Marketing with Shallow and Prudent Influencers

Abstract

Marketers often utilize social media influencers to reach audiences with more authentic and credible messaging. While some influencers are prudent and carefully test products before promoting them, many others are shallow and merely post the marketer messaging as is. We analyze the impact of shallow and prudent influencers on marketer profits, customer satisfaction, and influencer payoffs. Counter to intuition, we find that shallow influencers increase market transparency, consumer satisfaction and marketer profits, while prudent influencers entice the marketers to reduce information efficiency in the market, and increase the share of unsatisfied consumers. In a market where both shallow and prudent influencers exist, prudent influencers may increase their payoff even further by extracting additional information rent. The results provide insight into the value that shallow influencers bring to the market and guidance for marketers considering the use of influencer marketing.

Keywords: Influencer Marketing, Product Reviews, Information Design, Bayesian Persuasion

JEL Classification: D82, D83, M31