Working papers

Influencer Dynamics (job market paper)

Consumers use social media for entertainment and to discover new products. To reach potential customers, brands pay influencers to feature products in their content. Payment depends on the size of the influencer’s audience, and the effectiveness of the endorsement relies on trust. Inauthentic recommendations may erode the relationship between an influencer and their followers. To grow their audience while maintaining its loyalty, an influencer must choose their content carefully. I develop a dynamic model in which influencers consider both short and long term costs and benefits from producing content. Both organic and sponsored posts require effort to produce and affect the influencer’s growth. Sponsored content incurs an additional cost since it requires negotiations with brands and because the influencer may feel bad about selling out. Analyzing the career histories of 1,369 influencers, I show that organic and sponsored posts have nearly identical effects on follower growth, but influencers produce much more organic than sponsored content. The cost unique to sponsored content generates this gap. On net, influencers increase their fraction of sponsored content up to a certain size and then begin to decrease it slightly. While influencers occasionally go viral, their career progression largely depends on consistent effort.

Works in progress

Platform Competition with Network-based Ad Targeting