Advertising and Word-of-Mouth Effects on Pre-launch Consumer Interest and Initial Sales of Experience Products

This study examines how consumers' interest in a new experience product develops as a result of advertising and word-of-mouth activities during the pre-launch period. The empirical settings are the U.S. motion picture and video game industries. The focal variables include weekly ad spend, blog volume, online search volume during pre-launch periods, opening-week sales, and product characteristics. We treat pre-launch search volume of keywords as a measure of pre-launch consumer interest in the related product. To identify probable persistent effects among the pre-launch time-series variables, we apply a vector autoregressive modeling approach. We find that blog postings have permanent, trend-setting effects on pre-launch consumer interest in a new product, while advertising has only temporary effects. In the U.S. motion picture industry, the four-week cumulative elasticity of pre-launch consumer interest is 0.187 to advertising and 0.635 to blog postings. In the U.S. video game industry, the elasticities are 0.093 and 1.306, respectively. We also find long-run co-evolution between blog and search volume, which suggests that consumers' interest in the upcoming product cannot grow without bounds for a given level of blog volume

Marketing and Data Science: Together the Future is Ours

The synergistic use of computer science and marketing science techniques offers the best avenue for knowledge development and improved applications. A broad area of complementarity between the typical focus in statistics and computer science and that in marketing offers great potential. The former fields tend to focus on pattern recognition, control and prediction. Many marketing analyses embrace these directions, but also contribute by modeling structure and exploring causal relationships. Marketing has successfully combined foci from management science with foci from psychology and economics. These fields complement each other because they enable a broad spectrum of scientific approaches. Combined, they provide both understanding and practical solutions to important and relevant managerial marketing problems, and marketing science is already very successful at obtaining unique insights from big data

Impact of acquisition channels on customer equity, The

Customer equity (CE henceforth) is a powerful new paradigm to evaluate the firm's value and to optimally allocate marketing resources. This paper is focused on the relationship between customer acquisition and CE. The authors attempt to answer the following four questions: 1) how should customer acquisition channels be categorized to make them meaningful to managers and academics?; 2) how do we measure the effects of different acquisition channels on the firm's performance?; 3) how do we disentangle short-run effect and long-run effects?, and 4) how should the manager allocate a limited budget among the acquisition channels so as to maximize customer equity? The authors first propose a way of categorizing customer acquisition channels according to their level of contact and intrusiveness. A vector-autoregressive (VAR) model is used to examine the dynamics of acquisition channels and the firm's performance, and an empirical illustration on a surviving Internet company is provided. The results show that each cohort (i.e., customers from different acquisition channels) has different short-run and long-run effects on the firm's performance by the subsequent login and purchasing behavior. Building on previous research on optimal resource allocation, the authors develop a Marketing Decision Support System (MDSS) to help managers allocate the acquisition budget among different channels with the objective of maximizing customer equity. The consequences of naively maximizing the short-term profit and not accounting for differences in the margin contribution of different cohorts are illustrated.customer equity; customer acquisition; VAR; long-run modeling;

The Direct and Indirect Effects of Advertising Spending on Firm Value

Marketing decision makers are increasingly aware of the importance of shareholder value maximization, which calls for an evaluation of the long-term effects of their actions on product-market response and investor response. However, the marketing literature to date has focused on the sales or profit response of marketing actions, and the goals of marketing have traditionally been formulated from a customer perspective. Recently, there have been a few studies of the long-term investor response to marketing actions. The current research investigates one important aspect of this impact, the long-term relationship between advertising spending and market capitalization. The authors hypothesize that advertising can have a direct effect on valuation (i.e., an effect beyond its indirect effect through sales revenue and profit response). The empirical results across two industries provide support for the hypothesis that advertising spending has a positive, long-term impact on own firms\u27 market capitalization and may have a negative impact on the valuation of a competitor of comparable size. The authors quantify the magnitude of this investor response effect for and discuss its implications for further research

Marketing Strategy and Wall Street: Nailing Down Marketing's Impact

marketing¿finance interface, firm financial value, brand value, efficient markets, brand equit

Effects of word-of-mouth versus traditional marketing: findings from an internet social networking site

The authors study the effect of word-of-mouth (WOM) marketing on member growth at an Internet social networking site and compare it with traditional marketing vehicles. Because social network sites record the electronic invitations from existing members, outbound WOM can be precisely tracked. Along with traditional marketing, WOM can then be linked to the number of new members subsequently joining the site (sign-ups). Because of the endogeneity among WOM, new sign-ups, and traditional marketing activity, the authors employ a vector autoregression (VAR) modeling approach. Estimates from the VAR model show that WOM referrals have substantially longer carryover effects than traditional marketing actions and produce substantially higher response elasticises. Based on revenue from advertising impressions served to a new member, the monetary value of a WOM referral can be calculated; this yields an upper-bound estimate for the financial incentives the firm might offer to stimulate WOM.pre-prin