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ABSTRACT. We report the results of a large-scale field experiment performed in the context of the national launch of a new cosmetic product. The manufacturer launched this new product using three promotional tools in parallel: full-page advertisements in fashion magazines, free standing inserts (FSI) in Sunday newspapers, and a viral marketing campaign. Each promotional tool featured an identical discount coupon for the new product, but with different redemption codes across promotional tools. Our data enable us to address the following research questions: (1) How does the effectiveness of viral marketing compare to that of traditional media? (2) What is the relation between online and offline social interactions in viral marketing campaigns? And (3) what characterizes the most active members in a viral marketing campaign? We find that (1) viral marketing compares very favorably to print advertising and FSI, based on the partial but objective measure of coupon redemption rate; (2) although viral marketing campaigns involve a strong online component, most social interactions happen offline and offline social interactions do not substitute online social interactions; (3) a set of simple measures of members’ social characteristics may be used to predict word-of-mouth transmission and identify the most active members in a campaign. pp. 43–65
JEL Classification: M31, M37, L82, D24

Keywords: viral marketing campaign, advertising, online social interaction

OLIVIER TOUBIA
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Columbia Business School
Columbia University
ANDREW T. STEPHEN
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INSEAD
ALIZA FREUD
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