PurposeInternet referral services are a common form of online marketing operating activities. To incentivize infomediaries and improve referral performance, brand retailers typically apply the cost-per-click (CPC) or the cost-per-sale (CPS) payments. The purpose of this paper is to investigate the effect of referral services on the optimal contract with CPC or CPS payments.Design/methodology/approachThis paper studies a mechanism design problem for internet referral services. To maximize the expected utility of the brand retailer, an uncertain contract model is established in which the brand retailer's assessment of the infomediary's referral service capability is characterized as an uncertain variable. Then equivalent models under CPC and CPS payments are presented to obtain the optimal solutions.FindingsThe results demonstrate that under CPC payments, as the referral service capability increases, the optimal sales volume is increasing, and the optimal transfer payment first shows a declining and then a rising trend. The brand retailer is less likely to raise the optimal transfer payment for the infomediary given a higher CPC revenue-sharing fee percentage, which is counterintuitive. Under CPS payments, the optimal sales volume and transfer payment are also increasing in the referral service capability. In addition, an increase in the click-through rate leads to the infomediary's incremental marginal utility.Originality/valueThe value of this research is its application of incentive contracts to the internet referral services considering CPC or CPS payments. The results of this research can serve as a guide for retailers and infomediaries in their decision-making around online retailing.
Kybernetes – Emerald Publishing
Published: Jun 28, 2019
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera