Participation vs. Effectiveness of Paid Endorsers in Social Advertising Campaigns: A Field Experiment

We investigate the participation and effectiveness of paid endorsers in viral-for-hire social advertising. We conduct a field experiment with an invitation design in which we manipulate both incentives and a soft eligibility requirement to participate in campaigns. The latter provides a strong and valid instrument to separate participation from outcomes effects. Since likes, comments, and retweets are count variables, and since potential endorsers can self-select to participate in multiple campaigns, we propose a Poisson lognormal model with sample selection and correlated random effects to analyze variations in participation and effectiveness. There are three main findings. (1) Payments higher than the average reward a potential endorser received in the past (gains) do not increase participation, whereas lower payments (losses) decrease participation. Neither gains nor losses affect effectiveness. (2) Potential endorsers who are more likely to participate tend to be less effective. (3) Which endorser characteristics are associated with effectiveness depends on whether success is measured in likes, comments, or retweets. These findings provide new insights on how marketers can improve social advertising campaigns by better targeting and incenting potential endorsers

How to Better Target and Incent Paid Endorsers in Social Advertising Campaigns: A Field Experiment

We investigate paid endorsement as a crowd-sourcing social advertising mechanism that allows advertisers to bypass publishers (e.g., Facebook) and recruit individual endorsers of their own choice at affordable prices. Specifically, we investigate (i) how incentives affect endorsers’ participation and effectiveness, (ii) what types of endorsers are most effective in generating online engagement (likes, comments, and retweets), and (iii) the potential differences between generating different types of engagements. We conduct a large scale field experiment in which we manipulate exogenously pay rates and eligibility to participate. Our findings suggest that increasing financial incentive doesn’t necessarily improve participation rate. In addition, endorsers who are effective are often not responsive. Further, it can be misleading to assess the attractiveness of endorsers simply based on observed engagements. Our findings provide new insights on how marketers can improve the effectiveness of paid endorsement by identifying and incentivizing high potential endorsers

Medical Innovation Revisited: Social Contagion versus Marketing Effort

This article shows that Medical Innovation—the landmark study by Coleman, Katz, and Menzel—and several subsequent studies analyzing the diffusion of the drug tetracycline have confounded social contagion with marketing effects. The article describes the medical community’s understanding of tetracycline and how the drug was marketed. This situational analysis finds no reasons to expect social contagion; instead, aggressive marketing efforts may have played an important role. The Medical Innovation data set is reanalyzed and supplemented with newly collected advertising data. When marketing efforts are controlled for, contagion effects disappear. The article underscores the importance of controlling for potential confounds when studying the role of social contagion in innovation diffusion

Contagion and heterogeneity in new product diffusion: An emperical test

Marketing researchers often assume that innovation diffusion is affected by social contagion. However, there is increasing skepticism about the importance of contagion and, as has long been known, S-shaped diffusion curves can also result from heterogeneity in the propensity to adopt. To gain insight into the role of these two different—though not mutually exclusive—mechanisms, we present substantive conjectures about conditions under which contagion and heterogeneity are more pronounced, and test these conjectures using a meta-analysis of the q/p ratio in applications of the Bass diffusion model. We find that the q/p ratio is positively associated with the Gini index of income inequality in a country, supporting the heterogeneity-in-thresholds interpretation. We also find evidence that q/p varies as predicted by the G/SG diffusion model, but the evidence vanishes once we control for national culture. As to contagion, we find that the q/p ratio varies systematically with the four Hofstede dimensions of national culture, and for three of them in a pattern theoretically consistent with the social contagion interpretation. Furthermore, we find that products with competing standards have a higher q/p ratio, which is again consistent with the social contagion interpretation. Finally, we find effects of national culture only for products without competing standards, suggesting that technological effects and culturally mediated social contagion effects may not operate independently from each other

WHEN DOES SOCIAL NETWORK-BASED PREDICTION WORK? A LARGE SCALE ANALYSIS OF BRAND AND TV AUDIENCE ENGAGEMENT BY TWITTER USERS

Social network-based prediction, more specifically targeting friends and contacts of existing customers, has proven successful in various domains like retail banking, telecommunications, and online advertising. However, little is known about for what types of product categories and brands social network-based marketing is especially effective at predicting brand engagement, both in absolute terms and compared to demographic targeting or collaborative filtering. In this work, we compare the performance of a social network-based recommendation engine against a product network-based recommendation engine of the kind used in collaborative filtering. We do so over 700 brands and 223,000 consumers a novel data set collected from Twitter. We compare the performance of the two approaches by product and user features. Preliminary results indicate that the variance in performance within and across methods is related to differences in brand and user popularity as well as brand audience

