Influencer Marketing with Fake Followers

45 Pages Posted: 26 Dec 2018 Last revised: 17 Mar 2022

See all articles by Abhinav Anand

Abhinav Anand

IIM Bangalore

Souvik Dutta

Indraprastha Institute of Information Technology

Prithwiraj Mukherjee

Indian Institute of Management (IIMB), Bangalore

Date Written: March 16, 2022

Abstract

Influencer marketing is a practice in which an advertiser pays a popular social media user (influencer) in exchange for brand endorsement. We develop a contract-theoretic model of an advertiser and an influencer. The influencer can inflate her publicly displayed follower count by buying fake followers, and can take a hidden action to legitimately increase her true number of followers. An imperfect audit can detect fraud, which imposes a high cost on the influencer. We show that the optimal contract exhibits high faking for influencers with intermediate follower counts, while faking levels are low for those with very small or very large true follower counts. Audits deter fraud only when accompanied by high penalties, but perversely, restitution paid to the advertiser encourage more fraud.

Keywords: Digital marketing, social media, influencer marketing, fake followers, optimal control, contract theory, moral hazard.

Suggested Citation

Anand, Abhinav and Dutta, Souvik and Mukherjee, Prithwiraj, Influencer Marketing with Fake Followers (March 16, 2022). IIM Bangalore Research Paper No. 580, Available at SSRN: https://ssrn.com/abstract=3306088 or http://dx.doi.org/10.2139/ssrn.3306088

Abhinav Anand (Contact Author)

IIM Bangalore ( email )

Bannerghatta Road
Bangalore, 560 076
India

Souvik Dutta

Indraprastha Institute of Information Technology ( email )

Okhla, Phase III
Near Govind Puri Metro Station
New Delhi, 110020
India

Prithwiraj Mukherjee

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

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