Incentive Marketing Strategy under Multi-state Diffusion Model in Online Social Networks

In online social networks, customers can share their experience and hence spread advertisement through social links, enabling viral marketing. By using online social networks, sellers can design advertisement strategies to reach more potential customers. An effective marketing strategy is able to provide a method to monetize the social network and has attracted much attention in the research community. However, most existing research based on the influence maximization problem focus on how to select the seed node set in the beginning and neglect how the price and rewards in the marketing strategy can influence the diffusion process. In this paper, we study how to design an incentive strategy in the online social network and explain how the incentive strategy influences the diffusion. We also propose a framework which incorporates a multi-state diffusion model. People’s purchasing behavior, which may be influenced by the rewards received in the incentive marketing strategy is divided into different states in the diffusion model. People in different states have different influence power. Simulations are performed to illustrate our framework and show that the incentive marketing strategy performs well in activating more people and achieving more revenue.