On Mobile Marketing

By: Sunil Gupta et al.

People are often more willing to try new things when they see others doing so. This phenomenon, which academics call “social influence”, has a profound impact on many aspects of customer decision-making and marketing. For example, social influence affects consumer’s willingness to take up new technologies and adopt and use social networks.

Marketers are, thus, eager to understand how and to what extent social influence affects people’s consumption decisions. To date, however, it has been difficult to pinpoint the effects of social influence, as researchers have struggled to separate it from a simple fact that like-minded people tend to enjoy the same things, per the adage, “Birds of a feather flock together”.

We use the field of mobile app adoption in Japan to examine this problem. Japan is an ideal testing ground because about 80-85% of all page views occur through mobile.

In addition, mobile apps are often social in nature, especially those that are linked to a social network platform. We devise a new method to assess social influence by controlling for other factors that usually complicate the picture.

Overall, the findings show that peer usage accounts for more than a quarter of all mobile app adoptions. The paper also highlights a risk that firms could overestimate social influence by 40% on average, even up to 100% in certain cases. Our method helps overcome this risk.

From “Separating Homophily and Peer Influence with Latent Space