Firms are increasingly using social media influencers to promote their products. We develop a two-period model to investigate a firm’s strategy for introducing a product via an influencer, where there is uncertainty in the influencer-product match. In the second period, the influencer exerts an effort to promote the product to her followers, who can spread the product information to non-followers via word-of-mouth (WOM). In the second period, the firm sells to the non-followers. We show that the firm’s pricing, production, and commission contract decisions depend on the influencer’s incentive-independent excess payoff from the promotion and on the difference between the WOM effect of followers who do or do not make a purchase rather than the WOM effect of each group. As the influencer’s incentive-independent payoff increase, the firm will increase (decrease) commissison rate and commission rate when the followers’ sensitivity to product price is relatively low (high) compared with that to the influencer’s effort. As the marginal WOM benefit of the first-period sales increases, the firm tends to reduce his unit net profit from sales. The influencer with a medium-sized follower base receives the highest commission rate and exerts the largest promotion effort. While the followers of influencers with a medium-sized follower base may pay the highest price. We also show that (i) there exists a threshold for the probability of match, above which the firm faces zero demand in the first period if an influencer-product mismatch occurs; and (ii) the firm may charge followers a lower price than non-followers, even though followers are less sensitive to price than non-followers. Finally, regarding influencer selection, we find that the firm may not be better off employing an influencer with a larger follower base.

With social media spreading and social media influencers (SMIs) becoming popular and monetising their content, research on how they become entrepreneurs and the enterprising characteristics of SMIs remains limited. Due to this, the study examines through the use of case studies the evolution of hobbyist SMIs into professional entrepreneurs.

Advanced web technologies enable consumers can create and exchange the content in various social media platforms (SMPs). As an interactive communication channel, SMPs serve as a new and updated form of online community where consumers and companies benefit from each other. Due to its minimal threshold in cost and skills necessary for accessing these SMPs, consumers use SMPs to acquire information in addition to seeking for socialization, which affect a purchase decision making process (Wang, Yu, and Wei, 2012). With various benefits of using SMPs among consumers, product reviews and photos posted by the customers in SMPs perform as an emerging type of endorsement to other users of SMPs. Individuals who actively share and disseminate the such product/service related-contents often become micro-celebrities among SMPs users. According to DiSilvestro (2016), customers no longer trust advertising created by brands, but they prefer to reply on reviews via SMPs, and in fact, 67% of consumers visit SMPs to reviews generated by other customers. In this regard, increasing number of brands tries to find influential micro-celebrities to build positive brand image and provide meaningful customer engagement which potentially increase sales in the end (Khamis, Ang, and Welling, 2016). Despite the increasing popularity of SMPs and influencers to brands, marketers struggle to measure their returns on investment, such as customer retention and increased customer lifetime value (Hennig-Thurau et al., 2010). Thus, a focal interest of this study is the role of a sense of community in building participants’ positive relational outcomes for a given brand that implementing the promotional activities via SMPs (Hudson et al., 2016).

This study attempts to investigate consumers’ perceptual process of influencer advertising and its impact on brand attitude formation on social media. Perceived congruence between the influencer and the product and sponsorship disclosure are manipulated as key independent variables. In so doing, this study examines whether consumers can infer two types of motives (affective vs. calculative) from different levels of perceived congruence (high vs. low) and sponsorship disclosure (present vs. absent). The impact of multiple motive inference on brand attitude is also examined in this study. The result indicates that perceived congruence of influencer and posting has a significant effect on the affective motive inference. When the posting is perceived to be relevant to and expected from the influencer, the participants infer the affective motive of the influencer. However, the participants do not infer calculative motives from the incongruent posting of the influencer. As native advertising can obfuscate the boundary between editorial and commercial contents (Conill, 2016), perceived congruence is significant to successfully cover the posting as a natural posting by influencer and induce affective motive inference. In addition, the disclosure of sponsorship did not reveal any effect on the calculative and the affective motive inferences. Even though the disclosure of sponsorship can make viewers recognize an advertising intent (Boerman, Willemsen, & Van Der Aa, 2017), the message did not induce motives inference behind it. It is significant to investigate whether there are intervening variables that moderate the linkage between sponsorship disclosure and motive inference processing. Furthermore, affective motive inference impacted the attitude for the brand whereas calculative motive inference exerted no significant effect. These findings suggest that when the product promoted in influencer advertising is congruent with the influencer, consumers form positive attitude toward the brand through affective inference processing. To successfully implement influencer advertising, marketers should design a content congruent with the influencer’s original postings and encourage audience to engage in affective motive processing.