Word-of-Blog for Movies: A Predictor and an Outcome of Box Office Revenue?

Abstract

Social media has become an important avenue of Word-of-mouth (WOM) and a recent study has found blogging to be an important lead-generation source among social media options. This article examines the dynamic interrelationship between word-of-blog volume and sales by using the movie industry as the research context. By employing the Granger Causality test and modeling the interrelationship through simultaneous equations, the results show that the volume of word-of-blog and box office revenue for movies provide significant causality and explanatory power for each other, supporting word-of-blog volume is both a predictor and an outcome of sales. The results also highlight for retailers the importance of strategically managing word-of-blog to influence consumer purchase decisions and generate revenue as well as the value of the findings for forecasting.