Blogs, like traditional advertising, can help predict product sales

Sep 16, 2009

(PhysOrg.com) -- While traditional advertising is still the main driver of product sales, blogging and other new media are fast becoming predictors of market outcomes, say University of Michigan researchers.

In a new study, "Marketing Activity, Blogging and Sales," Puneet Manchanda and Hiroshi Onishi of Michigan's Ross School of Business looked at the interaction of mainstream television advertising, consumer-generated media such as blogs and the sales of new products.

They found that while advertisers may have no direct control over the content of blogs, advertising can affect blogging indirectly by providing new content for bloggers—and, therefore, increasing an advertiser's bottom line.

"Our results suggest that blogs can be a good predictor of market outcomes and managers would do well to consider including them in sales forecasting models," said Manchanda, professor of marketing at the Ross School. "By understanding the specific relationship between traditional and new media, managers can allocate resources much better to traditional media as they can exploit the multiplier effect of traditional media on new media."

Specifically, their research shows that blogging and TV advertising act as complements, especially pre-launch. TV advertising amplifies consumer participation via blogging activity and consequent readership. That leads to increased buzz about a new product even before it hits the market.

According to Manchanda and Onishi, a 1 percent increase in the volume of traditional TV marketing leads to a median increase in market outcomes of 0.21 percent, with a majority of the gain coming from the increased blogging generated by pre-launch advertising.

Once the product is available, however, consumers may rely less on traditional media, leading to a much weaker relationship between new and old media at that point, they say.

"We find that pre-launch advertising leads to a positive significant increase in the number of blogs, but interestingly, this pattern changes post-launch," said Onishi, a Ross doctoral student. "As more and more consumers are able to sample a product, it is likely that bloggers are unaffected by traditional advertising as they can rely on their own user experience or the experiences of close others."

In their study, Manchanda and Onishi analyzed data from three different product markets in Japan: green tea drinks, movies and cellular phones. In all three product markets, they found that the volume of blogs is positively correlated with market outcomes.

"The two media—new and traditional—act synergistically," Manchanda said. "When the number of cumulative blogs is relatively large, the effect of the can become positive overall via this interaction.

"From a managerial perspective, this interaction is crucial as managers have no direct control over consumer-generated media. However, if there is a relationship between traditional media, which is under managerial control, and new media, which is not, then managers can better manage resource allocation."

Provided by University of Michigan (news : web)

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

add to favorites email to friend print save as pdf

Related Stories

Digital disruption dire for traditional advertising

Nov 08, 2007

The advertising industry is facing more upheaval in the next five years than in the previous half century, according to a new report. “The End of Advertising as We Know It" from IBM Global Business Services shows more-empowered ...

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 0

More news stories

Poll: Big Bang a big question for most Americans

Few Americans question that smoking causes cancer. But they have more skepticism than confidence in global warming, the age of the Earth and evolution and have the most trouble believing a Big Bang created the universe 13.8 ...

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...

Finnish inventor rethinks design of the axe

(Phys.org) —Finnish inventor Heikki Kärnä is the man behind the Vipukirves Leveraxe, which is a precision tool for splitting firewood. He designed the tool to make the job easier and more efficient, with ...

Making graphene in your kitchen

Graphene has been touted as a wonder material—the world's thinnest substance, but super-strong. Now scientists say it is so easy to make you could produce some in your kitchen.