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- 17 Jun 2013
- Research & Ideas
Advertising Symbiosis: The Key to Viral Videos
Creating an online ad that goes viral requires more than mere entertainment. Thales S. Teixeira discusses the key to creating megahit marketing through "advertising symbiosis." Closed for comment; 0 Comments.
- 10 Jun 2013
- Research & Ideas
How Numbers Talk to People
In their new book Keeping Up with the Quants, Thomas H. Davenport and Jinho Kim offer tools to sharpen quantitative analysis and make better decisions. Read our excerpt. Open for comment; 0 Comments.
- 15 May 2013
- Research & Ideas
From McRibs to Maseratis: The Power of Scarcity Marketing
In the new book Happy Money: the Science of Smarter Spending, behavioral economists Elizabeth Dunn and Michael Norton describe how money can buy happiness—but only if we spend it the right way. Closed for comment; 0 Comments.
- 15 Apr 2013
- Research & Ideas
Solving the Search vs. Display Advertising Quandary
Internet advertising was supposed to make it easier for marketers to measure the impact of their ad buys. But a basic question remains: Do search ads or do display ads create more customers on the web? Research by Professor Sunil Gupta. Closed for comment; 0 Comments.
- 28 Feb 2013
- Working Paper Summaries
Do Display Ads Influence Search? Attribution and Dynamics in Online Advertising
The introduction of online metrics such as click through rate (CTR) and cost per acquisition (CPA) by Google and other online advertisers has made it easy for marketing managers to justify their online ad spending in comparison to the budgets used for television and other media. However, these metrics suffer from two fundamental problems: (a) they do not account for attribution, since they give credit to the last click and ignore the impact of other ad formats that may have helped a consumer move down the conversion funnel, and (b) they ignore the dynamics, since they only account for the immediate impact of ads. As firms spend more of their ad dollars on online search and display, managers and researchers alike recognize a need for more careful attribution adjustment that takes into account the journey consumers follow before conversion as well as account for the impact of ads over time. In this paper, the authors use time series models to infer the interaction between search and display ads and also capture their impact over time. Examining data from a bank that used online advertising to acquire new customers for its checking account, the authors found that display ads have a significant impact on search applications, as well as clicks. The majority of this spillover was not instant, but took effect only after two weeks. On the other hand, search advertising did not lead to an increase in display applications. However, search ads showed significant dynamic effects on search applications that made them very cost effective in the long run. Key concepts include: Classic metrics used in practice are highly biased since they do not account for the effects documented in this study. As a result, firms may be making suboptimal budget allocation decisions. Managers should carefully consider the interaction and dynamic effects of search and display advertising. In the study, revised measures of ad effectiveness lead to a very different budget allocation than the one used currently by the firm. Even though the proposed allocation gives credit to display due to its effect on search applications, the search ad budget should be increased by 36% from its current level due to its strong dynamic effects. The display ad budget should be decreased by 31%. Closed for comment; 0 Comments.
- 11 Feb 2013
- Research & Ideas
Neuroeconomics: Eyes, Brain, Business
At first glance, a neuroscientist and a business school might seem an odd fit. But in fact economists have been paying increasing attention to how the brain works. Christine Looser discusses her research on how the brain detects aliveness and the possible implications for organizations and advertisers. Open for comment; 0 Comments.
- 04 Feb 2013
- Research & Ideas
Are the Big Four Audit Firms Too Big to Fail?
Although the number of audit firms has decreased over the past few decades, concerns that the "Big Four" survivors have become too big to fail may be a stretch. Research by professor Karthik Ramanna and colleagues suggests instead that audit firms are more concerned about taking risks. Closed for comment; 0 Comments.
- 29 Jan 2013
- Research & Ideas
Creating the Perfect Super Bowl Ad
Professor Thales S. Teixeira says TV viewers lose purchasing interest when ads get too caught up in entertainment. His advice for the perfect pitch: tie together a good story and a compelling brand. Closed for comment; 0 Comments.
