How News on Social Media Can Drive Local Adoption of New Products

Professor Tong Guo found news coverage shared on social media can be as effective as TV advertising

April 2, 2024
Tong Guo_News on Social Media and New Product Adoption_Duke University's Fuqua School of Business

News media impacts people’s behavior, and when the reports are about a new product, they may nudge local businesses to adopt it, with an effectiveness similar to that of TV ads.

In the working paper, “Social Media Publicity and New Product Entry via Local Entrepreneurs,” Professor Tong Guo of Duke University’s Fuqua School of Business, with Duke Economics Professor Daniel Yi Xu and Fuqua Ph.D. candidate Boya Xu, examined news stories about meat substitutes between 2015 and 2019. They found that news stories shared on social media led local restaurants and grocery stores to launch alternative meat products.

“Literature has shown that producer-generated content, such as advertising, as well as consumer-generated content, such as product reviews, both induce new product adoption,” Guo said. “But we knew relatively little about whether news media, which is a third-party information source, would have an impact on new product adoption.”

Early-stage adoption of a new product

Guo and co-authors focused their research on meat-substitute brands that had a relatively niche market at the time of the study, and were striving to win over traditional meat lovers.

“The meatless meat producers were saying, ‘even if we get 100% of vegetarians and vegans, it's only a very small portion of all the food buyers,’” Guo said. “‘We don’t want to position ourselves as yet another plant-based product, we are completely different. We're like real meat.’”

Products like alternative meat rarely go directly to consumers, Guo said, and mostly depend on local businesses, like grocery stores and restaurants to gradually introduce the product.

Guo said the innovators—often startups running under budget constraints in the early years—mostly skip traditional media and tend to rely exclusively on unpaid tactics such as social media sharing.

Assessing the impact

The researchers collected almost 29,000 social media posts referring to meat-alternative products between 2015 and 2019, and classified them as producer-generated promotion, consumer-generated word of mouth, news stories, and recipes. They also surveyed a group of restaurants, to pin down the top five discussion topics about the new products: producer financials, sustainability, health, chain partnership, and product description. They then used Natural Language Processing tools to measure the intensity of each topic by post category, date and location.

They found that about half of the posts were news stories posted by local and global outlets, and they were significantly linked to the adoption of the product.

“Our estimates suggest a 1.2% rise in quarterly alternative meat adoptions by local entrepreneurs for every doubling of news coverage being shared on social media,” Guo said.

The magnitude of the effect is similar to the impact of TV advertising documented across 288 consumer packaged goods categories, Guo said, which can be very relevant for early-stage producers lacking marketing budgets for TV ads or other expensive channels.

Financial topics are one of the most effective drivers

The research also showed that stories about producers' financials are as effective as stories focused on sustainability, which producers considered one of the selling points of the alternative meat products, along with its health benefits.

“Sustainability works as expected, much like anything describing the lower environmental impact with the bioengineered foods, which is the main driver of adoption,” Guo said. “What's a little surprising is that financial information is also very effective.”

She said that perhaps favorable financial news about new products serves as a signal for low uncertainty about the innovation and instills confidence in local businesses. “They may think, ‘I don't know whether the meatless meat technology is reliable or not, but I trust the celebrity investors’ bet as they are putting their money in it,’” she said.

“In addition, favorable publicity of the innovation—which was often induced by the eye-catching financial events, among everything else—may serve as free marketing for local stores and restaurants, driving store traffic which may eventually lead to more sales for their current product offerings,” Guo said. “Jump on the latest trend, and entrepreneurs will catch a wave of free attention.”

Health-related news, on the other hand, seems to be not all that effective to drive product adoption, the research found.

Insights for marketers

The researchers developed a framework to causally measure the effectiveness of the social media news by geographical areas, which can potentially offer insights for area-specific campaigns, Guo said.

“Our framework helps organizations seeking to promote adoption of new products broadly, and bio-engineered foods in particular, to plan the right content given when and where the marketing campaigns will run, " she said.

Other tech startups targeting the consumer packaged goods market could also learn the lesson from the impact of news stories shown in this study.

“Knowing a densely populated liberal city is better tuned to sustainability news can inform the design of their content marketing strategies,” Guo said.


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