We present an analysis of a person-to-person recommendation network, consisting of 4 million people who made 16 million recommendations on half a million products. We observe the propagation of recommendations and the cascade sizes, which we explain by a simple stochastic model. We analyze how user behavior varies within user communities defined by a recommendation network. Product purchases follow a ‘long tail’ where a significant share of purchases belongs to rarely sold items. We establish how the recommendation network grows over time and how effective it is from the viewpoint of the sender and receiver of the recommendations. While on average recommendations are not very effective at inducing purchases and do not spread very far, we present a model that successfully identifies communities, product, and pricing categories for which viral marketing seems to be very effective.
@cite_37: Viral marketing takes advantage of networks of influence among customers to inexpensively achieve large changes in behavior. Our research seeks to put it on a firmer footing by mining these networks from data, building probabilistic models of them, and using these models to choose the best viral marketing plan. Knowledge-sharing sites, where customers review products and advise each other, are a fertile source for this type of data mining. In this paper we extend our previous techniques, achieving a large reduction in computational cost, and apply them to data from a knowledge-sharing site. We optimize the amount of marketing funds spent on each customer, rather than just making a binary decision on whether to market to him. We take into account the fact that knowledge of the network is partial, and that gathering that knowledge can itself have a cost. Our results show the robustness and utility of our approach.
@cite_33: Models for the processes by which ideas and influence propagate through a social network have been studied in a number of domains, including the diffusion of medical and technological innovations, the sudden and widespread adoption of various strategies in game-theoretic settings, and the effects of "word of mouth" in the promotion of new products. Recently, motivated by the design of viral marketing strategies, Domingos and Richardson posed a fundamental algorithmic problem for such social network processes: if we can try to convince a subset of individuals to adopt a new product or innovation, and the goal is to trigger a large cascade of further adoptions, which set of individuals should we target?We consider this problem in several of the most widely studied models in social network analysis. The optimization problem of selecting the most influential nodes is NP-hard here, and we provide the first provable approximation guarantees for efficient algorithms. Using an analysis framework based on submodular functions, we show that a natural greedy strategy obtains a solution that is provably within 63 of optimal for several classes of models; our framework suggests a general approach for reasoning about the performance guarantees of algorithms for these types of influence problems in social networks.We also provide computational experiments on large collaboration networks, showing that in addition to their provable guarantees, our approximation algorithms significantly out-perform node-selection heuristics based on the well-studied notions of degree centrality and distance centrality from the field of social networks.
@cite_27: The creation of online consumer communities to provide product reviews and advice has been touted as an important, albeit somewhat expensive component of Internet retail strategies. In this paper, we characterize reviewer behavior at two popular Internet sites and examine the effect of consumer reviews on firms' sales. We use publicly available data from the two leading online booksellers, Amazon.com and BarnesandNoble.com, to construct measures of each firm's sales of individual books. We also gather extensive consumer review data at the two sites. First, we characterize the reviewer behavior on the two sites such as the distribution of the number of ratings and the valence and length of ratings, as well as ratings across different subject categories. Second, we measure the effect of individual reviews on the relative shares of books across the two sites. We argue that our methodology of comparing the sales and reviews of a given book across Internet retailers allows us to improve on the existing literature by better capturing a causal relationship between word of mouth (reviews) and sales since we are able to difference out factors that affect the sales and word of mouth of both retailers, such as the book's quality. We examine the incremental sales effects of having reviews for a particular book versus not having reviews and also the differential sales effects of positive and negative reviews. Our large database of books also allows us to control for other important confounding factors such as differences across the sites in prices and shipping times.
@cite_23: One of the earliest and best known Internet reputation systems is run by eBay, which gathers comments from buyers and sellers about each other after each transaction. Examination of a large data set from 1999 reveals several interesting features. First, despite incentives to free ride, feedback was provided more than half the time. Second, well beyond reasonable expectation, it was almost always positive. Third, reputation profiles were predictive of future performance, though eBay's net feedback statistic is far from the best predictor available. Fourth, there was a high correlation between buyer and seller feedback, suggesting that the players reciprocate and ret aliate.
@cite_17: Quantitative models have proved valuable in predicting consumer behavior in the offline world. These same techniques can be adapted to predict online actions. The use of diffusion models provides a firm foundation to implement and forecast viral marketing strategies. Choice models can predict purchases at online stores and shopbots. Hierarchical Bayesian models provide a framework for implementing versioning and price-segmentation strategies. Bayesian updating is a natural tool for profiling users with clickstream data. A key challenge for practitioners of Internet marketing is to extract value from the huge volume of data that can be collected. These techniques illustrate how this information can be leveraged to create better decisions.
In the context of the internet word-of-mouth advertising is not restricted to pairwise or small-group interactions between individuals. Rather, customers can share their experiences and opinions regarding a product with everyone. Quantitative marketing techniques have been proposed @cite_17 to describe product information flow online, and the rating of products and merchants has been shown to effect the likelihood of an item being bought @cite_23 @cite_27 . More sophisticated online recommendation systems allow users to rate others' reviews, or directly rate other reviewers to implicitly form a trusted reviewer network that may have very little overlap with a person's actual social circle. Richardson and Domingos @cite_37 used Epinions' trusted reviewer network to construct an algorithm to maximize viral marketing efficiency assuming that individuals' probability of purchasing a product depends on the opinions on the trusted peers in their network. Kempe, Kleinberg and Tardos @cite_33 have followed up on Richardson and Domingos' challenge of maximizing viral information spread by evaluating several algorithms given various models of adoption we discuss next.