The Power of the Like button

Traditionally movie studios have used the same marketing strategies to promote their movies. Think about advertisements through different channels on the television, release announcements in the newspapers or even advertisement which are visible for us to see on different billboards. According to McKinsey the global cinema advertising expensive where approximately 2.1 billion US dollars in 2014. This amount is expected to grow up to 2.8 billion dollars in 2018. So, in the near future we can state that the advertising expediture will grow. From a logical perspective I would assume that companies are blessed with the arrival of different great social media platforms. These platforms have a gigantic reach where consumers make use of but also corporations. In the past consumers could only inform eachother about a certain product verbally or via letters. Nowadays, the consumer has a much greater reach due to social platforms such as Facebook etc. These platforms make it easier and also less expensive for us to communicate. Thus, companies should also make use of these platform to have less expenditures, right?


To argue that the use of social media platforms can indeed decrease the advertisement expenditure and still increase box office performances I read an article about ‘the Power of the Like button’. The authors in this article state that before a certain movie is released the ‘likes’ of this prerelease have a signigicantly positive impact on box office performance. With box office performances the authors mean the opening week box office records. Thus, they state that a 1% increase in the number of ‘likes’ in the week prior to the release of the movie, is associated with an increase of the opening week box office records with 0,2% (Cheng et al, 2017). The authors did the research by firstly collecting data from the websites IMDb, Facebook and Box Office Mojo throughout the calendar year 2013. The data that they collected included movie-specific characteristic, ‘like’ activities on Facebook and the box office performance which is the amount of opening box office records. In the figure below you can see that the opening records of Star wars: The Force Awakens is roughly 248 billion US dollars.


There are two main stages in which the generated data was analysed. Firstly the authors wanted to understand the relationship between prerealesed ‘likes’ and box office performances by running a cross-sectional regression.  Secondly the authors applied the Fama-McBeth regression to estimate the prerelease ‘like’ impact over time. It is interest to see that a 1% increase in ‘likes’ prior to the release of the movie indeed increased the opening week box office record with 0,2%. Even more interesting to see that the prerealesed ‘like’ effect becomes stronger as it approaches the release date. This research makes a huge contribution to businesses that are considering to use the Facebook like button as a marketing tool. On the other hand, this article does not take the popularity of the actors in the movies into consideration and it is not clear whether the results of this research apply for other products which are movie related.

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Ding, C., Cheng, H., Duan, Y. and Jin, Y. (2017). The power of the “like” button: The impact of social media on box office. Decision Support Systems, 94, pp.77 84.

McKinsey & Company, Global media report 2015, 2015. 16.08.17).









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