Advertising Competitions in Social Networks

TL;DR

This paper models advertising competition in social networks using game theory, deriving equilibrium strategies for marketing campaigns considering peer influence and network value, with analytical solutions for various scenarios.

Contribution

It introduces a game-theoretic framework for advertising in social networks, providing analytical expressions for equilibrium strategies considering peer influence and network value.

Findings

Derived a closed-form symmetric equilibrium strategy for marketing campaigns.

Analyzed different scenarios like Winner-takes-all and Borda, retrieving their equilibrium strategies.

Provided insights into resource allocation in competitive social network advertising.

Abstract

In the present work, we study the advertising competition of several marketing campaigns who need to determine how many resources to allocate to potential customers to advertise their products through direct marketing while taking into account that competing marketing campaigns are trying to do the same. Potential customers rank marketing campaigns according to the offers, promotions or discounts made to them. Taking into account the intrinsic value of potential customers as well as the peer influence that they exert over other potential customers we consider the network value as a measure of their importance in the market and we find an analytical expression for it.We analyze the marketing campaigns competition from a game theory point of view, finding a closed form expression of the symmetric equilibrium offer strategy for the marketing campaigns from which no campaign has any incentive to deviate. We also present several scenarios, such as Winner-takes-all and Borda, but not the only possible ones for which our results allow us to retrieve in a simple way the corresponding equilibrium strategy.