Seeding Strategies for Viral Marketing: An Empirical Comparison

Oliver Hinz, Bernd Skiera, Christian Barrot, & Jan U. Becker
Journal of Marketing
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The future of classic mass media advertising is uncertain in today’s environment of increasingly prevalent digital video recorders, spam filters, and consumers’ simultaneous use of multiple media. Instead, consumers increasingly rely on advice from other people in their personal or professional network. Thus, companies have shifted their budgets from above-the-line (mass media) to below-the-line (e.g., promotions, direct mail, viral) marketing activities. Among those below-the-line activities, viral marketing, which describes the phenomenon that consumers mutually share and spread marketing-relevant information that was initially sent out by companies, is particularly promising. It is currently a hot topic in industry because it is purported to be inexpensive and consumers usually pay more attention to messages received from friends or related others.

One crucial decision of companies is which consumers to initially target with the viral message, because the quality of these seeding points is essential for the subsequent diffusion process. Social networks describe the connections among consumers, and sociometric measures enable researchers to summarize social positions of consumers. Consequently, using these sociometric measures for seeding viral marketing campaigns seems to be attractive.

One intuitively appealing approach is to target consumers who are well connected to other members of the social networks (“hubs”). However, these central consumers might receive too many messages and thus ignore messages from those who are not closely connected to them. Therefore, an alternative is to target less connected consumers in a social network, who have fewer but possibly more valuable connections. Unfortunately, previous researchers have derived conflicting recommendations and have not relied on empirical data to support their recommendations.

The authors first derive determinants of viral marketing success and then compare several seeding strategies in two complementary field experiments in an online social network as well as in one real-life viral marketing campaign with more than 200,000 customers. Their results show that the use of sociometric measures enables to increase the success of viral marketing campaigns substantially as good seeding strategies are eight times more successful than poor seeding strategies. Thus, companies are well advised to use sociometric measures to capture the positions of consumers in social networks and then use these metrics for selecting attractive seeding points for viral marketing campaigns.

The authors’ results underscore the attractiveness of well-connected consumers for viral marketing campaigns because they are more likely to react to viral marketing messages and to make use of their greater reach to spread the message. However, they are not more persuasive than others. The results also indicate that seeding to people who connect unconnected parts of the network (bridges) is approximately as attractive as seeding to hubs. However, the authors discover that data to identify these “bridging” customers are usually more difficult to obtain. Finally, their results show that some sociometric measures are fairly comparable across different specifications of social networks. This result indicates that companies can use easier-to-observe measures such as the number of friends in the overall network of Facebook even if their purpose is to target a smaller part of the network such as women between 30 and 40 years.

Biography
Oliver Hinz is chaired Professor of Information Systems, esp. Electronic Markets at the TU Darmstadt (Germany). His interests include electronic markets, diffusion and social contagion processes, interactive pricing, and social media. Professor Hinz worked several years as a consultant for business logic in the financial services industry before his academic career. He received his PhD from the Goethe-University of Frankfurt (Germany) in 2007. His dissertation was awarded various prizes, including the honorable Schmalenbach prize for young researchers in 2008. Dr. Hinz’s research has been published or is forthcoming in journals such as Journal of Marketing, MIS Quarterly, Information Systems Research, Journal of Management Information Systems, and Decision Support Systems.

Bernd Skiera is a chaired Professor of Electronic Commerce at the Faculty of Business and Economics at Goethe University Frankfurt, Germany and a member of the board of the E-Finance Lab at the House of Finance at University of Frankfurt. Before his academic career, he worked as a software developer for SAP. His research areas are online marketing, customer management, and pricing. He was a finalist for the Journal of Marketing’s 2008 MSI/H. Paul Root Award. His work has been published in, among others, Journal of Marketing, Journal of Marketing Research, Management Science, Marketing Science, Journal of Management Information Systems, Journal of Product Innovation Management, Journal of Service Research, and European Journal of Operational Research.

Christian Barrot is Assistant Professor of Marketing and Innovation at the Kühne Logistics University in Hamburg (Germany). He holds a PhD from the Christian-Albrechts-University at Kiel (Germany). Prior to joining academia, he gained industry experience as an entrepreneur and consultant in the online and telecommunication industry. His research areas are diffusion of innovations, social network analysis, electronic commerce, and customer relationship management. His research has been published in journals such as Journal of Marketing and International Journal of Electronic Commerce.

Jan U. Becker is Assistant Professor of Marketing and Service Management at the Kühne Logistics University in Hamburg (Germany). He holds a PhD from the Christian-Albrechts-University at Kiel (Germany). Prior to joining academia, he gained management and consulting experience in the telecommunication and media/entertainment industry. Professor Becker’s research focuses on customer relationship management, strategic marketing, and innovation research and service management. His research has been published in Journal of Marketing, International Journal of Research in Marketing, and Journal of Media Economics.

Journal of Marketing, Volume 75, Number 6, November 2011
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Oliver Hinz, Bernd Skiera, Christian Barrot, & Jan U. Becker
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