Impact of viral views on Facebook’s advertising revenue

IS literature has examined social networks from the perspectives of advertisement targeting, impact of central nodes and network characteristics on information diusion. As a result, paid ad campaigns are not well understood and there is uncertainty with respect to how much an advertiser should spend and for how long, particularly as advertisers may control spending across the campaign duration. This paper attempts to fill this gap and analyzes the optimal advertising strategy for rms on Facebook. Results indicate there are distinct regions where Facebooks revenue decreases as sharing increases, just as there exist regions where Facebook’s revenue increases with sharing. This leads us to examine the possible causes behind advertiser spending behavior, and the explanation as to why viral views might both complement and substitute for ad spending.

Full Paper from WITS 2013, Milan here.

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