Is Oprah Contagious? Identifying Demand Spillovers in Product Networks
AbstractWe study the online contagion of exogenous demand shocks generated by book reviews featured on the Oprah Winfrey TV show and published in the New York Times, through the co-purchase recommendation network on Amazon.com. These exogenous events may ripple through and affect the demand for a “network” of related books that were not explicitly mentioned in a review but were located “close” to reviewed books in this network. Using a difference-in-differences matched-sample approach, we identify the extent of the variations caused by the visibility of the online network and distinguish this effect from variation caused by hidden product complementarities. Our results show that the demand shock diffuses to books that are up to five links away from the reviewed book, and that this diffused shock persists for a substantial number of days, although the depth and the magnitude of diffusion varies widely across books at the same network distance from the focal product. We then analyze how product characteristics, assortative mixing and local network structure, play a role in explaining this variation in the depth and persistence of the contagion. Specifically, more clustered local networks “trap” the diffused demand shocks and cause it to be more intense and of a greater duration but restrict the distance of its spread, while less clustered networks lead to wider contagion of a lower magnitude and duration. Our results provide new evidence of the interplay between a firm’s online and offline media strategies and we contribute methods for modeling and analyzing contagion in networks.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 10-18.
Length: 32 pages
Date of creation: Sep 2010
Date of revision:
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Web page: http://www.NETinst.org/
networks; product networks; electronic commerce; ecommerce; recommender systems; identification; exogenous shocks;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
- M15 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - IT Management
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-16 (All new papers)
- NEP-CUL-2010-10-16 (Cultural Economics)
- NEP-MKT-2010-10-16 (Marketing)
- NEP-NET-2010-10-16 (Network Economics)
- NEP-SOC-2010-10-16 (Social Norms & Social Capital)
- NEP-URE-2010-10-16 (Urban & Real Estate Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- The impact of Oprah's book club
by Economic Logician in Economic Logic on 2010-11-10 16:26:00
- Are Oprahâ??s Product Approvals Contagious?
by Miguel in Simoleon Sense on 2010-11-11 16:07:43
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