Virality, Network Effects and Advertising Effectiveness

Catherine Tucker

No 11-06, Working Papers from NET Institute

Abstract: Many video ads are designed to go viral, so that the total number of views they receive depends on customers sharing the ads with their friends. This paper explores the relationship between achieving this endogenous reach and the effectiveness of the ad at persuading a consumer to purchase or adopt a favorable attitude towards a product. The analysis combines data on the real-life virality of 400 video ads, and crowd-sourced measurement of advertising effectiveness among 24,000 consumers. We measure effectiveness by randomly exposing half of these consumers to a video ad and half to a similar placebo video ad, and then surveying their attitudes towards the focal product. Relative ad persuasiveness drops on average by 10\% for every one million views the ad had received. Taking into account the advantages of increased reach, this means that there was a decline in overall advertising effectiveness at 3-4 million views. Importantly, ads that generated both views \emph{and} online engagement in the form of comments did not suffer from the same negative relationship. We show that such ads retained their efficacy because they achieved virality due to humor or visual appeal rather than because they were provocative or outrageous.

Keywords: Social Networks; Video; Online Advertising (search for similar items in EconPapers)
JEL-codes: M37 M38 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-10
New Economics Papers: this item is included in nep-mkt, nep-net and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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