will more often than not use viral as part of that.

The banks are starting to see it as an opportunity. It is becoming TV, radio, press, print – and the viral element. The barriers tend to be that they aren’t used to pushing many buttons when it comes to challenging work, and viral is very challenging. It has to be creative as it is a pull medium. It’s still challenging for clients to do. But they’re dipping their toe in; being quite cautious.

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What makes a successful viral campaign, in terms of numbers?

I had a meeting today with an agency’s media planning department, and they were asking the same thing. Being able to track a viral’s success and put it on a graph is good – planners love graphs.

We have found that once you get to the 1.5m view mark, you’ve hit the tipping point. Campaigns that we’ve run have been successful when they have got to that area between 1m and 1.5m views. Then they take on a life of their own and are suddenly at 4m or so within a few weeks.

People start talking about it and it starts being talked about in the press, and more people hear about it. Success generates success.

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Are you being asked for more detailed reporting?

We don’t find clients demanding enough, to be honest. There is so much data we can pull out; when we do, they tend to be a bit baffled by it.

Just putting a URL in a TV commercial is not enough to get people to go to a website, just as putting a URL in a viral isn’t enough. This is the only advertising channel where you can do branding, engagement, and you are one click away from purchase. In TV, you have to pick up a phone but on viral, you are one click away from acquisition.

Clients are becoming so much more driven by CPC and CPA, and that’s the best model for advertisers where you only pay marketing spend when someone buys. That’s the way advertising is going, even though Google won’t like it.

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Are you doing any CPA deals?

No. A CPA deal is for something like the Threshers campaign. Unless there is a real call to action that people are going to take, it’s media space that could go elsewhere. Viral is very good at branding and getting brands talked about, but I don’t think people are creating work that is challenging enough. It’s a shame, because it can be done.

Threshers could have done a viral and offered a 40% coupon for download, or allowed people to go straight through to the website to order. But people had to print it off and go down to their local store. There is that opportunity to start drawing people in, but clients are fearful of pushing things too far. It’s still an experimental medium, and the budgets reflect that.

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How are your charges structured and how accurately can you predict the potential success of campaigns?

We start at £6,000 and go up to £50,000 per campaign. At £6,000 we promise 60,000 views and anything above that is a bonus for them. It encourages clients to be more creative. We’re trying to break down barriers to entry, rather than doing a CPM or CPC rate, which I think would scare people off. It might mature into that ultimately.

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How does your distribution work, beyond posting content on the Kontraband site? Do you have a partner network?

We have about 100 sites that we work with, and we have various relationships with them, depending on the target market and the viral. Then we have bloggers who we work with and forum seeders. If it’s aimed at more of a niche audience then we have to go down the seeding and blogging route.

We seed out to between five and 20 sites on every viral we do. We basically pay them a fee, depending on what the budget is, and they can promote the viral on their site.

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Are there any tricks marketers running a viral campaign should be doing to prepare other channels and make the most out of the traffic?

Viral often sits out on its own, and I’m often not sure why it does. It should become more of an overall strategy; not just sitting out there, being funny. It’s still a bit rogue, with a lot of experimenting.

It’s changing slowly. Clients tend to put it in a little pile on its own in the corner. A lot of the traditional agencies struggle when it comes to doing a successful viral because they are so used to working in other formats, like press and posters. They would deny that, but there tend to be more specialist people in viral and they are slowly getting their heads round the thing.

I think one important thing is to have something to offer. There has to be an end-point. But I don’t think clients are building marketing strategies around virals – they are doing virals because agencies have talked them into doing something a bit wacky. They’re not backing it up with anything.

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How’s the site doing in terms of numbers, and have you any plans to expand internationally?

We’re doing about 10m uniques a month. We had 50% growth in traffic last year and a further 42% in the first three months of this year. It’s good. We’re just talking to some investors now about going global. We’ve a satellite office in the US but we want to open a proper office and offer much more targeted marketing towards our main demographic; young males.

We want to be the number one male distraction site in the world, and the number one viral marketing company in the world as well.

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How much traffic do you get from the US at the moment?

Between 50% and 60%. Europe is about 25%.

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