{"id":1417,"date":"2015-10-04T23:56:07","date_gmt":"2015-10-05T03:56:07","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/bzzagent-an-effective-management-of-network-effects\/"},"modified":"2015-10-04T23:56:29","modified_gmt":"2015-10-05T03:56:29","slug":"bzzagent-an-effective-management-of-network-effects","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/bzzagent-an-effective-management-of-network-effects\/","title":{"rendered":"BzzAgent: An Effective Management of Network Effects"},"content":{"rendered":"

Two-Sided Platform<\/strong><\/p>\n

How to attract customers\u2019 attention in a word already so saturated with advertising? BzzAgent, Inc.\u2019s approach is to revert to the most primal form of advertising \u2013 recommendations from trusted friends. The company is monetizing on this idea by creating and carefully managing network effects within a two-sided platform.<\/p>\n

BzzAgent is a Boston-based fast-growing word-of-mouth marketing firm that aims to increase the effectiveness of marketing campaigns by employing everyday people to promote their clients\u2019 products. BzzAgent is a pioneer of the word-of-mouth (WOM) marketing strategies that are built around the premise that consumers are significantly more likely to purchase products recommended by their friends or acquaintances in a casual conversation rather than those seen in a TV commercial or an internet advertisement. In fact, according to the data presented by the company, \u201c71% of interviewed people said that a friend\u2019s recommendation would make them more comfortable with a brand, while only 15% said the same thing of seeing an advertisement.\u201d<\/p>\n

The players in BzzAgent\u2019s two sided platform are: i) top class corporations and ii) regular customers who get a chance to try out products and are encouraged to share their honest feedback. BzzAgent\u2019s list of top-class corporations includes Nestle, Kraft, Tropicana, CVS, Philips or Logitech. There are several aspects of value creation for these large corporations. First of all, it is a cost-effective method for gathering customer feedback, as BzzAgents are not hired employees and are not compensated for their time. Second, the campaign allows to reach thousands of self-identified early adopters who enthusiastically spread the word about products they test to their networks. Additionally, reports submitted by agents on a regular basis, offer a real-time feedback to corporations. Finally, in a world accustomed and increasingly indifferent to media advertising, a personalized approach of BzzAgent stands out.<\/p>\n

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Interested in Becoming a BzzAgent?<\/strong><\/p>\n

What is more interesting is what value BzzAgent creates for its network of Agents. These people are not paid, yet they sign up in hundreds each month and are putting their time and personal networks to work for the obvious benefit of large corporations. First of all, joining the BzzAgent\u2019s network is quick \u2013 interested individuals sign up to become a BzzAgent and create their profile. New client assignments are posted on BzzAgent\u2019s homepage and all eligible Agents can sign up as long as a cap on the number of Agents per campaign has not yet been reached. The immediate visible value stems from receiving product samples. Doesn\u2019t it feel like receiving a birthday gift? Additionally, every time when a product is being promoted, an agent can fill out a report that will earn them reward points. These points can be used to purchase products on BzzAgent\u2019s Homepage. Yet, reports indicate that only a small portion of BzzAgents claim their rewards points. The key here is that Agents are looking for non-material rewards such as recognition, the feeling of being a trend setter, or a venue for expressing their opinion.<\/p>\n

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What is BzzAgent\u2019s Secret Sauce?<\/strong><\/p>\n

Understanding and tapping into the above mentioned needs of one side of the platform is a part of the secret sauce here. Based on the BzzAgent\u2019s case, let\u2019s summarize some of the best practices for harnessing network effects in a two-sided platform.<\/p>\n