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

Abstract

We investigate the participation and effectiveness of paid endorsers in viral-for-hire social advertising. Specifically, we investigate (i) how the financial incentive affects endorsers’ participation and effectiveness in paid endorsement campaigns, (ii) what types of endorsers are most effective in generating online engagements (likes, comments, and retweets), and (iii) whether that varies across types of engagements that require different levels of efforts from followers. We conduct a field experiment with an invitation design in which we manipulate both incentives and a soft eligibility requirement to participate in the campaign. 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 use 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 do not increase participation, whereas lower payments decrease participation. Neither gains nor losses affect performance. (2) Potential endorsers who are more likely to participate tend to be less effective. (3) Which 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.​

Keywords: Paid endorsement, Social advertising, Targeting, Viral marketing, Sample selection