Predicting Efficacy of Advertisements
Blog inspired by “How Social Networks Influence Online Advertising” By Mathew Young
Over the Thanksgiving break, I and many other Cornell students got to do something we rarely do, watch cable tv, go to metropolitan places and shopping malls, and communicate with people outside our bubble. I noticed that I was immediately barraged with advertisements for products that I hadn’t been exposed to during my entire semester at Cornell. This was evidence that the type advertisements that I was exposed to were chosen with my network in mind. And just as we learned about the bargaining theories and information cascades in class, I was more likely to purchase products that others in my circle had purchased, than to differ from them.
The topic of information cascades is a very intuitive one and is driven by the fact that people make decisions sequentially, people gather and retain information privately, and people observe other’s behavior and decisions. Using these natural phenomena, we can deduce that people make decisions by observing each other’s decisions, rather than by gaining their private information. For example, I am more likely to put on a coat if my friends have put one on, or purchase an iPhone because most of my peers decided to purchase an iPhone.
This leads me to the conclusion that advertising agencies are most likely to develop marketing strategies by analyzing networks, rather than randomly dispersing their advertisements. A student would not be compelled to by a fragrance dispenser because they see a middle aged woman in a standard middle class home using it in an advertisement, because they wouldn’t relate to the woman and therefore would not be compelled to follow her lead. However, an advertisement highlighting college student’s use of Febreze would certainly be more effective. Due to information cascades, social networks have greatly influenced marketing strategies over the last decade.