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. However, viral marketing has been around for as long as people have been selling things. So, it is word-of-mouth marketing.

It relies on the average person’s tendency to “tell their friends”. The reference or terminology is the only thing that has changed. Surveys tell us that the average person has at least six close friends that they speak to fairly often. 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 backdrop for the most successful viral marketing business model.

Great marketers often remark that in order to sell anything in large numbers, you should consider giving away a free item. I recently downloaded a free e-book with great dieting tips. It made a lot of sense. It was designed by the head of a supplement company. He put forward the idea that you share the book with everyone you know. His goal, was to sell as many supplements as possible.

He could have sold the book. It contained as much information as many of the diet books out there, but he realized the importance of giving something to get something. 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 numerous software programs on the web that offer a free version and a “pro” 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 groups online are getting flooded with new members, reflecting how many people are choosing to spend extra time. People on MySpace literally have hundreds of "friends" and they talk to them quite often. If you can provide something that they want to share, then you may have a viral campaign waiting to happen.

There are other elements of a successful viral marketing business model. The key element is designing the free item campaign for something free that people can share with others.