New research on the structure of product recommendation networks reveals how demand flows among products — and that has important implications for marketers.
We all know that colds, the flu, and other diseases are contagious. They spread from one person to another, with different individuals displaying varying degrees of susceptibility. Similarly, ideas and information can be contagious. Online social networks like Facebook and Twitter amplify the spread of concepts and content — sometimes to such a degree that they’re said to be “going viral.” This phenomenon can play a role in marketing, as customers spread awareness of and interest in products through word-of-mouth interactions.
Such social interactions form the basis for network-based demand shifts for specific products. However, today’s platforms can also enable demand to spread across different and potentially competing products. Online retail platforms like Amazon.com provide product recommendations, noting, for instance, on the landing page of Product A that people who bought Product A also bought Product B. Such recommendations define what we call a copurchase network of products connected by shared purchasing behaviors. As users click from one product to the next, attention flows from one product page to the next, causing the network to become a potential channel for redistributing demand across brands. Think of this phenomenon as the virtual aisle structure of the online storefront.
How might this contagion actually play out? Consider this real-life example: In September 2007, actress Jenny McCarthy appeared on “The Oprah Winfrey Show” and discussed Louder than Words: A Mother’s Journey in Healing Autism, her book about dealing with her son’s autism. After the show aired, demand for the book increased about 200-fold on Amazon.com. Further examination of Amazon’s sales rank data, however, shows that the impact of McCarthy’s appearance on “Oprah” was more far-reaching, altering demand not just for Louder Than Words but also for books that were recommended on Amazon’s Louder Than Words landing page. For example, two books located one click away in Amazon’s copurchase network at the time — Life Laughs: The Naked Truth About Motherhood, Marriage, and Moving On (also written by McCarthy) and Ten Things Every Child With Autism Wishes You Knew — experienced estimated sales increases of 16-fold and six-fold, respectively. Even books located several recommendation clicks (or “degrees of separation”) away enjoyed sizable demand gains.
To discover whether such an effect is systematically induced by external recommendations of books on Amazon, two of the authors, along with fellow researchers Eyal Carmi of Google Inc.