Participation vs. Effectiveness in Sponsored Tweet Campaigns: A Quality-Quantity Conundrum

Management Science (forthcoming)

57 Pages Posted: 12 Dec 2015 Last revised: 21 Aug 2023

See all articles by Jing Peng

Jing Peng

University of Connecticut - Department of Operations & Information Management

Christophe Van den Bulte

University of Pennsylvania - Marketing Department

Date Written: August 20, 2023

Abstract

We investigate the participation and effectiveness of paid endorsers in sponsored tweet campaigns. We manipulate the financial pay rate offered to endorsers on a Chinese paid endorsement platform, where payouts are contingent on participation rather than engagement outcomes. Hence, our design can distinguish between variation in participation and variation in outcomes, even if people select to endorse only specific tweets. Also, the lack of compensation for effort allows one to attribute differences in outcomes to pre-contractual selection rather than post-contractual behavior. The main finding is that endorsers exhibited adverse selection: Several observed and unobserved endorser characteristics associated with a higher propensity to participate had a negative association with being an effective endorser given participation. This adverse selection results in a conundrum when trying to recruit a sizable number of high-quality endorsers. Only 9.5% to 11.8% of the endorsers were above the median in both the propensity to participate and the propensity to be effective, compared to a benchmark of 25% in the absence of any association. A simulation analysis of various targeting approaches that leverages our data of actual endorsements and outcomes shows that targeting candidate endorsers by scoring and ranking them using models taking into account adverse selection on observables improves campaign outcomes by 13% to 55% compared to models ignoring adverse selection.

Keywords: Paid endorsement, Sponsored tweets, Targeting, Viral marketing, Adverse selection

Suggested Citation

Peng, Jing and Van den Bulte, Christophe, Participation vs. Effectiveness in Sponsored Tweet Campaigns: A Quality-Quantity Conundrum (August 20, 2023). Management Science (forthcoming), Available at SSRN: https://ssrn.com/abstract=2702053 or http://dx.doi.org/10.2139/ssrn.2702053

Jing Peng (Contact Author)

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Christophe Van den Bulte

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

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