Latest ResearchWhere is this place located?

Log in to follow, share, and participate in this community. Not a member? Join Now!

Recent Content

Refresh this widget
Filter by Categories & Tags

MIT CDB Assistant Professor, Renee Gosline, Describes Digital Marketing's Newest Influencers

MIT CDB Video: Sinan Aral on Social Commerce


At the recent MIT CDB conference on Big Data, professor and social networking expert, Sinan Aral, discusses peer influence and how it can impact product marketing strategies and the online economy.




Popular Blog Posts

There are many metrics and data available that quantify the use of digital goods and services. We know, for example, how many billions songs are downloaded and how much revenue that garners. We can tell how many articles there are on Wikipedia and how many hours people spend on Facebook.

 

To date, there are primarily three ways to quantify the impact digitization is having: We can look at the contribution of the transactions to the GDP; we can look at an IT company’s stock values, or we can track consumer spending and prices as indicators of consumer surplus created.

 

 

But none of these approaches measure the real value of digital services when the services are free, according to our latest research at MIT’s Center for Digital Business. For example, a money-only model may be missing 95% of the value consumers derive online. Finding that new metric is the focus of my team’s latest research. Free goods and services on the Internet have exploded in the past decade, and the average American now spends more than 32 hours a month online.

 

Once they have an Internet connection, they don't spend money to use Wikipedia, Facebook or Youtube, so the value of these services isn't properly reflected in the GDP statistics.

This gap is a problem we have been grappling with for some time, including in a Sloan Management Review article a few years ago.

 

At the recent annual meeting we offered a possible solution to the measurement problem: Consumers pay with time, not just money, and where they choose to spend their limited time and attention online is a form of voting. Increasingly, the digital economy is the 'attention economy.' Our research is calculating a demand curve for time and estimating how much consumers implicitly value free goods based on use of their time, not on dollars, spent on the Internet.

 

One preliminary finding shows that free goods added the equivalent of $139 billion in value to the economy in 2010-- more than 1% of the GDP and equal to $647 per person. The findings may have an impact of calculations such as the GDP and other economic metrics.


chart.JPG



The same robotic technologies that enable laboratory droids to bake cookies and construct small buildings have the potential to dramatically automate manufacturing processes in the next decade.

 

Robots are already changing lives and accelerating productivity much as computing did in the last few decades, according to MIT professor and researcher, Daniela Rus. The next wave of exponential growth and advancements in robotic fabrication also will have a huge impact on the digital economy. “We will soon get to an age where it is as easy to have your own robots as it is to print on paper today,” she said at an October IDE seminar.  Rus, Professor of Electrical Engineering and Computer Science as well as Director of the Computer Science and Artificial Intelligence Laboratory (CSAIL), discussed and demonstrated the results of her most recent work.A1-MIT-robots-rus_0.jpg

 

Based on a 2014 McKinsey report advanced robotics, the Internet of Things and autonomous cars are among the top 12 disruptive technologies with a total potential economic impact between $14 trillion and $33 trillion a year in 2025. (See infographics here). Advanced robotics alone could generate from $1.7 to $4.5 trillion, according to McKinsey. The estimates are  "based on an in-depth analysis of key potential applications and the value they could create in a number of ways, including the consumer surplus that arises from better products, lower prices, a cleaner environment, and better health."

 

Rus said despite huge progress, the high cost of robotic design and production, as well as limitations in communications and physical dexterity still have to be overcome before bots can reach their full economic potential. Toward that end, her group is building and deploying easily designed robots that can perform complex, multi-step tasks. They can also interact with humans and follow instructions with new levels of precision and accuracy. For example, a team of bots in the lab have built a log cabin by identifying parts and language sequences, then dividing the tasks among themselves. Once at work, the robots analyze instructions and adjust their processes to accommodate their droid co-workers. They communicate with each other and can ask their human partners for specific help if they get stuck with a task as well.

