First, Go Big or Go Small? Analysis of Sequential Social Advertisement
30 Pages Posted: 5 Aug 2017 Last revised: 24 Jun 2018
Date Written: June 16, 2018
Social media platforms like Twitter and Facebook have emerged as new channels for advertising that enable customer targeting based on demographics, interests, and user behavior. Spillover through word of mouth (WOM) and user engagement plays a crucial role in social media marketing. Since individuals are part of multiple groups (based on their diversified interests) on social media, strategically sequencing ad campaigns across asymmetric groups can potentially increase sales. In this paper, we present a theoretical model for information retention and show that sequence order of ads across different target groups may have asymmetric outcomes. We then estimate the effect of sequence order (targeting users in a small group followed by users in a large group, and vice versa) on sales through randomized field experiments on two dominant social media platforms (Facebook and Twitter). While advertising on small groups provides better returns on Twitter and ads on large group perform better on Facebook, we find that sequentially advertising initially to a small group followed by large group performs better on both platforms. The managerial insight behind our findings can help practitioners in strategically sequences ad campaigns across the different group and optimize the returns from social media.
Keywords: Social Media, Advertising, Social Media Marketing, Strategic Sequencing, Spillover.
JEL Classification: M00, M30, M31, M37
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