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

Author

Listed:
  • Paulo Albuquerque

    () (Simon Graduate School of Business, University of Rochester, Rochester, New York 14627)

  • 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)

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.

Suggested Citation

  • Paulo Albuquerque & Polykarpos Pavlidis & Udi Chatow & Kay-Yut Chen & Zainab Jamal, 2012. "Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content," Marketing Science, INFORMS, vol. 31(3), pages 406-432, May.
  • Handle: RePEc:inm:ormksc:v:31:y:2012:i:3:p:406-432
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    File URL: http://dx.doi.org/10.1287/mksc.1110.0685
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. repec:eee:joinma:v:27:y:2013:i:4:p:281-298 is not listed on IDEAS
    2. Dae-Yong Ahn & Jason A. Duan & Carl F. Mela, 2011. "An Equilibrium Model of User Generated Content," Working Papers 11-13, NET Institute, revised Dec 2011.
    3. Romain Gandia & Guy Parmentier, 2017. "Optimizing value creation and value capture with a digital multi-sided business model," Post-Print hal-01592885, HAL.
    4. repec:eee:ijrema:v:33:y:2016:i:3:p:639-655 is not listed on IDEAS
    5. Reto Hoffstetter & Harikesh Nair & Scott Shriver & Klaus Miller, 2009. "Social Ties and User Generated Content: Evidence from an Online Social Network," Working Papers 09-28, NET Institute, revised Nov 2009.
    6. Naroditskiy, Victor & Stein, Sebastian & Tonin, Mirco & Tran-Thanh, Long & Vlassopoulos, Michael & Jennings, Nicholas R., 2014. "Referral Incentives in Crowdfunding," IZA Discussion Papers 7995, Institute for the Study of Labor (IZA).
    7. repec:eee:joinma:v:38:y:2017:i:c:p:64-81 is not listed on IDEAS
    8. Leeflang, Peter S.H. & Verhoef, Peter C. & Dahlström, Peter & Freundt, Tjark, 2014. "Challenges and solutions for marketing in a digital era," European Management Journal, Elsevier, vol. 32(1), pages 1-12.

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