January 30, 2007
More research on viral marketing - and supporting the limited role of "influentials"(Posted by francois to: Consumer generated media | marketing | word of mouth )
Right on the heels of learning that the influentials may in fact not be all that influential in causing trends and other social "epidemics", here comes more research (pdf) confirming the limited role of the influentials and heeding marketers that some viral marketing techniques could easily backfire on them.
Jure Leskoved from Carnegie Mellon, Lada Adamic from the University of Michigan and Bernardo Huberman from HP Labs collaborated on this research project where they looked at the dynamics of viral marketing.
Here are some of their findings:
- We find that most recommendation chains do not grow very large, often terminating with the initial purchase of a product.
- Marketers should take heed that providing excessive incentives for customers to recommend
- product purchases are not far from usual 80-20 rule (the top twenty percent of the products account for 20 percent of the sales), with the top 20% of the products contributing to about half the sales
- individuals' likelihood of purchasing a product initially increases as they receive additional recommendations for it, but a saturation point is quickly reached. Interestingly, as more recommendations are sent between the same two individuals, the likelihood that they will be heeded decreases
- Marketers should take heed that providing excessive incentives for customers to recommend products could backfire by weakening the credibility of the very same links they are trying to take advantage of.
- ...we find that the probability of purchasing a product increases with the number of recommendations received, but quickly saturates to a constant and relatively low probability. This means individuals are often impervious to the recommendations of their friends, and resist buying items that they do not want.
- we find that there are limits to how influential high degree nodes are in the recommendation network. As a person sends out more and more recommendations past a certain number for a product, the success per recommendation declines. This would seem to indicate that individuals have influence over a few of their friends, but not everybody they know.
- Finally, we presented a model which shows that smaller and more tightly knit groups tend to be more conducive to viral marketing.
This paper also exposes the potential long term negative effects of commercializing relationships on the value of personal recommendations and word of mouth in general - a practice used aggressively by some well known marketers.
Posted by francois at January 30, 2007 06:50 AM | Bookmark This
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I think we have to avoid a bi-modal 'all or nothing' model in terms of influencing. Influence mechanisms are well studied in social sciences. They tend to follow a non-linear pattern (excuse my language) where small screw-ups have the potential of destroying a lot of influence-capital that you may have accumulated. In my research in organizations, influence mechanisms in internal social networks matter a lot, and I have explained this in my book 'Viral Change: the alternative to slow, painful and unsucessful management of change in organizations' These internal influence-nodes have little to do with established hierarchy for example. Once the internal epidemic ( new ideas, new fashion, new changes...) has started, it spreads via those influence nodes AND also ( here Watts supposedly new findings for example) any other mortal via imitation and diffusion. It is more complex than the rather standard, simplistic model often associated with viral marketing - Leandro Herrero
Posted by: Leandro Herrero at January 30, 2007 08:17 AM
Leonardo - I could not agree with you more. It is much more complex than the latest WOM fad would lead you to believe.
Posted by: francois gossieaux at February 2, 2007 10:18 AM
Leandro's comment reminds me of my own experiences driving change at large corporations. In contrast to many of my colleagues, I have long believed that concentrating on influencing social networks is the key to effecting lasting change, rather than the more traditional combination of top-down leadership, communication & training espoused by most change consultants.
In fact I enjoyed his comment so much I went out and bought his book. Having read through the first chapter this evening, it looks like the perfect antidote to much of the out-of-date thinking on change that sit on my consultant's library.
Take a look at some of Ralph Stacey's work on Organisational Dynamics for more of the same.
Independent Management Consultant
Posted by: GrahamHill at February 9, 2007 02:26 PM