Excellent post by Eric Kintz at HP:
#1 – Viral marketing does not spread well. In epidemics, high connectors are very critical nodes of the network and allow the virus to spread. In recommendations networks, a few very large cascades exist but most recommendation chains terminate after just a few steps.#2 – The probability of viral infection decreases with repeated interaction. Providing excessive incentives for customers to recommend actually weakens the credibility of those links. The probability of purchasing a product increases with the number of recommendations received, but quickly saturates to a constant and relatively low probability.
#3 – Viral effectiveness varies depending on price and category. Social context has a high influence on the potency of viral infection. Technical or religious books for example had more successful recommendations than general interest topics. Smaller and more tightly knit groups tend to be more conducive to viral marketing.