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Marketing with Shallow and Prudent Influencers

Author

Listed:
  • Ron Berman

    (The Wharton School, University of Pennsylvania, 3730 Walnut Street, Philadelphia, PA 19104, USA)

  • Xudong Zheng

    (Johns Hopkins University, 3100 Wyman Park Drive, Baltimore, MD 21211, USA)

Abstract

Marketers often utilize social media influencers to reach audiences with more authentic and credible messaging. While some influencers are prudent and carefully test products before promoting them, many others are shallow and merely post the marketer messaging as is. We analyze the impact of shallow and prudent influencers on marketer profits, customer satisfaction, and influencer payoffs. Counter to intuition, we find that shallow influencers increase market transparency, consumer satisfaction and marketer profits, while prudent influencers entice the marketers to reduce information efficiency in the market, and increase the share of unsatisfied consumers. In a market where both shallow and prudent influencers exist, prudent influencers may increase their payoff even further by extracting additional information rent. The results provide insight into the value that shallow influencers bring to the market and guidance for marketers considering the use of influencer marketing.

Suggested Citation

  • Ron Berman & Xudong Zheng, 2020. "Marketing with Shallow and Prudent Influencers," Working Papers 20-06, NET Institute.
    • Handle: RePEc:net:wpaper:2006
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    File URL: http://www.netinst.org/Berman_20-06.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    influencer marketing; product reviews; information design; Bayesian persuasion;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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