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

28 Pages Posted: 24 Oct 2012 Last revised: 10 Nov 2019

See all articles by Paulo Albuquerque

Paulo Albuquerque

INSEAD

Udi Chatow

Hewlett-Packard Laboratories, Palo Alto

Kay-Yut Chen

University of Texas at Arlington

Zainab Jamal

HP Labs

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

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.

Keywords: demand modeling, user-generated content, online marketing, two-sided markets

Suggested Citation

Albuquerque, Paulo and Chatow, Udi and Chen, Kay-Yut and Jamal, Zainab, Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content (2012). Marketing Science, Vol. 31, No. 3, 2012; pp. 406-432; DOI: 10.1287/mksc.1110.0685, Available at SSRN: https://ssrn.com/abstract=2160801

Paulo Albuquerque (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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

HP Labs ( email )

United States

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