Journal of Advertising Research



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


JOHN E.  HOGAN  a1 a , KATHERINE N.  LEMON  a2 a and BARAK  LIBAI  a3 a
a1 Strategic Pricing Group jhogan@spgconsulting.com
a2 Carroll School of Management, Boston College katherine.lemon@bc.edu
a3 Faculty of Management, Tel-Aviv University libai@post.tau.ac.il

Article author query
hogan je   [Google Scholar] 
lemon kn   [Google Scholar] 
libai b   [Google Scholar] 
 

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.



Footnotes

a The authors' names are listed in alphabetic order.