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

Operations and Information Management Department; Faculty Adviser: Christophe Van den Bulte

Social advertising uses the connections in social networks to reach and influence a target audience. Paid endorsement is an increasingly popular social advertising mechanism that allows advertisers, especially small online retailers, to bypass publishers (e.g., Facebook, Twitter) and recruit individual endorsers of their own choosing at pre-specified prices. Despite the growing interest in paid endorsement, measuring the performance of social ads impedes the further deployment of paid endorsement and other forms of social advertising.

This project seeks to measure the impact of paid endorsement on sales and reach through large-scale field experiments, carried out in collaboration with weibo.com, China’s largest microblog platform with over 500 million users, and online retailers on taobao.com, China’s largest ecommerce website. Specifically, the research investigates 1) how paid endorsement (high vs. low) and the characteristics of products (mass vs. niche appeal) affect the effectiveness of ads on social media platforms as measured by sales and reach (likes, comments, shares, exposures, and clicks), and 2) what affects endorsers’ decision to participate in paid endorsement and their ability to generate sales and reach.

The research findings will also provide practical guidelines for retailers as to how to incentivize endorsers and what to advertise on social media platforms. Paid endorsement is an affordable solution to advertising online. This research is of great importance to retailers in a variety of industries, particularly small retailers with a limited advertising budget.