Eric Anderson 
Social Media Marketing 
Game Theory and the Emergence of Collaboration

Preface Social media marking has been heralded as a sea change in the market- consumer relationship, but its rapid growth and rabid following among m- keters has also produced a sea of confusion. Lacking any durable framework for understanding how, why, and on what terms the consumer relationship has changed under social media, marketers pursue new venues for their newness alone – with decidedly mixed results. This book finds a theoretical framework for social media marketing in the science of game theory, with its focus on adversarial but mutually dependent relationships. Originally developed to guide nuclear brinksmanship policy during the Cold War, game theory provides the foundation for an evoluti- ary view of social media marketing. Through fascinating game theory c- cepts like the Prisoner’s Dilemma, the Stag Hunt, Self-Command, and Job Market Signaling, this study uncovers the cooperative trends that brought marketing to its present state and points the way toward marketing’s future course. I. Der Drehbuchautor und seine Rechte VII VII Vorwort Contents Chapter 1: Surviving the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. 1 The Origins of Game Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1. 2 Game Theory, the New Media, and the NEW New Media . . . . . . . . . 7 1. 3 The Payoff Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Chapter 2: Zero-Sum Games in Traditional Marketing . . . . . . . . . . . . 13 2. 1 Zero-Sum Games and the Problem of Transparency . . . . . . . . . . . . . 14 2. 2 The Zero-Sum of Pricing Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . 16 2. 3 The Wisdom of Randomization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182. 4 Randomization and A/B Testing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. 5 The Hazards of Entrenchment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Table of Content

Surviving the Customer.- Zero-Sum Games in Traditional Marketing.- The Prisoner’s Dilemma and the Emergence of Cooperation.- Consumer Revolt and the Rising Cost of Defection.- Sustaining Marketer-Consumer Cooperation through Coordination Games.- Crowdsourcing and Schelling’s Theory of Self-Command.- Content Popularity and Spence’s Theory of Costly Signaling.- Kapferer’s Prism and the Shifting Ground of Brand Identity.- Maxwell’s Demon and the Dwindling Supply of Consumer Attention.

About the author

Eric Anderson’s expertise regarding social media marketing is based on many years of experience as a marketing manager and digital media consultant. He is the VP of Emerging Media at White Horse, one of the leading interactive agencies in the US. His social media podcast series recently won a silver award in the 2009 Summit Creative Awards.