When your friend shows up with the latest "must-have" product, it's more likely you'll buy the same product. By exploiting this phenomenon—and harnessing the information available through online social networks—marketers hope to better target products to would-be buyers.
In work presented this week at the Interdisciplinary Workshop on Information and Decision in Social Networks, researchers from the Norwegian telecom provider Telenor showed how important friend connections can be to the adoption of a product. Watching how adoption spreads within social networks could help predict whether a new product will become a viral smash, they say. The researchers looked at patterns of adoption for Apple's iPhone and iPad, as well as for the far-less-successful Doro mobile handset.
"Social networks matter when purchase decisions are made," says Pål Sundsøy, a project manager in the advanced analytics and business intelligence group at Telenor. In particular, he says, people have a higher chance of adopting a product that their friends have bought. Likewise, when people abandon a product—for example, by switching between cell-phone networks—they are more likely to jump ship if their friends do so first.
To measure the social characteristics of product adoption, the researchers made use of anonymized data from Telenor's network. That data revealed how users communicate and what mobile devices they use.
Most strikingly, the researchers found what Sundsøy termed a "tribe of Apple." People who used Apple products tended to be connected to each other. After the launch of the iPhone, a heavily connected cluster of users formed relatively quickly. That central cluster grew larger over time. For the iPad, the researchers observed a similar structure forming even faster (their graphs tracked iPad adoption by the month, instead of the quarterly measures they used for the iPhone). They found that social connections predicted whether users were likely to own Apple products. iPhone users had twice as many connections—meaning they had communicated with one another by voice, text message, or email—than would be expected by chance. The researchers also studied the much less successful Doro. The handset is marketed as a device designed primarily for phone calls rather than data-related activities. Doro users tended to be connected to few other Doro users, and there was no central cluster. Sundsøy argues that this structure suggests that the device will likely never gain momentum.
But social connections aren't everything. In another talk given at the same workshop, Nicholas Christakis, a Harvard University social scientist and expert on networks, said that the qualities of whatever is spreading through a network matters a great deal. For example, some germs are more contagious than others, and will spread faster through a network. Similarly, he said, some ideas are "stickier" than others, and take hold better. So product adoption will also spread according to the quality of the product, and not just the number of friends who already own it.
Even taking variations in product quality into account, however, it will still be useful to look at patterns of adoption in social networks, the Telenor researchers say.
"The social variables have high predictive power," says Sundsøy. "Those who communicate together tend to adopt together." According to his group's work, one key factor is the size of the connected cluster that forms around a product. If a large, heavily connected group begins to form, he says, there's a good chance that a product will take off.