This year’s INFORMS Marketing Science Conference paid lots of attention to social media and social networking. Quite a few sessions were devoted to the topic. Here I picked a few presentations with especial relevance to business practice and summarized them below.
1. Freemium model depends on users’ group membership and content contribution.
Presented by Gal Oestreicher-Singer from Tel Aviv University, this research analyzed a large dataset of 150,000 random existing users and a separate group of new subscribers of Last.fm. The authors wanted to find out under what conditions users are more likely to pay for premium services in a freemium model. Results suggest two main factors: (1) group membership and leadership: those functioning as leaders of Last.fm user groups are more likely to pay for a premium account. (2) Content contribution, in this case, posting of journal entries. Those who have written a journal entry on the site are more likely to pay up. The effects of these factors, the authors found, exceeded the traditionally accepted influence of content consumption and local network size. The authors also argue that the network position of the user within the community can also affect likelihood to pay. But this area is still being explored.
2. How To receive more incoming social links for your online shop?
In the social networking space for e-commerce, such as eBay, individual merchants can connect with other merchants by building links between their shops. Such incoming links can build traffic and increase business. So how can one increase the likelihood of being linked to? Andrew Stephen, who recently joined the faculty at INSEAD, reported findings from his dissertation research that answer this question. His research shows that reciprocity and assortment diversity are the two drivers of incoming links. In other words, merchants are more likely to have outgoing links to those who have incoming links to them, and they are more likely to link to those who have a large assortment of merchandise.
3. Celebrity, offensiveness, and honest labeling of content drive YouTube video success
I was especially excited about this presentation because it partially answers a burning question that has been on my mind for a while: “What makes some YouTube videos more successful than others?” The two presenters, Caroline Wiertz and Thorsten Hennig-Thurau from Cass Business School, City University, London, together with their co-author Michael Paul compared 100 top hit videos with 100 matching “flop” videos that were uploaded on the same day. They found three factors that have the biggest impact on the success of a video: offensiveness of the video content (i.e., controversy factor); featuring or association with a celebrity; and honest labeling of a video content’s via title, tags, and thumbnail. In a separate study, the three researchers tracked the number of views for 360 videos newly uploaded to YouTube over the course of a month. Their results suggest that the drivers of video views are different at different diffusion stages. In the beginning (the 1st day after posting), past channel success drives the number of views for the video. During the following days, however, existing # of views, volume and valence of user comments, and video description (via title, tags, and thumbnail) take over in predicting video popularity. In the final stage of their one-month tracking period, existing # of views and honest labeling become the most important driving factor. Their research findings offer clues to companies as to what to manage and pay attention to when doing viral marketing through YouTube.
4. Negative word-of-mouth effect accentuated by reviewer similarity and brand reputation
Ever wondered why bigger brands suffer huge backlashes from negative word-of-mouth? Debanjan Mitra from University of Florida addressed this question. By looking at book reviews from Amazon.com and Barnes & Noble websites and correlating them with sales rankings, he and his co-authors found that, besides the established finding of negative word-of-mouth having a larger effect on consumers than positive word-of-mouth, the similarity between reviewers and the audience further accentuate the effect. In other words, we are more affected by the negative opinions of people who are just like us. Furthermore, they found that the situation is even worse for higher-reputation brands (e.g., authors with higher ranking books). Apparently, the higher reputation your brand has, the more you have to lose and the more devastating negative word-of-mouth can be. In the authors’ presentation title, they labeled this effect as “the weakness of strong ties”.
What do you think? Do you agree with these marketing scientists findings and insights?