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

Abstract

We investigate the participation and effectiveness of paid endorsers in sponsored tweet campaigns. We manipulate the financial pay rate offered to endorsers on the Chinese paid endorsement platform weituitui.com, 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 self-select to endorse only specific tweets. 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% to 17% 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 12% to 40% compared to models ignoring adverse selection.

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