New Product Diffusion with Two Interacting Segments or Products

We study the diffusion of a product in two customer segments where the acceptance level in one segment affects the diffusion rate not only in that same segment, but also in the other. The inter-segment influence can be positive or negative, i.e., the acceptance level of the product in one segment can reinforce or impede its diffusion in the other. The model set-up also applies to the diffusion of two products, with independent and market potential, in a single population. Since the diffusion system we study does not have a closed-form solution, we use phrase plane analysis to identify the equilibrium points of the joint diffusion process and to characterize their stability properties. Further, we provide a means to identify the regions with different convergence behavior, i.e., to identify boundaries for regions within which all trajectories converge to a particular equilibrium point For the cases of asymmetric influence (+/-) and mutually impeding influence (-/-), we also provide conditions under which both products can achieve full market potential in equilibrium. Finally, we provide managerial insights into the effectiveness of two strategies in the context of asymmetric (+/-) interaction between two customer segments: (1) seeding, i.e., using free samples to support the launch of a product in one segment being harmed by the adoption in the other, and (2) demand control, i.e., purposely limiting market potential for the customer segment harming product diffusion in the other segment

Credit Scoring with Social Network Data

Motivated by the growing practice of using social network data in credit scoring, we analyze the impact of using network-based measures on customer score accuracy and on tie formation among customers. We develop a series of models to compare the accuracy of customer scores obtained with and without network data. We also investigate how the accuracy of social network-based scores changes when consumers can strategically construct their social networks to attain higher scores. We find that those who are motivated to improve their scores may form fewer ties and focus more on similar partners. The impact of such endogenous tie formation on the accuracy of consumer score is ambiguous. Scores can become more accurate as a result of modifications in social networks, but this accuracy improvement may come with greater network fragmentation. The threat of social exclusion in such endogenously formed networks provides incentives to low-type members to exert effort that improves everyone\u27s creditworthiness. We discuss implications for managers and public policy

The Sales Effect of Word of Mouth: A Model for Creative Goods and Estimates for Novels

Weekly sales of creative goods – like music records, movies or books – usually peak shortly after release and then decline quickly. In many cases, however, they follow a hump-shaped pattern where sales increase for some time. A popular explanation for this phenomenon is word of mouth among a population of heterogeneous buyers, but previous studies typically assume buyer homogeneity or neglect word of mouth altogether. In this paper, I study a model of new-product diffusion with heterogeneous buyers that allows for a quantification of the sales effect of word of mouth. The model includes Christmas sales as a special case. All parameters have an intuitive interpretation. Simulation results suggest that the parameters are estimable for data that are not too volatile and that cover a sufficiently large part of a title’s life cycle. I estimate the model for four exemplary novels using scanner data on weekly sales.Meistens erreichen die wöchentlichen Verkäufe von kreativen Produkten wie Musikalben, Kinofilmen oder Büchern kurz nach Veröffentlichung ihren Höhepunkt und nehmen dann schnell ab. In einigen Fällen jedoch zeigen sie einen buckelartigen Verlauf mit zunächst ansteigenden Verkäufen. Eine populäre Erklärung für dieses Phänomen beruht auf der Existenz von Mundpropaganda unter heterogenen Käufern, doch bisherige Studien gehen typischerweise von der Annahme homogener Käufer aus oder vernachlässigen Mundpropaganda gänzlich. Dieses Papier betrachtet ein Modell der Verbreitung neuer Produkte unter heterogenen Käufern, welches eine Quantifizierung der Verkaufswirkung von Mundpropaganda ermöglicht. Das Modell beinhaltet Weihnachtsverkäufe als Spezialfall. Alle Modellparameter haben eine intuitive Bedeutung. Ergebnisse einer Simulation zeigen, dass die Parameter empirisch geschätzt werden können, wenn die Daten einen hinreichend großen Teil des Verkaufszyklus eines Titels abdecken und nicht zu volatil sind. Das Modell wird auf Scannerdaten für vier exemplarische Romane angewendet

(De)marketing to Manage Consumer Quality Inferences

Savvy consumers attribute a product’s market performance to its intrinsic quality as well as the seller’s marketing push. The authors study how sellers should optimize their marketing decisions in response. They find that a seller can benefit from “demarketing” its product, meaning visibly toning down its marketing efforts. Demarketing lowers expected sales ex ante but improves product quality image ex post, as consumers attribute good sales to superior quality and lackluster sales to insufficient marketing. The authors derive conditions under which demarketing can be a recommendable business strategy. A series of experiments confirm these prediction