Using online search data to forecast new product sales

  • Authors:

  • Gauri Kulkarni;P. K. Kannan;Wendy Moe

  • Affiliations:

  • Department of Marketing, Sellinger School of Business and Management, Loyola University Maryland, Baltimore, MD 21210, USA;Department of Marketing, Robert H. Smith School of Business, University of Maryland, College Park, MD 20742, USA;Department of Marketing, Robert H. Smith School of Business, University of Maryland, College Park, MD 20742, USA

  • Venue:
  • Decision Support Systems
  • Year:
  • 2012

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Abstract

Search engines are rapidly emerging to be the ''go-to'' sites for consumers to learn more about a product, concept or a term of interest, irrespective of the initial channel in which the interest originated - text, radio, TV, multi-media channels, word of mouth, etc. In this paper we argue that data on the search terms used by consumers can provide valuable measures and indicators of consumer interest in a product, concept or a term. Such data can be particularly valuable to managers in gauging potential product interest in a new product launch context or consumption interest in the post-release context. Based on this premise, we develop a model of pre-launch search activity and link the pre-launch search behavior and product characteristics to early sales of the product, thus providing a useful forecasting tool. Applying the model in the context of motion pictures, we find that search term usage follows rather predictable patterns in the pre-launch and post-launch periods and the model provides significant power in forecasting release week sales as a function of pre-release search activity. With advertising data included in the model, we find that the pre-release search data offers additional explanatory and forecasting power, thus highlighting the ability of the search data to capture other factors, such as possibly word-of-mouth, in impacting early sales. We offer specific insights into how managers can use search volume data and the model to plan their new product release.