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Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness

John E. Hogan, Katherine N. Lemon, Barak Libai
DOI: 10.1017/S0021849904040243 Published 1 September 2004
John E. Hogan
Strategic Pricing Group
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Katherine N. Lemon
Carroll School of Management, Boston College
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Barak Libai
Faculty of Management, Tel-Aviv University
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ABSTRACT

In this article the authors demonstrate how a customer lifetime value approach can provide a better assessment of advertising effectiveness that takes into account postpurchase behaviors such as word-of-mouth. Although for many advertisers word-of-mouth is viewed as an alternative to advertising, the authors show that it is possible to quantify the way in which word-of-mouth often complements and extends the effects of advertising. The authors provide a simple approach to the measurement of postpurchase word-of-mouth sales effects and demonstrate how firms may be underestimating advertising effectiveness by ignoring such effects. Their approach illustrates how customer lifetime value models can provide an important tool to assess the long-term effects of advertising campaigns.

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Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness
John E. Hogan, Katherine N. Lemon, Barak Libai
Journal of Advertising Research Sep 2004, 44 (3) 271-280; DOI: 10.1017/S0021849904040243

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Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness
John E. Hogan, Katherine N. Lemon, Barak Libai
Journal of Advertising Research Sep 2004, 44 (3) 271-280; DOI: 10.1017/S0021849904040243
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