Understanding the evolution of engagement with brand posts on social media using agent-based models

Abstract

Purpose This paper aims to delineate the nature of the costs associated with the diffusion of brand posts. Since cost is an essential component of customer lifetime value, this research also aims to identify factors that impact consumer engagement (CE) with brand posts. Design/methodology/approach This study conceptualize marginal cost of CE as the ratio of a unit change in cost for a unit change in CE – this ratio is conceptualized for a paid brand post compared to an organic brand post. The authors present a theoretically grounded simulation method that analyzes the relative impact of several factors that influence CE with brand posts. By using an agent-based simulation model, the method presented in this paper helps explain the relative impact of four factors on CE with brand posts on social media. Findings The authors explain four factors that influence the diffusion of CE with a brand post – promotion-related (i.e. whether it is paid vs organic), network-related, user-related and active periods. The authors also show that the effectiveness of paid posts vs organic posts attributed to a better audience assembled by the seeding algorithms dissipates after the initial stages of diffusion. These findings indicate that paid posts are effective vs organic posts in large part due to higher exposure than due to the efficiency of the algorithms to assemble nodes that are likely to engage with the post. Research limitations/implications An agent-based model details the impact of several factors that influence the effectiveness of paid and organic posts and presents methods to analyze the impact of these factors that have implications for theory. Practical implications The authors address the difficulty in ascertaining the effectiveness of paid posts by proposing a metric – marginal cost of engagement, defined as the incremental cost incurred by the marketer in earning one additional unit of CE. Since the costs incurred on paid and organic posts differ only on variable components, the marginal cost of engagement presents a way to benchmark paid posts against organic posts, which is very useful for managers in ascertaining the amount to spend on paid posts on social media. Originality/value There is little prior research on the costs involved in the diffusion of brand posts on social media. Identifying specific factors that impact costs is valuable for theory and practice.