The Causal Effects of Twitter Banter Among Rival Brands: The Case of a New Product Launch in the Fast-Food Industry
69 Pages Posted: 24 Aug 2022
Date Written: July 25, 2022
We quantify the causal effects of humorous banter among three rival fast-food brands on Twitter in the context of a new product launched by one of the rivals (viz, the focal or entrant brand). We argue that Twitter banter can cause a surge in online search that in turn leads to higher offline sales. We then exploit the exogeneity of the banter to show the event led to 400% and 54% increases in online search and store visits (respectively) for the focal brand, relative to the previous week. These effects vary with demographics, namely, race and culture. For the two incumbents who initiated the banter with the focal brand, the banter led to a 5.3% increase and a 2.9% decrease in visits to their store locations, respectively. Results also showed that (long-term) the launch increased the focal brand’s store visits by 30%. As a result, this study documents that social media can greatly affect launch sales and warns rival brands who wish to initiate humorous online banter as a form of comparative advertising. That is, initiating negative comparisons on Twitter, unlike in offline settings, could rapidly provide rivals not only free engagement but also higher sales.
Keywords: Causal Inference, Brand Banter, Twitter, New Product Launch, Regression Discontinuity in Time, Synthetic Difference-in-Differences, Fast-Food Industry
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