A Generalized Model of Advertising: Incorporating Electronic Word of Mouth into Advertising Model

摘要

Our paper develops a multi-channel multi-stage consumer demand model, and assesses and compares the response from advertising exposures of electronic word-of-mouth (eWOM) and traditional advertising vehicles. More specifically, we build a Hierarchical Bayes statistical model assessing the association between eWOM and consumer purchases, as well as the interaction between eWOM and traditional media at the individual consumer level. A multistage demand model incorporates product category, brand and quantity choices and accommodates variety-seeking demand characterized by purchases of multiple brands at a purchase occasion. We compare the distributions of eWOM and traditional media individual effects and discuss the multi-channel synergy versus cannibalization or "bad buzz". As a result, our model allows to assess the comparative effectiveness of social media marketing campaigns versus traditional ones, and provide insightful tools to improve consumer targeting and consumer community management on social media.