The market for influence, by Fainmesser and Galeotti (the movie)

Here's a nicely done "trailer" for a paper by Itay Fainmesser and Andrea Galeotti. It's a three minute video...
"The Market for Influence" by Itay Fainmesser and Andrea Galeotti from Itay Fainmesser on Vimeo.

For you dinosaurs who prefer an abstract to a trailer, here it is, with the whole movie paper at the link.

The Market for Influence

Itay P Fainmesser

Johns Hopkins University - Carey Business School

Andrea Galeotti

University of Essex

Date Written: August 2018

Abstract

Influencer marketing is the fast-growing practice in which marketers purchase product endorsements from influencers — who are individuals with many followers and strong reputations in niche markets. This paper develops a model of the market interactions between influencers, followers, and marketers. Influencers trade off the increased revenue they obtain from more paid endorsements with the negative impact that this has on their followers’ engagement, which in turn affects the price marketers are willing to pay for their endorsement. Our analysis provides testable predictions on how the price that influencers receive depends on the size of their audience and how an improvement in the online search technology affects influencers’ competition for followers and marketers. We show that, in equilibrium, over- and under-provision of paid endorsements coexist. We evaluate the strategic effects of recent, transparency-motivated policy interventions implemented by competition authorities in the US and Europe, requiring influencers to clearly indicate marketer-sponsored content.

Suggested Citation:

Fainmesser, Itay P and Galeotti, Andrea, The Market for Influence (August 2018). Available at SSRN: https://ssrn.com/abstract=3207810 or http://dx.doi.org/10.2139/ssrn.3207810

  Before the paper was made into a movie, I had earlier posted about it and a related news article here:

Wednesday, July 18, 2018

Matching endorsements to endorsers