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Despite the popular use of social media by consumers and marketers, empirical research investigating their economic values still lags. In this study, we integrate qualitative user-marketer interaction content data from a fan page brand community on Facebook and consumer transactions data to assemble a unique data set at the individual consumer level. We then quantify the impact of community contents from consumers (user-generated content, i.e., UGC) and marketers (marketer-generated content, i.e., MGC) on consumers' apparel purchase expenditures. A content analysis method was used to construct measures to capture the informative and persuasive nature of UGC and MGC while distinguishing between directed and undirected communication modes in the brand community. In our empirical analysis, we exploit differences across consumers' fan page joining decision and across timing differences in fan page joining dates for our model estimation and identification strategies. Importantly, we also control for potential self-selection biases and relevant factors such as pricing, promotion, social network attributes, consumer demographics, and unobserved heterogeneity. Our findings show that engagement in social media brand communities leads to a positive increase in purchase expenditures. Additional examinations of UGC and MGC impacts show evidence of social media contents affecting consumer purchase behavior through embedded information and persuasion. We also uncover the different roles played by UGC and MGC, which vary by the type of directed or undirected communication modes by consumers and the marketer. Specifically, the elasticities of demand with respect to UGC information richness are 0.006 (directed communication) and 3.140 (undirected communication), whereas those for MGC information richness are insignificant. Moreover, the UGC valence elasticity of demand is 0.180 (undirected communication), whereas that for MGC valence is 0.004 (directed communication). Overall, UGC exhibits a stronger impact than MGC on consumer purchase behavior. Our findings provide various implications for academic research and practice.

This article focuses on whether banner advertising affects purchasing patterns on the Internet. Using a behavioral database that consists of customer purchases at a Web site along with individual advertising exposure, the authors measure the impact of banner advertising on current customers' probabilities of repurchase, while accounting for duration dependence. The authors model the probability of a current customer making a purchase in any given week (since the last purchase) with a survival model that uses a flexible, piecewise exponential hazard function. The advertising covariates are purely advertising variables and advertising/individual browsing variables. The model is cast in a hierarchical Bayesian framework, which enables the authors to obtain individual advertising response parameters. The results show that the number of exposures, number of Web sites, and number of pages all have a positive effect on repeat purchase probabilities, whereas the number of unique creatives has a negative effect. Returns from targeting are the highest for the number of advertising exposures. The findings also add to the general advertising literature by showing that advertising affects the purchase behavior of current (versus new) customers.

We investigate the role of potential weekly brand-specific characteristics that influence consumer choices, but are unobserved or unmeasurable by the researcher. We use an empirical approach, based on the estimation methods used for standard random coefficients logit models, to account for the presence of such unobserved attributes. Using household scanner panel data, we find evidence that ignoring such time-varying latent (to the researcher) characteristics can lead to two types of problems. First, consistent with previous literature, we find that these unobserved characteristics may lead to biased estimates of the mean price response parameters. This argument is based on a form of price endogeneity. If marketing managers set prices based on consumer willingness to pay, then the observed prices will likely be correlated with the latent (to the researcher) brand characteristics. We resolve this problem by using an instrumental variables procedure. Our findings suggest that simply ignoring these attributes may also lead to larger estimates of the variance in the heterogeneity distribution of preferences and price sensitivities across households. This could overstate the benefits from marketing activities such as household-level targeting. We resolve the problem by using weekly brand intercepts, embedded in a random coefficients brand choice model, to control for weekly brand-specific characteristics, while accounting for household heterogeneity. Overall, our results extend the finding on the endogeneity bias from the mean of the heterogeneity distribution (i.e., the price effect) to include the variance of that distribution.brand choice, choice models, econometric models, targeting, endogeneity, instrumental variables

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We use multiple dependent variables (e.g., attitude toward advergames, attitude toward brand, and purchase intention) to evaluate the effectiveness of advergames. Based on work from human-computer interaction research and the transportation theory, we propose two-way interaction effects of interactivity, fit, and expectancy on attitudes toward advergame, and also their main effects on attitude toward brand. A positive mediating relationship from attitude toward advergame to attitude toward brand, and to purchase intention is also hypothesized. We conducted a 2*2*2 factorial design experiment in an online 3D virtual world environment to test our hypotheses. The results show that, in the high fit condition, both high interactivity and low expectancy lead to a more favorable attitude toward advergames. However, in the low interactivity condition, low expectancy generates a more positive attitude toward advergames. Interactivity and attitude toward advergames have significant positive effects on attitude toward brand, which, in turn, positively impacts purchase intention.

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