Quantifying online buzz and its impact on product launch

Abstract

This paper seeks to quantify online 'buzz'about a consumer product launch and measure its valuebefore, during or after the event. We developed a modelthat enables us to measure 'buzz' (also called 'word-ofmouth' equity). We then used our model to measureIPhone's word-of-mouth equity over the years since itsfirst version was launch in 2007. It was found that wordof-mouth equity subsided over the course of months andat different rates for different IPhone versions likeIPhone 3G, 3GS. There seems to be a correlationbetween word-of-mouth equity and unit sales and alsoshare price. When compared to a competitor like HTCCorp. which manufactures mobile phones before appledid, HTC's word-of-mouth equity increases 4.5 timesduring its product launch (measured one month priorand one month post launch), with corresponding 32%increase in sales within the next 3 quarters. By contrastApple's WOM Equity increases only 1.7 times but thecorresponding sales increase within the next 3 quarterswas 750%. This strongly indicates about the significanceof the magnitude of the initial 'buzz' that is relevant toconsumer interest that can generate product purchase.