“Thumb up advertising”is a new and effective way to spread shared advertising in social media.How the retailer adapts“thumb up advertising”in marketing with a game theory model is analyzed.The results show that when the retailer chooses to thumb up the advertising in Moments,a higher reward will increase the equilibrium price but hurt the retailer s expected profit;if the consumers can more easily reach the thumb up amount,the retailer will charge a higher price,and possibly gain more profit.When the retailer chooses thumb up at the end of the advertising context,a higher reward will increase the equilibrium price and the retailers expected profit will increase/decrease.If the consumers are easier to reach the thumb up amount,the retailer will charge a higher price,and may get more profit.If a consumer s click cost of clicking the sharing advertising is higher,the retailer charges a lower price;and if the consumer s additional perceived value from the advertising is higher,the retailer charges a higher price and reaps more profit.
An appropriate advertising mode selection and allocation of advertising budgets considering advertising budget constraints are developed with the game theory and optimization model.The results show that the advertising budget and the weakening factor of the online advertising effects on the traditional advertising affect sellers advertising,pricing strategies and budget allocation.The effectiveness of combination advertising is a Pareto optimum relative to the traditional advertising in a certain range.The weakening effect of the online advertising on the traditional advertising has a nonlinear effect on the advertising strategy and pricing strategy.In addition,sellers choose combination advertising with different budget constraints,and there is an optimal budget allocation ratio.In certain cases,sellers can obtain an optimal advertising expenditure less than the budget constrain.When sellers adopt combination advertising with enough budget,they do not invest in traditional advertising without limit.Moreover,compared with enough budget,when sellers adopt combination advertising with budget constrain,sellers do not decrease the advertising allocation of online advertising since online advertising is more efficient.
A two-period model is developed to investigate the competitive effects of targeted advertising with imperfect targeting in a duopolistic market. In the first period, two firms compete in price in order to recognize customers. In the second period, targeted advertising plays an informative role and acts as a price discrimination device. The firms＇ optimal advertising and pricing strategies under imperfect targeting are compared with those under perfect targeting. Equilibrium decisions show that, under imperfect targeting, when the advertising cost is low enough, both firms will choose to target ads at the rivals＇ old segments. This equilibrium, which could not exist under perfect targeting, results in two opposite results. When cost is high, the effect of mis-targeting will soften price competition and increase profits; on the contrary, when cost is low enough, it will lead to aggressive price competition and profit loss with the increase of imperfect targeting, so firms may have incentives to reduce the mis- targeting degree.
