The Gift of Gab: Evidence TelE-Commerce Firms Can Profit from Viral Marketing

Abstract

Viral or buzz marketing takes advantage of communication linkages to propagate positive influence regarding a product or service. TelE-commerce is an ideal domain within which to study viral marketing, because communication linkages can be observed. In this paper, we follow a new telE-commerce service. In particular, we observe how the communication networks of existing customers influence the rate of product diffusion. The main contribution of this paper is evidence that consumers are more likely to purchase a service if they have previously spoken to a person who has the service. In addition, we offer the following three contributions: 1) the clarification that this need not be evidence of viral influence, we suggest different explanations; 2) we also describe the relation of these explanations to theories of purchasing behavior; and 3) we present some evidence to discern from among the explanations.