Does online word of mouth increase demand? (and how?) evidence from a natural experiment

Stephan Seiler, Song Yao, Wenbo Wang

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

We leverage a temporary block of the Chinese microblogging platform Sina Weibo due to political events to estimate the causal effect of online word-of-mouth content on product demand in the context of TV show viewership. Based on this source of exogenous variation, we estimate an elasticity of TV show ratings (market share in terms of viewership) with respect to the number of relevant comments (commentswere disabled during the block) of 0.016. We find that more postshow microblogging activity increases demand, whereas comments posted prior to the show airing do not affect viewership. These patterns are inconsistent with informative or persuasive effects and suggest complementarity between TV consumption and anticipated postshow microblogging activity.

Original languageEnglish (US)
Pages (from-to)838-861
Number of pages24
JournalMarketing Science
Volume36
Issue number6
DOIs
StatePublished - Nov 1 2017

Bibliographical note

Funding Information:
Funding: This research was partially funded by the Hong Kong Research Grants Council Early Career Scheme [Grant 699213], Hong Kong University of Science and Technology Institute for Emerging Market Studies [Research Grant 16BM07], and the McManus Research Grant from the Kellogg School of Management, Northwestern University.

Funding Information:
This research was partially funded by the Hong Kong Research Grants Council Early Career Scheme [Grant 699213], Hong Kong University of Science and Technology Institute for Emerging Market Studies [Research Grant 16BM07], and the McManus Research Grant from the Kellogg School of Management, Northwestern University.

Publisher Copyright:
© 2017, INFORMS.

Keywords

  • Advertising
  • Microblogging
  • Natural experiment
  • Social media
  • Word of mouth

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