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3173. Advertising by Recruiting Influencers

Contributed abstract in session MA-59: Pricing and applications 3, stream Pricing and Revenue Management.

Monday, 8:30-10:00
Room: S08 (building: 101)

Authors (first author is the speaker)

1. Maya Jalloul
Information Systems and Operations Management, HEC Paris
2. Vasiliki Kostami
HEC Paris

Abstract

The growth of social media platforms allowed customers to rely on influencers and past consumers’ experiences for their purchase decisions. In this paper, we address some of the firm's challenges of influencer marketing by considering different types of influencers and partnership schemes with them and we address the effect of social learning. We introduce a two-period model. In the first period, the firm launches a new product and an influencer marketing campaign. The campaign can rely on two types of influencers that differ in popularity and credibility and two potential partnerships; sponsored advertising and public relations. Customers make their purchase decisions using their original beliefs, the information obtained via the influencers they follow, and reviews of early adopters as they become available in the second period. When customers are equally likely to follow the same influencer, the firm should partner with a single influencer type through a single type of partnership. Furthermore, social learning is highly beneficial for an undervalued product when supplemented by advertising. Finally, in a society formed by classes where followers and influencers usually belong to the same class, a diverse mix of influencer advertising methods can be optimal. We suggest the strategic partnerships a firm should establish with social media influencers depending on their credibility and popularity, the market composition, and the characteristics of the social media platform.

Keywords

Status: accepted

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