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Network-based marketing: Identifying likely adopters via consumer networks
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| Venue: | Statistical Science |
| Citations: | 114 - 12 self |
BibTeX
@ARTICLE{Hill_network-basedmarketing:,
author = {Shawndra Hill and Foster Provost and Chris Volinsky},
title = {Network-based marketing: Identifying likely adopters via consumer networks},
journal = {Statistical Science},
year = {},
pages = {2006}
}
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Abstract
Abstract. Network-based marketing refers to a collection of marketing techniques that take advantage of links between consumers to increase sales. We concentrate on the consumer networks formed using direct interactions (e.g., communications) between consumers. We survey the diverse literature on such marketing with an emphasis on the statistical methods used and the data to which these methods have been applied. We also provide a discussion of challenges and opportunities for this burgeoning research topic. Our survey highlights a gap in the literature. Because of inadequate data, prior studies have not been able to provide direct, statistical support for the hypothesis that network linkage can directly affect product/service adoption. Using a new data set that represents the adoption of a new telecommunications service, we show very strong support for the hypothesis. Specifically, we show three main results: (1) “Network neighbors”—those consumers linked to a prior customer—adopt the service at a rate 3–5 times greater than baseline groups selected by the best practices of the firm’s marketing team. In addition, analyzing the network allows the firm to acquire new customers who otherwise would have fallen through the cracks, because they would not have been identified based on traditional attributes. (2) Statistical models, built with a very large amount of geographic, demographic and prior purchase data, are significantly and substantially improved by including network information. (3) More detailed network information allows the ranking of the network neighbors so as to permit the selection of small sets of individuals with very high probabilities of adoption. Key words and phrases: Viral marketing, word of mouth, targeted marketing, network analysis, classification, statistical relational learning. 1.
Keyphrases
consumer network network-based marketing identifying likely adopter network neighbor prior customer main result traditional attribute diverse literature detailed network information high probability small set network-based marketing refers new data set network information statistical support prior study new customer viral marketing firm marketing team statistical model product service adoption statistical method network linkage network analysis direct interaction research topic strong support new telecommunication service inadequate data key word statistical relational learning large amount prior purchase data baseline group
