Blogs Build an Audience by Promoting Rivals Finds Yale School of Management Study

New Haven, Conn., March 7, 2007 — Recommending a rival can increase a firm’s bottom line suggests a new study by researchers at Yale School of Management.

There are a number of contexts where a firm may recommend a rival. For example, a salesperson may recommend that a customer look for a product in another store and Amazon.com frequently provides a link to a book sold by another site. In their study, “Link to Success: How Blogs Build an Audience by Promoting Rivals” Dina Mayzlin and Hema Yoganarasimhan focus on the context of web logs or blogs. From the bloggers’ perspective, posting a one-way link to a potential competitor may be a risky strategy since it may lose readers to the linked blog. However, the study suggests that linking can build an audience because it signals to readers that the blog is skilled at locating information that they will find useful, making it more likely that the reader will visit again. The blog becomes a destination site.

“From the consumer’s perspective, linking increases the attractiveness of the blogosphere since links enable readers to locate information,” said Mayzlin, an assistant professor of marketing at the Yale School of Management and a fellow of the Yale Center for Customer Insights. Yoganarasimhan, the study’s co-author, is a Ph.D. candidate at Yale SOM.

In their study, the authors set out to explain how blogs become popular despite a number of obstacles to readers such as the large number of blogs available, the variable quality among blogs that feature similar types of content, and blogs’ lack of brand equity. The authors argue that blogs differ along two dimensions: the ability to break news and the ability to find news in other blogs. Hence, a consumer learns about the blog’s quality from the blog’s posts and links.

The authors also find that the incentive to link is maximized in a time period when the blogger is not able to generate news-breaking content on her own. “Impressing readers is a big issue for bloggers. If a blogger is not able at this time to ‘get the scoop,’ it is in her best interest to direct readers to a rival that has new information,” said Mayzlin.

The authors propose that a byproduct of this incentive to link is a self-sustaining system of quality monitoring between different blogs. The linking blogger has a selfish desire to impress readers with her ability to find quality information, so she will refer a reader to another blog with information. Blogs that more reliably produce information are more likely to have more incoming links and hence receive more visitors.

The authors say that the study supports the view that blogs are a valuable medium and offers advertisers a new metric for valuing blogs.

“Advertisers typically place a lot of value on blogs that produce original content and have a high number of incoming links, but we found that the number of outgoing links may also provide useful information on blog quality,” said Mayzlin.

The Yale Center for Customer Insights at the Yale School of Management is a research center that studies the behavior of customers and marketplace dynamics. The Center welcomes inquiries from organizations interested in research partnerships and sponsorship opportunities. For more information visit: http://www.cci.som.yale.edu or contact Eugenia Hayes at 203-432-6069 or eugenia.hayes@yale.edu.