Academic journal article Journal of Information, Information Technology, and Organizations

The Emergence of Electronic Word-of-Mouth as a Marketing Channel for the Digital Marketplace

Academic journal article Journal of Information, Information Technology, and Organizations

The Emergence of Electronic Word-of-Mouth as a Marketing Channel for the Digital Marketplace

Article excerpt

Introduction

The emerging digital marketplace, with the Internet as a key facilitator, is an amorphous web of connections among producers and consumers (Berman, Abraham, Battino, Shipnuck, & Neus, 2007). The Internet has also presented a synergistic opportunity for commentary, recommendation, suggestion, and referral through Wordof-Mouth WOM (Dellarocas, 2003). This seems particularly so for music and movies which elicit a following. Word-of-mouth is an alternative which rapidly creates awareness among users about a new album, products, services, and content (V. Dhar & Chang, 2007).

Burson-Marsteller and Roper Starch coined the term 'e-fluentials' in 1999 (Burson-Marsteller, 2005). This finding asserted that in traditional, offline, word-of-mouth communication one person affects the attitude and behavior of approximately another two people, whereas in eWOM one person affects the behavior of eight other people. In 2001, it was found that the e-fluentials represented about 11 million Americans, each potentially influencing up to 14 people (BursonMarsteller, 2005). Since 1999, the number of online adults in the US has grown from about 9 percent to more than 80 percent-by more than 178 million people (Leggatt, 2007). Considering these numbers, higher computer literacy, and availability of more useful content, the e-fluentials may be expected to influence a much larger section of the society today.

Formally stated, an eWOM unit is a relevant remark made by a potential, actual, or former customer about a product or service (Hennig-Thurau, Qwinner, Walsh, & Gremler, 2004). This remark is readily available to potential customers and partners through the Internet. eWOM involves text-based, recorded, traceable, organized, and reusable one-to- many consumer interactions among strangers in cyberspace. Several studies have examined consumer-created content from the perspective of information credibility. The owner-created information focuses more on the technical details. It does not describe a product's actual performance or user perspective. Dellarocas (2003) argued that the Internet's bidirectional communication structure and the ability to artificially create large-scale word-of-mouth networks at low cost can have implications on brand reputation, consumer retention, and quality assurance. In an early study, it was found that buyers pay a 20% premium on the basis of familiarity with the seller (Brynjolfsson & Smith, 2000). The credibility of the promotional messages in online chat rooms and the implication of those new information channels on sales has been studied (Mayzlin, 2006). Specific factors like identification, promotion, loyalty, satisfaction, and participation have been studied in free-software virtual communities (Casalo, Flavian, & Guinaliu, 2010). Hence, eWOM has also been described as empowering consumers, and adding value to sales (Fiona, 2005). It is an integral aspect of the digital market worthy of continued research attention.

This study investigates the impact of electronic word-of-mouth (eWOM) on sales and revenues for digital products such as music albums. To better understand the word-of-mouth phenomenon, we refer to the terminology framework designed by the word-of-mouth Marketing Association, womMA (WOMMA, 2005). We adopt this womMA framework from an Object-Oriented perspective so that distinct eWOM functionalities, their attributes, relationships, behavior such as hits, download, streaming, sales and revenues may be derived. Table 1 illustrates the eWOM ecosystem at a high level. This framework has four main classes. The objects for these classes are:

* Participants are consumers-Senders or Receivers.

* Actions are the activities that a participant performs on WOM units, such as reading a blog post, replying or composing a comment, or recommending or suggesting content to others.

* A WOM unit is a consumer generated message found in channels such as posts, comments, and downloads. …

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