Project Details
Projekt
The Influence of Digital Social Media and Customers' Usage Frequency of Digital Media Products on the Marketing of these Products via Platforms; first funding period: The Influence of Social Networks on the Sequential Marketing of Short-Lifecycle Hedonic Media Products
Applicant
Professor Dr. Sönke Albers
Subject Area
Accounting and Finance
Term
from 2014 to 2023
Project identifier
Deutsche Forschungsgemeinschaft (DFG) - Project number 163849297
In the first funding period, we estimated the effect size of marketing activities on the sales of hedonic media products (HMP) in digital social media (DSM). Given the sequential marketing of HMP across different distribution channels we developed an optimization model which allows for analyzing the effectiveness of the different marketing activities. In more detail, we investigated the timing of the sequential distribution, the price differentiation across channels, the word-of-mouth and its carryover and spillover effects. A comparison of various methods of controlling for endogeneity for the price elasticity of books revealed that it is sufficient to regress a rather complete set of quality indicators on sales with the help of OLS. The resulting price elasticity was small across different methods and data sets. For the advertising and WOM elasticities we find plausible values of about 0.1 in accordance with previous meta-analyses where one can additionally benefit in the long-run from carryover effects for which we provided a comprehensive meta-analysis. To derive the optimal marketing-mix for the HMP across the sequential channels, we developed a model which is designed in a modular way and offers closed-form solutions for single marketing activities. Based on a calibration with realistic values from meta-analyses and industry reports we find for the book market that the price differentiation is the most critical while the timing across channels contrary to the literature leads to corner solutions.However, digital HMP are increasingly marketed via platforms such as Netflix (movies), Spotify (music), and Skoobe (books) that offer large assortments for streaming as flat fee subscriptions. Records of customer usage behavior on these platforms (datafication) allows these platforms to compensate music labels and artists in turn proportional to the streaming of their songs. This leads to similar sequential distribution strategy questions as in the first funding period. In particular, we need to analyze whether music labels or artists should rather start to sell their physical CDs or downloads of songs exclusively for a while or whether they should offer their songs on Spotify either at the same time, delayed or never. However, in contrast to the current funding period the question extends to whether the offering via these platforms is profitable at all.To investigate these research questions we need information on the preference functions of consumers elicited either from surveys, market data, or experiments. In addition, the usage compensation will entail fiercer competition among artists. Self-marketing via digital social media (DSM) becomes thus more attractive. Consequently, we want to analyze the effectiveness of the alternative activities and the importance of them for optimization. These new research questions build on the results of the first funding period but focus now on the usage aspect of HMP.
DFG Programme
Research Units
Co-Investigators
Professor Dr. Michel Clement; Professor Dr. Thorsten Hennig-Thurau
