Skip to main content
×
Home
    • Aa
    • Aa

Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness

  • JOHN E. HOGAN (a1), KATHERINE N. LEMON (a2) and BARAK LIBAI (a3)
Abstract

In this article the authors demonstrate how a customer lifetime value approach can provide a better assessment of advertising effectiveness that takes into account postpurchase behaviors such as word-of-mouth. Although for many advertisers word-of-mouth is viewed as an alternative to advertising, the authors show that it is possible to quantify the way in which word-of-mouth often complements and extends the effects of advertising. The authors provide a simple approach to the measurement of postpurchase word-of-mouth sales effects and demonstrate how firms may be underestimating advertising effectiveness by ignoring such effects. Their approach illustrates how customer lifetime value models can provide an important tool to assess the long-term effects of advertising campaigns.

Copyright
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Ambler, Tim, C.B. Bhattacharya, Julie Edell, Kevin L. Keller, Katherine N. Lemon, and Vikas Mittal. “Relating Brand and Customer Perspectives on Marketing Management.” Journal of Service Research 5, 1 (2002): 1325.

Anderson, Eugene. “Customer Satisfaction and Word of Mouth.” Journal of Service Research 1, 1 (1998): 517.

Arndt, Johan. “The Role of Product Related Conversation in the Diffusion of a New Product.” Journal of Marketing Research 4, 3 (1967): 291295.

Berger, Paul D., and Nada I. Nasr. “Customer Lifetime Value: Marketing Models and Applications.” Journal of Interactive Marketing 12, 1 (1998): 1730.

Biyalogorsky, Eyal, Eitan Gerstner, and Barak Libai. “Customer Referral Management: Optimal Reward Programs.” Marketing Science 20, 1 (2001): 8295.

Buttle, F.A.Word-of-Mouth: Understanding and Managing Referral Marketing.” Journal of Strategic Marketing 6, 3 (1998): 241254.

Gallaugher, John M.Internet Commerce Strategies: Challenging the New Conventional Wisdom.” Communications of the Association for Computing Machinery 42, (July 1999): 2729.

Goldenberg, Jacob, Barak Libai, and Eitan Muller. “Talk of the Network: A Complex System Look at the Underlying Process of Word-of-Mouth.” Marketing Letters 12, 3 (2001): 209221.

Gupta, Sunil, Donald R. Lehmann, and Jennifer Ames Stuart. “Valuing Customers.” Journal of Marketing Research 41, 1 (2004): 718.

Herr, Paul M., Frank R. Kardes, and John Kim. “Effects of Word of Mouth and Product Attributes Information on Persuasion: An Accessibility—Diagnosticity Perspective.” Journal of Consumer Research 17, 4 (1991): 454462.

Hogan, John E., Donald R. Lehmann, Maria Merino, Rajendra K. Srivastava, and Peter C. Verhoef. “Linking Customer Assets to Financial Performance.” Journal of Service Research 5, 1 (2002): 2638.

Hogan, John E., Katherine N. Lemon, and Barak Libai. “What is the True Value of a Lost Customer?Journal of Service Research 5, 3 (2003): 196208.

Hogan, John E., Katherine N. Lemon, and Roland T. Rust. “Customer Equity Management: Charting New Directions for the Future of Marketing.” Journal of Service Research 5, 1 (2002): 412.

Jain, Dipak, and Siddhartha Singh. “Customer Lifetime Value Research in Marketing: A Review and Future Directions.” Journal of Interactive Marketing 16, 2 (2002): 3446.

Libai, Barak, Eyal Biyalogorsky, and Eitan Gerstner. “Setting Referral Fees in Affiliate Marketing.” Journal of Service Research 5, 4 (2003): 303315.

Monahan, George E.A Pure Birth Model of Optimal Advertising with Word-of-Mouth.” Marketing Science 3, 2 (1984): 169178.

Murray, Keith B.A Test of Services Marketing Theory: Consumer Information Acquisition Activities.” Journal of Marketing 55, 1 (1991): 1025.

Rust, Roland T., Katherine N. Lemon, and Valarie A. Zeithaml. “Return on Marketing: Using Customer Equity to Focus Marketing Strategy.” Journal of Marketing 68, 1 (2004): 109127.

Venkatesan, Rajkumar, and V. Kumar. “A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy.” Journal of Marketing 68, 4 (2004): 106125.

Zahay, Debra, James Peltier, Don E. Schultz, and Abbie Griffin. “The Role of Transactional Versus Relational Data in IMC Programs: Bringing Customer Data Together.” Journal of Advertising Research 44, 1 (2004): 318.

Zeithaml, Valarie A.Service Quality, Profitability and the Economic Worth of Customers: What We Know and What We Need to Learn.” Journal of the Academy of Marketing Science 28, 1 (2000): 6785.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Advertising Research
  • ISSN: 0021-8499
  • EISSN: 1740-1909
  • URL: /core/journals/journal-of-advertising-research
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 7
Total number of PDF views: 51 *
Loading metrics...

Abstract views

Total abstract views: 385 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 24th April 2017. This data will be updated every 24 hours.