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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

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

    Keywords

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

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