Cooperative Advertising Strategies In Social Media Based On Communication Between Individuals

Cooperative advertising is a commonly-used method in modern advertisement market.However,the development of social media,such as websites and mobile phones,has challenged the business models based on the features of traditional media.The special features of new media advertising,such as accurate advertisement,communication between advertisers and advertisement receivers,and a great change in the calculation of payment,make new media advertising significantly different from traditional methods,and as a result,call for a change in the description and research on cooperative advertising models.In this article,we try to combine social network with the cooperative advertisement model,in order to analyze the decisions and profits of both the manufacturer and the retailer.We use the commonly used voter model to introduce social network into the traditional cooperative advertising model.We use the model to describe the features of cooperative advertisement through social media,especially communication among users of social media.Based on the model,we calculate the profit of both the manufacturer and retailer in the cooperative advertising model,and analyze the decisions of both sides in a Stackelberg game deciding the scale of advertisement and the participation rate for the retailer.Some main conclusions are as follows: the amount of advertisement rises as the profit per product increases;the increase in the effect of advertisement only stimulates the retailer to raise advertisement expenditure,for the manufacturer will have a strong motivation to take free rides instead of invest more.According to the cooperative advertising model in social networks,we use both theoretical analysis and numerical examples to discuss the value of accurate advertising and cooperation.We reach the conclusion that the value of accurate advertisement increases as the imbalance of centrality among consumers increases.We also conclude that cooperative advertising boosts the profit of the whole supply chain when the participation rate is in a rational range,and the highest efficiency of the supply chain depends on the fairness in the participation of the advertisement expenses.Last but not least,we introduce competition among retailers into the model,and conclude that adding additional retailers into the supply chain will stimulate the retailer to advertise more in the market,thus saving advertisement expenses for the manufacturer.Another main contribution of the article is that we offer a concise mathematical explanation of the so-called ?value of the commons‘,a widely accepted belief among new media industry.We also come up with a range of participation rate for situations where the idea of the value of the commons holds true,in order to adapt the model to new media environment.We also obtain some other results,for example,the fairness in advertisement cost participation is impossible if value of the commons assumption holds true.