Maximizing the overall profit of a word-of-mouth marketing campaign: A modeling study

Abstract

As compared to the traditional advertising, the word-of-mouth (WOM) communications have striking advantages such as significantly lower cost and rapid delivery; this is especially the case with the popularity of online social networks. This paper addresses the issue of maximizing the overall profit of a WOM marketing campaign. A marketing process with both positive and negative WOM is modeled as a dynamical model knwn as the SIPNS model, and the profit maximization problem is modeled as a constrained optimization problem. The influence of different factors on the dynamics of the SIPNS model is revealed experimentally. Also, the impact of different factors on the expected overall profit of a WOM marketing campaign is uncovered experimentally. On this basis, some promotion strategies are suggested. To our knowledge, this is the first time a WOM marketing campaign is treated this way.