Making a fortune with paperclips and pixels

In August 2005, I got an email from a guy named Kyle MacDonald. He wrote to tell me how much he’d enjoyed reading my article about the paperclip and asked me to check out his Web site, called One Red Paperclip.

About a month earlier, Kyle had launched a project in which his goal was to trade one red paperclip for something of slightly higher value, and then trade that thing for something even more valuable, and so on until he eventually owned a house, or a private island, or something else so valuable he was unlikely to go any further.

As most of the world has probably heard by now, Kyle did indeed succeed in going from a paperclip to a house as a result of just 14 trades over the course of one year. As each trade landed him a more valuable asset, his project attracted more media coverage, which in turn induced people to trade even bigger-ticket items and thereby share his publicity.

Yet another noteworthy news story from August 2005 was the launch of the Million Dollar Homepage. A fellow by the name of Alex Tew wanted to raise money to pay for his college education, and he decided to round the figure up to a nice even million dollars. He put up a Web page with 10,000 tiny squares—each square 10 pixels by 10 pixels—and sold advertising space in these squares at $1 per pixel (in 100-pixel blocks). One million pixels would, he hoped, generate one million dollars. Of course, you can’t put much of an ad in a 100-pixel square (though quite a few advertisers bought larger ads consisting of multiple contiguous blocks), but the idea was that no matter what you put in the space you’d bought, you’d get a great return on your investment, because the popularity of the site would lead to a great many clicks.

Alex’s bet paid off: the sheer audacity of his undertaking gave his site enormous publicity, and he ended up selling all the pixels on the page in just a few months—making just over $1 million, since the last thousand pixels were auctioned off for higher than the standard rate.

These two sites are good examples of viral marketing: roughly, the idea that something effectively advertises itself by word of mouth, spreading rapidly—like a virus—because people are so keen to pass on the information without any outside inducement. Viral marketing is nothing new; everything from razor blades to Tupperware has benefitted from word-of-mouth advertising.

Naturally, though, the Internet makes the process both easier and dramatically faster. Email, instant messaging, and blogs, not to mention social bookmarking sites such as and digg, media sites such as YouTube and flickr, and advertising venues such as craigslist and eBay, greatly facilitate the spread of these memes.

A Bold New Concept

Yet not every great idea catches on, and deliberate attempts to create viral marketing campaigns for a new product or service often fail. One reason for failure is that because any given idea has so much competition for attention, merely good isn’t good enough. An idea has to be good in a very particular way that captures people’s attention. Among the key components are novelty, boldness, and simplicity. People are attracted to things they’ve never seen before, especially if they’re over-the-top in some obvious way. And if someone can immediately grasp the essence of a new concept, it’ll have a much better chance at spreading.

My first thought when reading about One Red Paperclip and the Million Dollar Homepage was “Why didn’t I think of that?” Yes, the plans were silly and outrageous, but for that very reason, I also strongly suspected they’d succeed. People like silly and outrageous things; they tend to become news, which leads to more participation, which then leads to even more publicity, and eventually you reach a critical mass. A meme has been created, and as long as the scope of the project is reasonable, success is almost guaranteed. (I suspect that an attempt to trade up to ownership of a nation, or a Billion Dollar Homepage, would not have been successful.)

Steal This Idea

Needless to say, lots of other people also thought “Why didn’t I think of that?” and imitators quickly sprang up. They typically had a different twist—someone wants to start trading with a shoe, or end up with a car, or sell pixels in a different configuration or at a different price. But they all nevertheless were obvious knockoffs, and so far, none of them has been particularly successful. The simple reason: they weren’t new, so they weren’t news.

There’s no formula for creating a successful viral marketing campaign, and no reliable way to predict whether, when, or how well a new meme will spread. But certain things do seem to increase the likelihood of viral propagation. Besides novelty, boldness, and simplicity, I’ve noticed that most successful viral marketing memes revolve around sites with a sense of humor, entertaining products, or companies that don’t take themselves entirely seriously. It’s always easy to pass along something that’s funny. And in the case of commercial products, viral marketing virtually always requires that the product itself be genuinely useful and valuable; after all, negative memes spread even more quickly than positive ones.

Sometimes viral marketing leads to wealth for an individual or a company, sometimes it leads to more than 15 minutes of fame, and sometimes it leads only to notoriety. But it’s always an exciting ride for those involved. And it’s a great reminder that cleverness is often worth more than a large advertising budget.

Copyright © 2000, 2005, Ralph F. Wilson, E-Mail Marketing and Online Marketing editor, Web Marketing Today. All rights reserved. Permission granted to reprint this article on your website without alteration if you include this copyright statement and leave the hyperlinks live and in place.”

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