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

52 Pages Posted: 20 Jan 2010 Last revised: 27 Oct 2012

See all articles by Paulo Albuquerque

Paulo Albuquerque

INSEAD

Polykarpos Pavlidis

Nielsen Marketing Analytics

Udi Chatow

Hewlett-Packard Laboratories, Palo Alto

Kay-Yut Chen

University of Texas at Arlington

Zainab Jamal

affiliation not provided to SSRN

Kok-Wei Koh

Hewlett-Packard Laboratories, Palo Alto

Andrew Fitzhugh

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: January 19, 2010

Abstract

We develop a modeling approach to explain demand for an online platform of user-generated content, and measure the impact of marketing activities on decisions to visit the platform and on decisions to create and buy content. The model explains individual-level choices as a function of consumer characteristics and marketing activities, allowing for interdependence of decisions within and across users. We apply our model to the 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 and an individual-level data set from HP. Our results compare four types of marketing activities: price promotions, firm online activities, content creator referrals, and public relations efforts. We show that price promotions have strong effects on purchases, while content creator referrals and public relations have significant effects on all user decisions. We provide recommendations to the level of the firm's investments and quantify the benefits of “free” promotional activities from content creators. According to our findings, marketing actions from content creators generate about half of the business of MagCloud. This “free” marketing campaigns are likely to have a substantial presence in most online services of user-generated content.

Keywords: Demand Modeling, User-Generated Content, Two-Sided Markets

JEL Classification: C30, C15, M31

Suggested Citation

Albuquerque, Paulo and Pavlidis, Polykarpos and Chatow, Udi and Chen, Kay-Yut and Jamal, Zainab and Koh, Kok-Wei and Fitzhugh, Andrew, Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content (January 19, 2010). Simon School Working Paper No. FR 10-08. Available at SSRN: https://ssrn.com/abstract=1538887 or http://dx.doi.org/10.2139/ssrn.1538887

Paulo Albuquerque (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Polykarpos Pavlidis

Nielsen Marketing Analytics ( email )

1603 Orrington Av.
Evanston, IL 60202
United States
5855034460 (Phone)

Udi Chatow

Hewlett-Packard Laboratories, Palo Alto ( email )

1501 Page Mill Road
Palo Alto, CA 94301
United States

Kay-Yut Chen

University of Texas at Arlington ( email )

Arlington, TX
United States

Zainab Jamal

affiliation not provided to SSRN ( email )

Kok-Wei Koh

Hewlett-Packard Laboratories, Palo Alto ( email )

1501 Page Mill Road
Palo Alto, CA 94301
United States

Andrew Fitzhugh

affiliation not provided to SSRN

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