Viral marketing is a form of peer-to-peer communication in which individuals are encouraged to pass on promotional messages within their social networks. Conventional wisdom holds that the viral marketing process is both random and unmanageable. In this paper, we deconstruct the process and investigate the formation of the activated digital network as distinct from the underlying social network. We then consider the impact of the social structure of digital networks (random, scale free, and small world) and of the transmission behavior of individuals on campaign performance. Specifically, we identify alternative social network models to understand the mediating effects of the social structures of these models on viral marketing campaigns. Next, we analyse an actual viral marketing campaign and use the empirical data to develop and validate a computer simulation model for viral marketing. Finally, we conduct a number of simulation experiments to predict the spread of a viral message within different types of social network structures under different assumptions and scenarios. Our findings confirm that the social structure of digital networks play a critical role in the spread of a viral message. Managers seeking to optimize campaign performance should give consideration to these findings before designing and implementing viral marketing campaigns. We also demonstrate how a simulation model is used to quantify the impact of campaign management inputs and how these learnings can support managerial decision making.

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