Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content

Paulo Albuquerque, Polykarpos Pavlidis (), Udi Chatow (), Kay-Yut Chen () and Zainab Jamal ()
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Polykarpos Pavlidis: Simon Graduate School of Business, University of Rochester, Rochester, New York 14627
Udi Chatow: Hewlett-Packard Company, Palo Alto, California 94304
Kay-Yut Chen: Hewlett-Packard Company, Palo Alto, California 94304
Zainab Jamal: Hewlett-Packard Company, Palo Alto, California 94304

Marketing Science, 2012, vol. 31, issue 3, 406-432

Abstract: We measure the value of promotional activities and referrals by content creators to an online platform of user-generated content. To do so, we develop a modeling approach that explains individual-level choices of visiting the platform, creating, and purchasing content as a function of consumer characteristics and marketing activities, allowing for the possibility of interdependence of decisions within and across users. Empirically, we apply our model to Hewlett-Packard's (HP) print-on-demand service of user-created magazines, named MagCloud. We use two distinct data sets to show the applicability of our approach: an aggregate-level data set from Google Analytics, which is a widely available source of data to managers, and an individual-level data set from HP. Our results compare content creator activities, which include referrals and word-of-mouth efforts, with firm-based actions, such as price promotions and public relations. We show that price promotions have strong effects but are limited to the purchase decisions, whereas content creator referrals and public relations efforts have broader effects that impact all consumer decisions at the platform. We provide recommendations as to the level of a firm's investments when "free" promotional activities by content creators exist. These free marketing campaigns are likely to have a substantial presence in most online services of user-generated content.

Keywords: demand modeling; user-generated content; online marketing; two-sided markets (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (30)

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