Word-of-mouth marketing company House Party took a lot of ribbing over a cringe-inducing video that was filmed for the Microsoft Windows 7 parties last fall (including in CNBC.com's own "Pony" blog).
Source: House Party
But who's laughing now? House Party says it has had a successful year, with its 2009 revenue nearly tripling from the prior year, and its repeat business rate growing to more than 60 percent.
Kitty Kolding, CEO of House Party, expects the company is on a similar trajectory for 2010. Because its not a public company, House Party doesn't release official results.
What's more, representatives for clients such as Kraft's DiGiorno pizza and Ubisoft's Your Shape fitness videogame say their recent events have surpassed some of the goals they have laid out.
House Party's formula — having people throw parties for their friends in return for free stuff —seems fairly simple, but clients say the company's ability to identify party hosts and its experience at developing these parties are key to their success.
For each event, House Party canvasses its network of consumers who have volunteered to be hosts, as well as the fan base of its clients, to find the right mix of people to throw parties in their homes. Those hosts then invite their friends and family.
During the parties, the hosts act as advocates for the brand, demonstrating it and often passing along free samples, coupons and other goodies. The hosts document the party with photos and comments on House Party's Web site or on social media sites such as Facebook, all of which House Party tracks.
Last year, the company estimates House Party hosts entertained more than 1.3 million guests, generating about 120 million photos, blogs and other impressions, and more than 6 million hours of brand exposure and product trial.
And as for those Microsoft parties? They certainly built plenty of buzz. They also helped House Party expand its business outside the U.S.
This past weekend, as the New Orleans Saints and Indianapolis Colts advanced to the Super Bowl, about 5,000 homes were hosting parties for DiGiorno pizza.
According to DiGiorno Director of Marketing Tom Moe, more than 10,000 people tried to win a spot as a party host, which was a greater number than the company anticipated.
DiGiorno is the clear leader in the frozen pizza category, and it has strong brand awareness, but House Party allowed the company to "step it up" and "engage with the brand on a deeper level," Moe said.
Although this party was a first for the DiGiorno brand, it won't be the last. Another round of parties tied to "March Maddness" basketball games, is planned where consumers will sample a yet-to-be launched DiGiorno product, Moe said.
Moe expects to gather some experience from last weekend's event to finetune the bash they will be throwing in March. Meanwhile, the brand's getting some good buzz.
Take this example, a blog post from a mom who combined her DiGiorno party with her son's 10th birthday bash. Her comments about the party included pictures from event as well as a look at the goodie bags she made with the free stuff Kraft sent along for the party.
Kraft has used House Party to promote several of its brands, including Jello's Mousse Temptations, which were included in the party pack for UbiSoft's Your Shape party.
Your Shape, an exercise game for Nintendo's Wii that features Jenny McCarthy, wanted to build a community of game users and made that a goal of its House Party event, Ubisoft Brand Manager Trisha Greenberg said.
Source: Facebook
According to Greenberg, the party immediately helped the company to generate more Facebook fans, increasing by its fan base by about 15,000. (Recently, that number has climbed to more than 26,000.)
One of the things marketers like about the House Party concept is the length of time people wind up interacting with the brand during these events.
For example, when Kraft handed out samples of its DiGiorno flatbread melts on Michigan Avenue in Chicago, the event attracted a large turnout with some people standing in line for as many as 45 minutes to get a free sandwich. However, the recent DiGiorno pizza parties likely lasted for at least three hours, in the comfort of someone's home.
"That's the perfect social setting," Moe said.
The process also is more controlled than other types of word-of-mouth marketing.
For the Your Shape event, for example, the company identified women ages 18 to 55 years old who own Wii game consoles. That's a lot more targeted than it would have been able to do in another venue such as a demonstration at a shopping mall or at a fitness convention. All told the 7,500 parties Your Shape hosted reached about 80,000 people, Greenberg said.
"What we found was that when people tried it, they really understood it better," Greenberg said. "It's a video game. They are meant to be experienced."
Meanwhile, House Party buzz is building, which means the company is not having any trouble finding people who want to be hosts. Their database has more than doubled in the past 12 months, Kolding said.
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