Pricing Strategies for Viral Marketing on Social Networks

Abstract. We study the use of viral marketing strategies on social networks that seek to maximize revenue from the sale of a single product. We propose a model in which the decision of a buyer to buy the product is influenced by friends that own the product and the price at which the product is offered. The influence model we analyze is quite general, naturally extending both the Linear Threshold model and the Independent Cascade model, while also incorporating price information. We consider sales proceeding in a cascading manner through the network, i.e. a buyer is offered the product via recommendations from its neighbors who own the product. In this setting, the seller influences events by offering a cashback to recommenders and by setting prices (via coupons or discounts) for each buyer in the social network. This choice of prices for the buyers is termed as the seller’s strategy. Finding a seller strategy which maximizes the expected revenue in this setting turns out to be...

• Type: Conference
• Year: 2009
• Where: WINE
• Authors: David Arthur, Rajeev Motwani, Aneesh Sharma, Ying Xu 0002
• Keywords: Buyers, Seller Strategy, Social Network, WINE 2009