The Role of Social Learning in Influencer Marketing

Abstract

In influencer marketing, marketers can leverage the attention of followers through sponsored content posted by influencers and social learning among followers via interactions with these posts. We explore how a marketer can optimally leverage influencer marketing using these distinctive features. The decision to encourage social learning or to focus solely on awareness depends on the initial uncertainty of the product quality and the amount of learning achievable through influencer marketing. The amount of learning depends on the influencer's choice of creative contribution to the campaign. Social learning is valuable to the marketer only if the option value from learning is high because the brand is relatively unknown a-priori. We show that when an influencer values consumer surplus he may create less creative (and more informative) content than what is optimal for the marketer in terms of learning. Furthermore, our analysis demonstrates that for an unknown brand, a mega influencer with a large following fosters more information aggregation and yields higher profits. In contrast, for an established brand, using many micro influencers with fewer followers yield higher profits by creating attention while minimizing learning about the product. Our model also explains why influencer campaigns either "go viral" or "go bust".

Keywords: Influencer marketing, social learning, online advertising, targeting, word of mouth, social media marketing

JEL Classification: M31, M37, D83