- 28 Jan 2013
- Research & Ideas
Helping Yelp Create More Accurate Reviews
Over time, Yelp's reader rating system of restaurants can make or break an operation, but professor Michael Luca shows the program has flaws. Can a more accurate, fairer system be created? Closed for comment; 0 Comments.
- 23 Jan 2013
- Research & Ideas
Three-Dimensional Strategy: Winning the Multisided Platform
Done right, companies competing as a multi-sided platform often win with higher percentage profit margins than those enjoyed by traditional resellers. The problem is that a winning strategy is far from self-evident. Professor Andrei Hagiu explains the potential and the pitfalls for life as an MSP. Closed for comment; 0 Comments.
- 24 Oct 2012
- Research & Ideas
Want People to Save More? Send a Text
What's the most effective way to encourage people to save their money? The answer lies in a combination of peer pressure and text messages, according to new research by Assistant Professor Dina D. Pomeranz. Open for comment; 0 Comments.
- 01 Oct 2012
- Research & Ideas
Better by the Bundle?
Video game companies do it, fast-food restaurants, too. Why don't more companies bundle products and services together in one package at a bargain price? Research by Assistant Professor Vineet Kumar. Closed for comment; 0 Comments.
- 12 Sep 2012
- Research & Ideas
The Unexpected Link Between Cadavers and Careers
Illustrating the strange socializing power of our occupational pursuits, a new study by professor Michel Anteby and colleagues finds a strong association between jobs and corpse donations. Open for comment; 0 Comments.
- 19 Jul 2012
- Working Paper Summaries
Charitable Giving When Altruism and Similarity are Linked
This paper presents a model to help explain several aspects of charitable giving. First, individuals do not appear to reduce their contributions to a charity significantly when they learn that the government or other individuals have increased the funds that they devote to the charity's beneficiaries. Indeed, sometimes people increase their contributions when they hear that others have contributed more. Second, there are often several distinct charities that contribute to the same beneficiaries, and these charities frequently differ by the donor population to whom they target their appeal. Lastly, the extent to which individuals contribute to charity differs greatly, even among countries that appear otherwise quite similar. Rotemberg's model shows that two assumptions grounded in evidence from psychology are helpful in explaining these regularities. Specifically, the combination of (1) letting altruism be larger towards like-minded people and (2) having self-esteem depend on the number of people that agree with oneself is consistent with small reductions in one's own giving in response to larger giving by others. Key concepts include: Two human tendencies can help explain patterns of charitable giving. The first tendency is that people are happier when they learn that there is more agreement with their point of view. The second tendency is that people have warmer feelings towards, and are more willing to help, individuals whom they perceive as sharing their beliefs or, more generally, individuals who are more similar to themselves. There are parallels between voting and charitable giving. Both charitable contributions and voting involve the expression of beliefs about how resources ought to be distributed to others. However, democratic voting systems give one vote to each person regardless of income. Charitable contributions, on the other hand, do vary by income. Particularly in the case of large contributions, many contributions are visible to others. This paper's emphasis, by contrast, is on contributions whose total is visible to others but whose constituent individual contributions are not. Examples of anonymous contributions include those made via SMS messages. Closed for comment; 0 Comments.
- 02 Apr 2012
- Research & Ideas
Do Online Dating Platforms Help Those Who Need Them Most?
The $2 billion online dating industry promises the possibility of a priceless product: romantic love. Associate Professor Mikolaj Piskorski investigates whether these sites are helping the lonely—or just making life easier for young singles who are popular already. Key concepts include: Researchers studied a random sample of 500,000 OKCupid members, focusing on two important stages of forming a relationship: spotting a potential mate, and initiating contact. Older, shorter, and relatively overweight men tended to view more profiles than their younger, taller, slimmer counterparts. However, those who were most likely to view lots of profiles were least likely to initiate contact with an e-mail message. Some of the features on OKCupid helped users to overcome the normative restrictions of the offline world, while others only served to help those who really needed the least help. Closed for comment; 0 Comments.
