A new study out of the University of Utah’s David Eccles School of Business found that when it comes to driving sales, what consumers say online is more important than the number of comments. The study also found that traditional advertising is a stronger driver of sales earlier in a product’s life cycle, but online commentary becomes a more critical driver as the product matures in the market.

This study — the first of its kind — analyzed five major cell phone brands and the role that traditional advertising and online word of mouth (OWOM) had on sales and the overall affinity toward each brand. The study also examined two years’ worth of data, giving a much more in-depth analysis of consumer attitudes than any previous study.

“Prior to this study, there has been very little research around how content of online word of mouth affects product sales,” said Shyam Gopinath, the lead author of the study and a marketing professor at the David Eccles School of Business. “These findings give businesses the guidance they need to know where and how to allocate funds for advertising in both traditional and new media.”

Using a dynamic modeling framework, Gopinath and his colleagues analyzed both traditional advertising and OWOM content by category. For OWOM, the study examined whether or not the content focused on the attributes of, emotions toward and recommendations for the phone. For traditional advertising, the content broke down into attribute-focused and emotion-related content.

The researchers then investigated the relative importance of advertising and OWOM toward sales, specifically how paid ads influenced buyer behavior at different stages of a product life cycle, and the role traditional advertising played in generating OWOM content.

Key findings

• • Recommendation-related conversation is the only type of OWOM content that has a direct impact on sales, but content that focuses on product attributes and emotions impact sales indirectly by contributing to a higher likelihood for recommendations
• • Paid media (advertising) is a stronger driver of sales earlier in the product life cycle, but online word of mouth (OWOM) becomes the critical driver as the product matures in the market.
• • Attribute-focused OWOM drives online consumer recommendations when the product is new. However, emotion-focused OWOM becomes more important in generating online consumer recommendations in the later stages of the product life cycle.

“While we’re just scratching the surface in this area, businesses can greatly benefit from the OWOM dimensions investigated in this research,” said Gopinath. “Understanding what consumers respond to and what builds their trust in brands gives businesses much-needed data to connect with their intended audiences.”

The paper, titled “Investigating the Relationship Between the Content of Online Word of Mouth, Advertising, and Brand Performance,” was published in the current issue of Marketing Science and can be read online at pubsonline.informs.org.

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