Deriving the Economic Value of Personal Branding and Network Structure in Two-sided Platforms
Dr Heng Cheng Suang, Associate Professor, School of Computing
COM2 Level 4
Executive Classroom, COM2-04-02
Abstract:
Economic transactions and interactions increasingly occur in platforms. The primary function of platforms is to connect two or multiple distinct yet complementary groups of agents. However, the nature of the connections formed in two-sided networks is still not well understood. In this thesis proposal, we propose two empirical studies to bridge this gap from two aspects: connection maintenance (Study 1) and connection structure (Study 2). Our empirical studies use a dataset from a social investment platform (SIP), which relies on social media advisors (i.e., producer side, SMAs) to contribute online investment commentaries and advice to retail investors (i.e., consumer side).
In Study 1, we investigate the role of personal branding, together with product characteristics, in maintaining connections and harvesting economics gains. In particular, we focus on micro-celebrity tactics, one type of personal branding strategies. Our research questions are
1) How does the consumer patronage affect the product quality and product quantity of a producer in a two-sided network?
2) How do a producer's network structures in her same-side, cross-side and other-side network moderate the CNE from consumer patronage on her production activities in a two-sided network?
3) How does the introduction of a content monetization method influence the CNE from consumer patronage on the production activities of a producer in a two-sided network?
By simultaneously quantifying the impact of both SMAs' micro-celebrity tactics and informational factors on their remuneration performance, we can derive the relative economic significance of these factors and infer the information preferences of retail investors. We next perform an in-depth content analysis to measure micro-celebrity tactics of SMAs and the informational factors of online investment advice. We then propose a hierarchical Bayesian modeling framework that accounts for various empirical issues: SMA heterogeneity, self-selection of paid content generation, omitted variable bias and measurement errors. Our findings demonstrate that SMAs achieve higher remuneration performance in terms of subscription revenue if their investment advice has more diverse sectors (diversity), more popular stocks (popularity), fewer negative sentiments (negativity), higher short-term predictive accuracy (accuracy), and more efforts in monitoring stocks across periods (sustenance). Specifically, sentiment negativity has the strongest relative effect. A one standard deviation increase in negativity leads to RMB 43.29 change in the remuneration performance, followed by diversity (2.81), sustenance (2.43), and popularity (1.84). In addition, an affiliation-based micro-celebrity tactic is more effective than an intimacy-based one. These two tactics also negatively moderate the effects of informational factors such as diversity and intensity.
In Study 2, we use network structures to understand the connection structure in two-sided networks and its implications on the micro-level production activities of producers. Our research questions are
1) How does the consumer patronage affect the product quantity and product quality of individual producers in a two-sided network?
2) How do a producer's network structures in her same-side, cross-side and other-side network moderate the CNE from consumer patronage on the production activities of the producer in a two-sided network?
3) How does the introduction of a content monetization method influence the CNE from consumer patronage on the production activities of individual producers in a two-sided network?
We first propose a model-based method to estimate the latent product quality. We further partition the network into same-side, cross-side, and other-side sub-networks to examine the contention and intricacies among different network structures. We use the instrument variable (IV) method to conduct econometric analyses. Some notable findings from our analyses include 1) A 1% increase in consumer patronage leads to a 0.07% increase in content quantity and a 1.46% decrease in content quality; 2) A producer' network structures moderate the micro-level CNE. When the demand increases, a producer who is followed more by her peers in the same-sided network would improve the product quality. However, if the producer is more exclusively followed by consumers in the cross-network or has a larger other-sided network, she would focus on increasing the product quantity; 3) enabling a producer to produce paid content lowers content quality despite the heightened economic benefits.
Our studies contribute significantly to the literature on the economic value of personal branding and network structures in two-sided networks. Moreover, we offer important practical guidance to the platform and firms/individuals participating in two-sided networks.