Capturing dynamics in the value for brand recommendations from word-of-mouth conversations

Although there is an extensive literature on word of mouth (WOM), a longitudinal investigation into the dynamics of WOM conversations (rather than online reviews) on brand recommendation behavior is limited. To address this issue, the authors capture the dynamics in regard to the value of brand recommendation in a Bayesian State Space model. Such value is carried over time, with the current value as a function of the previous value, driven by advertising and branding effort (State Space model) with a heterogeneous coefficient (Bayesian). We find that past value for brand recommendation, along with advertising and brand attributes, such as visibility, excitement, differentiation, competency, and quality, influence the value of recommendations. We also incorporate heterogeneity and account for missing observations to include less talked-about brands. The results indicate that over 41% of brands experience a positive transition in the value of brand recommendations over time. Our investigation provides important managerial insights into which types of WOM influence consumer brand recommendations, while also providing nuanced insights for brand managers by identifying which types of brands and products are associated with higher carryover coefficients for the value in brand recommendations.