 

bakebot-2.jpgIn another example, an Iron Chef bot baked cookies by “reading” a series directions, mixing the ingredients and popping the pan into the oven. Executing such seemingly simple tasks required more than a year’s work in computational and lab development at MIT and cost about $500,000 to produce. The group is also testing a series of  simple, self-assembling "origami" style robots. The results of all of these efforts clearly “stretch the boundaries of what robots can do” now and indicate how much more they can achieve in the very near-term, Rus said—especially when commercial developers stake their claim.


“The state of robot production today is similar to where programming was before the invention of compilers,” she said. And with the rapid pace of advancements, the proliferation of low-cost, high function robots is just a blink away.

As social media becomes more pervasive in business and economic life, many researchers are trying to figure out just how much impact it is having on sales and on business models.

 

Jeffrey Hu, Associate Professor at Scheller College of Business  at Georgia Institute of Technology, and an MIT Sloan alumni, is among those studying the effects of social media. In particular, he examined just how much online broadcasting channels and crowdsourcing are influencing markets and customers compared with more traditional marketing channels. “With the emergence of social media and Web 2.0, broadcasting in the online environment has evolved into a new form of marketing due to the much broader reach enabled by information technology,” Hu said.hu_jeffrey_profile.jpg1.jpg

 

Turning Buzz into Business

During 2008 to 2009, Hu studied the patterns of the MySpace music community, the largest at the time, with 14 million users. He wanted to know if broadcasting information via social media –sending updates, bulletins and texts (this was before Twitter really had a strong presence) would result in greater economic returns. In other words, he said at a recent MIT CDB lunch seminar, “whether buzz could turn into sales.”

 

Hu and his team employed a panel vector auto-regression (PVAR) model to investigate the inter-relationship between broadcasting promotions in social media and music sales. By correlating social media activity of 631 musicians for 32 weeks and comparing the data to Amazon rankings, Hu was able to see a significant effect on sales. The study accounted for control variables such as promotional spending, new album releases and size of network, among other factors.

 

The research concludes that artist-generated content -- particularly personal messages versus automated ones-- can increase sales and ranking on Amazon. By extension, Hu believes that companies can use social media to promote products and boost sales. “Our findings also point to the importance of conducting captivating conversations with customers in the organizational use of social media,” he said.

 

The Wisdom of Crowds

The second study Hu described at the seminar looked at the wisdom of crowds and crowdsourcing compared with expert advice and content online. Many people have pointed out that while Wikipedia contains errors, for example, it also can be corrected quickly from a vast range of sources versus traditional, permanent resources such as print encyclopedias. Some advocates believe that customers turn to peer-based communities, such as Yelp, for restaurant reviews over venerable sources like Michelin guides because the websites are more current, are more accessible and have wider coverage areas.

 

In his research of the financial analysis sector, Hu found that the online community Seeking Alpha--which relies on investor input instead of journalists or professional analysts-- has been “surprisingly accurate” in predicting financial trends and making investment recommendations.

 

Of course, there are also many caveats where enterprise social media is concerned. As McKinsey notes in this recent journal article, “on-demand marketing” is putting enormous pressures on businesses to respond in four key areas:

1. Now: Consumers will want to interact anywhere at any time.

2. Can I: They will want to do truly new things as disparate kinds of information (from financial accounts to data on physical activity) are deployed more effectively in ways that create value for them.

3. For me: They will expect all data stored about them to be targeted precisely to their needs or used to personalize what they experience.

4. Simply: They will expect all interactions to be easy.

 

Maybe the next studies will focus on how well social media can help achieve these daunting consumer demands.

 

 

For related MIT research about social advertising, see this blog describing Catherine Tucker’s research.


For  more of Jeffrey Hu's research, see the following abstracts:


http://ssrn.com/abstract=2201430

 

http://ssrn.com/abstract=1807265)

 

and his Georgia Tech profile here:  http://scheller.gatech.edu/directory/faculty/hu/