The Sales Impacts of Traffic Acquisition Promotion in Live-Streaming Commerce

Abstract

Live-streaming commerce, a combination of live streaming and e-commerce on social media platforms, has been a huge phenomenon over the past few years. Recently, the lucky draw (also known as sweepstakes) stands out as one of the most popular promotion innovations for traffic acquisition in live-streaming commerce. As a non-price-based operational lever, lucky draws offer not only utilitarian benefits (i.e., winning rewards) but also social values that engage and entertain participants (i.e., participating in a social event). Exploiting a comprehensive dataset collected from TikTok (China), we examine lucky draws’ sales impacts on live-streaming events. Although the adoption of lucky draw results in an overall sales improvement, it can backfire when streamers stop offering the promotion: The sales of post-adoption events without lucky draws are substantially worse off than pre-adoption ones. These findings highlight both lucky draws’ benefits and their backfiring effects, providing operational implications associated with utilizing this type of promotion. In addition, we find that the lucky draw promotion exhibits significant heterogeneity in terms of impacting sales of streamers with various levels of popularity. Less well-known streamers benefit from the promotion remarkably better than more well-known streamers. Further, we explore the underlying mechanisms of lucky draws’ sale effects by analyzing their traffic effects on follower flow and non-follower flow.

Keywords: Live streaming commerce, Lucky draw, Sales effects, Negative spillover, Difference-in-differences