Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content

We develop a modeling approach to explain demand variation for an online platform of usergenerated content, and use it to measure the impact of marketing activities on decisions to visit the platform, and on decisions to create and buy content. The model explains individual-level decisions as a function of consumer characteristics, marketing activities, and behavior of other online users, allowing for the possibility of network e ects and interdependence of decisions. Empirically, we apply our model to the Hewlett-Packard's print-on-demand service of usercreated magazines, named MagCloud. We use widely available aggregate-level data from Google Analytics and summary statistics from company reports, thus making our approach generally applicable. Our results show that content price and content creator marketing actions have strong e ects on the number of purchases, while advertising by the rm mainly in uences visits and creation of content. We provide recommendations to the level of marketing investments and quantify the bene ts of free promotional activities from content creators. According to our ndings, 8% of MagCloud's pro ts are directly related to these actions. This type of free marketing is likely to have a substantial presence in most online services of user-generated content and must be taken into account when allocating marketing resources.