Growing Two-Sided Networks by Advertising the User Base: A Field Experiment

Presentation

Based on Marketing Science article  Tucker, C., and J. Zhang (2010), "Growing Two-Sided Networks by Advertising the User Base: A Field Experiment," Marketing Science, 29(5), pp. 805-814.

Tucker & Zhang Presentation.ppt

Teaching Objective

The objective is to explore a cost-effective growth strategy for network companies. Two-sided networks (e.g., ebay) often advertise their user base, but differ on how they do so. They may highlight the number of sellers, buyers, or both. Using field experiment data, we find that new sellers are competition-averse but seek assurance in competition - if they know the number of buyers, they are less likely to enter a network with many sellers; otherwise, they infer high buyer traffic from heavy seller presence. A growth strategy is to emphasize competitive information to potential customers who know less about demand.

Keywords: two-sided markets; information disclosure; competition; inference; entry; field experiment