- 26 Mar 2012
- Research & Ideas
What Neuroscience Tells Us About Consumer Desire
It's easy for businesses to keep track of what we buy, but harder to figure out why. Enter a nascent field called neuromarketing, which uses the tools of neuroscience to determine why we prefer some products over others. Uma R. Karmarkar explains how raw brain data is helping researchers unlock the mysteries of consumer choice. Closed for comment; 0 Comments.
- 22 Feb 2012
- Working Paper Summaries
The Dynamic Effects of Bundling as a Product Strategy
This paper investigates the practice of bundling as a product strategy, and identifies how consumers make choices between products and bundles in a dynamic environment. Authors Timothy Derdenger and Vineet Kumar look at the handheld video game market to study bundling in a platform setting with the goal of investigating several key questions of interest to practitioners who make product decisions: First, do consumers value bundles over and beyond their component products, indicating a synergy, which some researchers have hypothesized? Second, have there been differing opinions on whether mixed bundling, that is offering both the bundle and individual products for sale, is more effective than offering only pure bundles or even compared to offering only the products for sale? Given the prevalence of bundling in technology markets, it is critical to understand whether bundling is more effective in environments with strong network effects or with weak network effects. Key concepts include: Consumers have a negative synergy effect, that is they are willing to pay less for the bundle than for the individual console and game, leading to the question of whether introducing such bundles can increase revenue. Because bundles act similar to damaged goods, they work well in dynamically segmenting consumers and allow for purchases to occur earlier in time—the presence of bundles induces consumers to purchase earlier rather than wait. The time shifting of hardware purchases has a strong effect on software sales, since more consumers who own consoles will purchase video games over a longer time frame. Mixed bundling is especially effective compared to pure bundling, and the authors find that moving to pure bundling would reduce sales by over 20 percent. Strong network effects do not enhance the value of bundling, suggesting that bundling may instead prove more useful in settings with weak network effects. Bundling is thus a strategy that could serve as a substitute to creating stronger network effects. Closed for comment; 0 Comments.
- 09 Feb 2012
- Sharpening Your Skills
Sharpening Your Skills: Online Marketing
In this collection from our archives, Harvard Business School faculty discuss the latest research on online marketing techniques, including consumer reviews, video ads, loyalty programs, and coupon offerings. Open for comment; 0 Comments.
- 17 Jan 2012
- Working Paper Summaries
Expectations, Network Effects and Platform Pricing
In markets with network effects, the value that users gain from platforms depends on the number of other users of the same type who join the same platform (direct network effects) or the number of users of a different type that join (cross-group network effects). Examples include social networks like Facebook or Google+, payment systems like PayPal or Visa, videogame systems like PlayStation 3 and Xbox 360, smartphone platforms like Apple's iPhone or Google's Android, etc. Users typically rely on the media, market reports, or word of mouth to form expectations about the total number of other users that join a given platform. However, most of the time these users are unable to calculate the effect of platforms' prices on adoption by other users. In other words, they do not take price into account when forming expectations. To analyze platform profits, Andrei Hagiu and Hanna Hałaburda model different degrees of user sophistication in forming price expectations in markets with network effects. They show that firms have different preferences regarding the average sophistication of their user base depending on market structure. Key concepts include: Firms with market power always prefer to face more sophisticated users, while firms competing for share in a market of fixed size always prefer to face more unsophisticated users. Firms' preferences create different incentives to educate users about the effects of prices under different market structures. Specifying how expectations are formed is key to accurately estimating the strength of network effects and the impact of prices on demand. Closed for comment; 0 Comments.
A Manager’s Moral Obligation to Preserve Capitalism
Harvard Business School's Rebecca M. Henderson and Karthik Ramanna argue that company managers have a moral obligation to preserve capitalism. Closed for comment; 0 Comments.