KEY CONCEPT

New research reveals the potential benefits and pitfalls of including paid social media endorsers in new marketing efforts. The research notably revealed that paid endorsers are either eager to participate or very effective — but rarely both.

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IDEA SUMMARY

One of the fastest growing facets of social media marketing is the use of paid endorsers — a fashion blogger, for example, paid by a fashion designer to post a picture of herself wearing one of the designer’s pairs of earrings. Two researchers from the Wharton School of the University of Pennsylvania conducted a field experiment based on a microblogger site in China that highlighted the key success factors for paid social media endorsements.

Social media paid endorsement platforms such as the one used in the research enable companies to post a marketing task — for example, a tweet that the company wants spread across social — and the pay the bloggers who participate in the task.

The purpose of the field experiment was to explore the success factors behind participation (getting more endorsers to pick up the task and the level of engagement) and effectiveness (the success of endorsers in getting their followers to engage).

Note that engagement can be categorized as low effort, such as a simple like, or involve greater effort, such as commenting and retweeting.

The experiment involved rotating tasks onto the site, manipulating variables such as price, and then measuring participation and effectiveness.

One of the first findings of the research was the influence of price on participation. The researchers found that a financial incentive that was lower than normal would reduce the number of participants. However, offering a higher-than-normal financial incentive did not increase the number of participants.

The core finding of the field experiment was that endorsers who frequently participated in tasks (who frequently retweeted and commented) were less effective, while endorsers who were more effective were less likely to participate.

The categories (high participation or high effectiveness) into which the endorsers fell depended on certain characteristics:

• Previous participation: Endorsers who had participated in a large number of previous campaigns were more likely to participate in a new campaign. However, because those endorsers were less selective about which products they endorsed, they were also, as a result, less trusted by their followers — and thus less effective. Participants who in the past had been more selective about which product they endorsed would be less likely to participate in the test campaign — but more effective if they did.
• Presence: An endorser who had been on the site longer was less likely to participate; those bloggers, however, were more effective because their long presence had built up trust.
• Number of followers: Endorsers with large numbers of followers were also less likely to participate. The impact of number of followers on effectiveness, however, was a little more nuanced. Endorser with large numbers of followers were effective in getting followers to engage, but only at a lower level of engagement (such as likes). Endorsers with smaller numbers of followers were more effective in generating a higher level of engagement. The reason is that endorsers with smaller numbers had stronger ties to their followers, who were then more motivated to engage in higher-level actions (retweeting or commenting).

The bottom line is that companies seeking to use paid endorsements must recognize the opposing forces of participation and effectiveness — and often have to choose between one and the other.

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BUSINESS APPLICATION

The core finding of the research is that very few endorsers are going to be both high in participation and effectiveness. Therefore, to improve results from paid endorsements, companies need to:

• Attract the more effective endorsers who are not responding.
• Improve the more participative endorsers who are less effective.

To raise the participation rate of the less responsive but more effective endorsers (endorsers who have many followers and who have a lengthy presence on the platform), companies should ensure that their marketing material will not hurt the reputations of the endorsers. If effective endorsers are more selective, give them a reason to select your campaign. For example, carefully design your ads so that they look like organic tweets and not endorsed retweets. Another approach: offer tasks exclusively to endorsers who fit the high effectiveness profile (number of friends, length of presence).

To improve the effectiveness of responsive endorsers (endorsers who comment and tweet frequently), companies can set requirements for payment — for example, the number of words and emojis in retweets and a minimum number of people to be mentioned while retweeting. 

A final caveat: The opposing effects of participation and effectiveness can be hidden if a company does not pay careful attention. An endorser may boast about a high effectiveness, but that is only because he or she may be participating in a much greater number of campaigns. Absolute numbers can be misleading.

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REFERENCES

Participation Vs. Effectiveness of Paid Endorsers in Social Advertising Campaigns: A Field Experiment. Jing Peng & Christophe Van den Bulte. SSRN Working Paper (January 2016). 

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