INFLUENCER-GENERATED ORGANIC CONTENT AND FIRM STRATEGIES

Abstract

Consumers are now increasingly relying on social media to discover new products and acquire information about product fit. Influencer-generated organic product reviews, as an independent source of product information, play an increasingly important role in consumers’ purchase decisions. We develop a game-theoretic model to examine whether and how an influencer’s organic product review affects a firm’s advertising and pricing strategies, profit, and consumer surplus. We find that in the presence of consumer search, the influencer’s organic content interacts with the firm’s strategies, suggesting new ways for a firm to manage the influencer’s seemingly independent content. Our results also show that the two types of information (influencer’s organic review and firm-created ad) can be complements or substitutes when the firm targets experts only and the cost of review production is low. Our findings complement the existing research on influencers and offer managerial implications for marketers and policymakers.