Is Oprah Contagious? Identifying Demand Spillovers in Online Networks

Abstract

We study the spread of exogenous demand shocks generated by book reviews featured on the Oprah Winfrey TV show and published in the New York Times through the online co-purchase recommendation network on Amazon.com. We leverage the co-purchase recommendation network on Amazon.com to determine how such exogenous events might affect the demand for books that were not explicitly mentioned in a review but are located “close” to reviewed books in a product network. Our results show that the demand shock diffuses to books that are up to three links away from the reviewed book. However, the magnitude of diffusion varies widely across books at the same network distance from reviewed products. We also describe how product characteristics, assortative mixing and network properties can explain this variation in the depth of contagion. We discuss the significance of these results and their implications for the design of networks of products as well as for optimizing digital marketing spillovers.

Keywords: ecommerce, product networks, networks

JEL Classification: L11, M15, M21