Walt Mossberg's Influence has Been Quantified

I wrote in June about early numbers from research being conducted at the University of Maimi that attempted to quatify the impact of a Walt Mossberg review on a company’s stock price:

Initial data shows on average, “firms with bad product reviews saw stock losses of $200 million, while those with positive reviews saw gains of $500 million,” proving traditional media influencers still pack a punch.

The research study, The Value of Quality: Stock Market Returns to Reviewed Quality of New Products, has now been published and can be downloaded without charge from the Social Science Research Network.

The research was conducted under the following premise: “Firms are always in a rush to bring new products to market. This attitude is probably driven by several factors such as capturing market share rewards to new products, shaping consumer preferences, exploiting economies of experience, or pre-empting lucrative supplies, market positions, distribution outlets, and shelf space (Robinson and Fornell 1985; Carpenter and Nakamoto 1989; Kalyanaram, Robinson and Urban 1995). However, compelling evidence and some theory suggest that first movers may not have the advantages attributed to them in the past (Golder and Tellis 1993; Shankar 1999; Zhang and Narasimhan 2000). Further researchers have shown that speed alone does not lead to higher sales growth nor does it lead to higher accounting returns (Ittner and Larcker 1997). Superior quality is what consumers really look for in a new product (Liebowitz and Margolis 1990; Yin and Tellis 2003). Indeed, quality may well be the most important factor in the success of products and the market performance of competing brands (Tellis and Golder 2001). Yet, firms may systematically undervalue the importance of quality.

This paper suggests a simple but powerful method by which one can measure quality and assess market rewards to it: the event analysis of abnormal stock market returns of firms whose new products are publicly and systematically rated. Use of stock prices for market valuation has at least three benefits. First, data on stock prices is abundant and precise. Second, an accepted paradigm of research provides a clear method, the event study, for assessing stock market returns to information about quality. Third, a focus on stock prices is responsive to the ultimate goal of the firm — maximizing shareholder value (Srivastava, Shervani and Fahey 1998).”

The clear takeaway here for product companies is to focus on getting the product right first and only when the product quality is high should you think about getting that product in front of Mossberg.

Wired may have captured it best:“Walt Mossberg is walking through a convention hall at the Consumer Electronics Show in Las Vegas when a man starts screaming at him. The screamer, Hugh Panero, blames Mossberg for his firm’s recent problems: falling stock price, a sudden plunge in consumer interest. Mossberg is annoyed but hardly intimidated. As the author of the weekly ‘Personal Technology’ column in The Wall Street Journal, he’s used to dealing with disgruntled execs. He lets Panero shout. A crowd is gathering. Finally, Mossberg yells back, ‘I don’t give a f—- about your stock price!’”