House Party Leverages On and Offline Strategy to Compete in Viral Marketing

2/16/12Follow @jpruth

Brand marketers often work themselves into a lather to generate buzz about their products on social networks, but tweets and “likes” may not be enough to drive sales. Social media company House Party in Irvington, NY, uses a different strategy that combines offline gatherings with online tools to get the word out to consumers. House Party matches people who host private parties with sponsors who provide products to reach potential customers on a personal level.

At first glance, one might think this is a rehash of the Tupperware party concept—and to some extent it is. However, House Party also measures the responses online to its sponsored parties, which gives marketers intelligence on how consumers are reacting to their products.

Chris Maher, CEO of House Party, says his company’s digital platform meshes with traditional word-of-mouth marketing—and that’s what differentiates it from other social media companies. Photos and videos taken at the parties are posted on House Party’s website, which helps stir online discussions about the brands via blog posts, Facebook, and Twitter. House Party also conducts surveys about the products to give the sponsors feedback from these potential customers. “We are a conversation and recommendation engine,” Maher says.

And that engine recently got more fuel to help it race ahead of other social media companies. In January, House Party raised $5.3 million in a Series C round led by Acadia Woods Partners. Maher says seven-year-old House Party has raised about $9 million in total funding so far. The latest infusion of cash will go towards bolstering the company’s sales and marketing, as well as the development of the online platform. Maher says he plans to expand the company’s staff of 60 with 10 new hires within the next eight months.

A promise of attracting partygoers is naturally not enough to satisfy sponsors. Maher says House Party uses social-media monitoring company Radian6 to measure the online buzz generated by the parties arranged on its website. House Party also conducts surveys before and after the parties for feedback on the attendees’ purchase intent and receptivity toward their products. “There is an amazing amount of digital activity with impressions and engagement happening,” Maher says. Users are encouraged to post on the House Party website photos, videos, and blog posts about their parties. “All that stuff gets loaded to our platform where the client [companies] can see all of that,” he says.

House Party works with such brands as Unilever, Kraft, Ford, Budweiser, and cable channel AMC. The sponsors supply boxes of merchandise and promotional material that the party hosts receive for free to use and share at their private events. At most of the parties, sponsors put products directly in consumers’ hands.

AMC is using House Party to promote the March season premiere of television series “Mad Men.” Each party host will get a package that includes posters and “Mad Men” branded party supplies to share with their guests. While fans of the show at the parties get some swag, AMC locks in product placement in the home courtesy of House Party. “We’re not just a public relations or sampling tool,” Maher says. “We’re a viable media channel for them.”

These sponsored parties may be promotional, but the hosts do not have to buy anything nor do they sell anything to their guests. Would-be party hosts must apply online at House Party’s website to receive sponsorship from the brands. The application process helps match  products with the appropriate audience so a party primarily for kids does not get drink coasters and discounts on Courvoisier cognac. Maher says the individual parties typically range from 12 to 16 people though some may top 20 attendees.

Each brand sponsor typically works with House Party on campaigns to provide goodies for about 5,000 parties taking place across country, though some have topped 10,000 parties. Maher says House Party has 800,000 members (who are both guests and hosts) registered on its website. “Those are some of your biggest brand advocates, influencers, social viral people,” he says. Based on the brands’ objectives, House Party will inform this community about the types of parties being sponsored.

The parties include diverse groups, Maher says, from people interested in video games and toys to young adults who want nothing more than to go to a gathering sponsored by a beer company. That said, a significant portion of the hosts are mothers. “Our sweet spot is [consumer packaged goods] with products that are geared towards middle-age, middle-income moms,” Maher says.

House Party generates revenue by collecting fees from the brands and marketers. “We’re selling them an integrated marketing campaign,” Maher says. At the high end —perhaps a campaign with 10,000 parties—brands pay as much as $1 million he says. “On average, $250,000 to $500,000 is what our clients spend,” he says.

As House Party grows, Maher says the company is cautious about working with some types of sponsors such as political parties in order to avoid controversy. “Though we’re not backing a candidate, we have to be sensitive with our community and how they respond to that,” he says.

House Party was co-founded in 2005 by Gene DeRose, who was founder and CEO of Jupiter Communications, and Parker Reilly, whose media marketing career includes positions at Polygram Records, Time Inc., and Viacom. Maher says Reilly and DeRose launched House Party to put a new spin on word-of-mouth marketing. “Big brands have known for decades that the most powerful form of advertising,” Maher says, “is getting a consumer to talk about a product to another consumer.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

By posting a comment, you agree to our terms and conditions.