Consumer Response to User Generated Content and Online Advertising
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The bursts and multiplicity of online user generated content and Internet advertising have posed new challenges to marketing managers. In order to design effective marketing campaigns and allocate advertising budgets wisely, we must understand the role of how consumers respond to user generated content and different advertising formats. I explore two specific questions in this domain in the present dissertation: imagery content in user generated content, and multichannel advertising in a competitive setting. The first part of the dissertation examines three effects of imagery content in a social media post on users’ liking and sharing behaviors. The results indicate a strong mere presence effect: the inclusion of an immediately viewable picture in a Tweet lifts the number of Likes and Retweets for the Tweet by 231% and 479% respectively. However, Tweets with linked pictures receive fewer Likes and Retweets than Tweets without any pictures. Moreover, we find that pictorial characteristics have disparate effects on liking and sharing: personal content increases liking while artistic and informational content increases sharing. Last, we find that picture-text congruency also matters: unexpected pictures increase both liking and sharing, while relevant pictures only increase liking but not sharing. These results will shed light on how to improve social media content strategies and foster reader engagement. The second part of this dissertation extends the multi-channel advertising attribution literature by developing an integrated individual-level choice model that considers consumers’ online visit and purchase decisions across all competitors within one industry. We specifically analyze the effects of multi-channel advertising on: (1) consumer choice of entry site, (2) consumer search decisions concerning the remaining websites that compete in the same industry, and (3) subsequent purchase at one of the searched websites. We quantify the impact of different digital advertising channels on consumers’ decisions at different purchase funnel stages based on an individual-level click stream data for the online air ticket booking industry. We find that information stock collected through all advertising channels contributes significantly to consumers’ visit and purchase decisions, among which search advertising is more effective in driving the choice of entry site while email advertising has a larger effect on visit decision concerning remaining websites and purchase decision. The own- and cross-marginal impacts of various ad channels on each firm vary widely across competitors, and this is true at all purchase funnel stages. We also show that neglecting competition may lead to underestimated advertising effects and worse predictions, by comparing the estimated advertising effectiveness and predictive performance of our proposed model with those of the common baseline model that only models consumers’ binary purchase decisions on a focal firm.