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Does Your Product Have Buzz? Tap into an Online Newsgroup

Thanks to online newsgroups, the term "word of mouth" has new meaning—and new possibilities for learning from the market. HBS assistant professor David Godes teamed with Dina Mayzlin of Yale’s School of Management to research online buzz and write an HBS working paper about it.

Harvard Business School Working Knowldege

Want the Latest Buzz on Your Product? Listen in on an Online Newsgroup

Word of mouth undoubtedly impacts sales, but it’s difficult to quantify. To better understand the word of mouth phenomenon, David Godes and Dina Mayzlin turned their magnifying glass on thousands of online conversations about TV shows on Usenet discussion forums. In this e-mail interview with HBS Working Knowledge senior editor Martha Lagace, they describe their discoveries.

Lagace: What intrigued you most about word of mouth communication, making you decide to study it more deeply?
These conversations are essentially public and therefore easy to access at a low cost.
— Dina Mayzlin

Godes: On one hand, we noticed that more and more people were talking about word of mouth. Particularly with the rise of online communities, there seemed to be a lot of interest. There were a slew of new popular press books on the topic, Wall Street Journal articles, etc. Yet, we had a very strong sense that the general phenomenon of word of mouth was something that was not at all well understood. In particular, in comparing it to other, more "traditional" media—broadcasting, print, etc.—there was no consensus about how one should measure it. In fact, we could find very few attempts to do so.

Mayzlin: We felt that if companies were really interested in tracking, understanding, and doing something about word of mouth, then they had to be able to measure it first.

Q: Why did you decide to study word of mouth by looking at online newsgroups about TV shows? What were some advantages and disadvantages to that specific focus?

Mayzlin: It’s important to point out that our theory about how to measure word of mouth is separate and distinct from the way we test it. That is, we believe that our measurement approach for word of mouth is equally applicable to offline as it is to online communications. Now, why did we choose online newsgroups? Mainly because these conversations are essentially public and therefore easy to access at a low cost. This was important for us, but more important for companies implementing our measures. We wanted to show that they would work with data that companies could get quite easily themselves.

Godes: We chose TV shows as a context for a couple of reasons. First, it’s a category that people tend to talk about so we felt pretty confident that we’d have enough data to work with. Also, this too offered us free data. The weekly Nielsen ratings are published in Broadcasting & Cable magazine so this was easy to get. Of course, the challenge is to show that the method works in other categories as well and we’re working on this.

Q: How do you both think about volume and about dispersion across online communities?

Mayzlin: Think about it this way: Imagine you were at Starbucks and you tried some new vanilla apple latte or something, a drink they just began offering. And, it turned out that you liked it and you told your roommate about it. Imagine also that Starbucks magically knew about this conversation. The question is whether they should take this as an indication that the product’s sales will grow. One problem with this is that your roommate might already know about it and in fact may have already tried it. This is particularly likely if you and your roommate have similar habits. For example, you might take the same route to work and walk by the same Starbucks. Just measuring the "volume" of conversations about a product—how many times people talk about the new latte—might not capture the whole story.
David Godes
David Godes

Godes: This is where the dispersion measure comes in. We really want to get a sense for how many "new" people hear about the product. So, we created a measure that essentially tells us whether all of these conversations are happening between the same people—and therefore possibly reflecting past purchases more than predicting future ones—or whether they’re resulting in new people hearing about the product for the first time.

Q: Did anything surprise you as you began to delve into your word of mouth research?

Mayzlin: We were surprised to find that the volume of conversations did not really impact the future ratings of TV shows, whereas early on the dispersion measure did significantly impact future ratings.

Q: What might our business readers find most useful about this research?

Godes: Word of mouth can and should be measured just as all of the other key metrics of a company’s success are typically measured. Just because it is a difficult phenomenon to get one’s hands around doesn’t mean that it should be thought of as purely "qualitative." We think that our method for measuring it—in particular, our approach to the consideration and measurement of dispersion—will be very helpful to companies in this regard.

Mayzlin: Managers should also, we hope, find it interesting that these online communities might offer such a rich source of data about interpersonal communications.

Q: What are you working on next?

Godes: We’re working hard to improve the approach that we’ve taken in this paper in a few ways. First, we’re considering other measures beyond just volume and dispersion. For example, does the length of the conversation offer us any information? Also, we’re hoping to apply the method to more real-world contexts and are thus actively seeking companies interested in this type of research. We’re hoping to extend it into different purchase contexts and product/service categories. We’re confident that the general approach is quite flexible but are interested in understanding the nuances that these different contexts present.

· · · ·

David Godes is an assistant professor at Harvard Business School.

Dina Mayzlin is an assistant professor in the School of Management, Yale University.

http://hbswk.hbs.edu/pubitem.jhtml?id=3188&sid=0&pid=0&t=marketing

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