Marketing Spillovers of Location-Based Mobile Services

46 Pages Posted: 16 Mar 2015

See all articles by Zhuping Liu

Zhuping Liu

Baruch College, City University of New York

Jason A. Duan

University of Texas at Austin

Frenkel Ter Hofstede

University of Texas at Austin - Red McCombs School of Business

Date Written: September 1, 2014

Abstract

This paper studies the increasingly prevalent check-in phenomenon on location-based service platforms. We examine the range of spatial correlation among check-ins of restaurants and bars on Foursquare, a location-based mobile service, and empirically test the promotion effect on venues’ check-ins. Our model, built on an inhomogeneous Poisson process, employs an instrumental variable approach to correct for the potential bias induced by a dummy endogenous promotion variable. The model can be used to study a broad array of problems based on spatio-temporal count data from social media. We find significant spatial correlations among neighboring venues’ check-ins. Our estimation results indicate strong spillover effects: venues’ promotions not only significantly increase their own check-ins but also benefit their neighboring venues. More interestingly, the spillover effects between restaurants and bars are asymmetric: Bars’ promotions benefit neighboring restaurants while restaurants’ promotions do not benefit neighboring bars. These results have implications for marketers who are using or considering using location-based service platforms like Foursquare, Facebook, and Yelp.

Keywords: Marketing Spillover, Location-Based, Mobile Marketing, Spatial Models

JEL Classification: M31

Suggested Citation

Liu, Zhuping and Duan, Jason A. and Ter Hofstede, Frenkel, Marketing Spillovers of Location-Based Mobile Services (September 1, 2014). Available at SSRN: https://ssrn.com/abstract=2578335 or http://dx.doi.org/10.2139/ssrn.2578335

Zhuping Liu (Contact Author)

Baruch College, City University of New York ( email )

New York, NY 10010
United States

Jason A. Duan

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

Frenkel Ter Hofstede

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

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