Exclusive or Non-exclusive? Wanghong’s Choice of Advertising Modes under Limited Time

Problem definition: We investigate the joint advertising-mode-choice, time-allocation, and pricing policies for different types of wanghongs under short-video time constraint. Wanghong is the Chinese term for an internet celebrity or a social influencer who produces and uploads short videos to social media platforms such as Tiktok and Kwai. A wanghong (she) monetizes her fame through incorporating advertisements in video clips, and she needs to trade-off time lengths of original content and advertisements within the time limit restricted by platforms. She may choose to sell her time slots to an exclusive advertising agency at a high price or to non-exclusive agencies for earning revenue from multiple sources. If she searches for advertisements after her original content production, she is a traditional wanghong, and if she produces original content after accepting advertisement, she is an innovative wanghong.Methodology/results: To obtain a wanghong’s optimal strategy under exclusive and non-exclusive advertising modes, we endogenize the advertising price and transfer the decision variable from advertising price to advertisement length. We find that a traditional wanghong’s time-allocation strategy is of a state-dependent-threshold type, whereas an innovative wanghong always fully utilizes her time limit. Based on the time-allocation and pricing strategies, we reveal that the optimal advertising-mode policy depends only on the cost-revenue ratios of the wanghong-agency system. Moreover, compared with a traditional wanghong, an innovative wanghong prefers an exclusive mode.Managerial implications: Our findings help different types of wanghongs better manage their business through adopting appropriate advertising modes and utilizing time-allocation and pricing tools. We also reveal that the exclusive mode is more suitable for the innovative wanghong, because an innovative wanghong may fully utilize the time limit by adjusting her content length under the exclusive mode, whereas a traditional wanghong could only fully utilize the time limit through bringing in competition under the non-exclusive mode