Measuring the Value of Electronic Word-of-Mouth and its Impact in Consumer Communities

Abstract

Marketing practitioners have recognized a need to measure customer-generated media in addition to the traditional marketing metrics. Message boards, chat rooms, blogs, and virtual brand communities have become important venues for customer generated media. These communities can be modeled as two distinct, albeit connected, networks: social and informational. These networks change over time under the influence of online word of mouth. This study introduces an adaptation of PageRank as a new metric for measuring the value a community assigns each word-of-mouth instance and the value the community assigns to the members that create them. That metric is used to empirically support a model explaining how highly valued information builds the social network. These communities are egalitarian in assigning value to informational content, without regard to the status of its source, and highly valued content explains 10% of social network growth.

Keywords: word-of-mouth, user generated media

JEL Classification: M31