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Selling through social media influencers in influencer marketing: participation-based contract versus sales-based contract

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Abstract

With the rise of social media, social media platforms such as Instagram, TikTok, YouTube, and Twitter have been the venues to promote products in the era of digitalization. We develop game-theoretical models to investigate the impacts of the participation-based contract (PBC) and sales-based contract (SBC) on the sales of new experience products that are promoted through social media influencers (hereafter referred to as influencers). We find that both the firm and influencers can achieve a win–win outcome with the use of the SBC (PBC) if product quality is sufficiently low (high), but they cannot reach a consensus on using the same contract when selling the products that fall into a moderate range. Moreover, with the increased network overlapping effect, that is, endorsed influencers comprise a group with a larger number of similar followers, both the firm and influencers are more (less) likely to use the SBC (PBC); a stronger followership traffic effect, quantified by the number of followers, may cause difficulty in alignment of interests in influencer marketing contracting. Results provide managerial insights into designing product quality-based and influencer attributes-based influencer marketing contracts.

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Acknowledgements

The authors sincerely thank the editor and reviewers for their constructive comments. This paper was partially supported by the National Natural Science Foundation of China (grant numbers 72271050, 71871051, 71832001).

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Authors and Affiliations

  1. Glorious Sun School of Business and Management, Donghua University, Shanghai, China

    Bin Shen & Ming Cheng

  2. Shanghai Innovation Institute for Smart Process Manufacturing, Shanghai, China

    Renlong He

  3. Key Laboratory of Smart Manufacturing in Energy Chemical Process, Ministry of Education, East China University of Science and Technology, Shanghai, China

    Minglei Yang

Authors
  1. Bin Shen
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  2. Ming Cheng
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  4. Minglei Yang
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Correspondence to Minglei Yang.

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Shen, B., Cheng, M., He, R. et al. Selling through social media influencers in influencer marketing: participation-based contract versus sales-based contract. Electron Commer Res (2022). https://doi.org/10.1007/s10660-022-09600-5

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