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Does Online Word of Mouth Increase Demand? (And How?) Evidence from a Natural Experiment

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  • Stephan Seiler

    (Stanford University, Stanford, California 94305)

  • Song Yao

    (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)

  • Wenbo Wang

    (Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong)

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 (comments were 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.

Suggested Citation

  • Stephan Seiler & Song Yao & Wenbo Wang, 2017. "Does Online Word of Mouth Increase Demand? (And How?) Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 36(6), pages 838-861, November.
    • Handle: RePEc:inm:ormksc:v:36:y:2017:i:6:p:838-861
    DOI: 10.1287/mksc.2017.1045
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    3. Ishita Chakraborty & Joyee Deb & Aniko Oery, 2020. "When Do Consumers Talk?," Cowles Foundation Discussion Papers 2254R, Cowles Foundation for Research in Economics, Yale University, revised Mar 2021.
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    15. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.
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    17. Ishita Chakraborty & Joyee Deb & Aniko Oery, 2020. "When Do Consumers Talk?," Cowles Foundation Discussion Papers 2254R3, Cowles Foundation for Research in Economics, Yale University, revised Feb 2023.
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