Design of Sweepstakes-Based Social Media Marketing For Online Customer Engagement

Electronic Commerce Research (2020) 20:119–146
https://doi.org/10.1007/s10660-018-09329-0
Design of sweepstakes‑based social media marketing

for online customer engagement
Woo‑Jin Jung1 · Seungjun Yang2 · Hee‑Woong Kim3
Published online: 4 January 2019

© Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract
Customer engagement has been considered to be one of the most important goals of
social media marketing. Many companies have conducted social media marketing,
particularly through Facebook, by managing their brand fan pages. Compared with
other approaches in social media marketing, sweepstakes-based marketing has been
successful in gaining customers’ attention and in fostering engagement with custom-
ers. However, understanding has been lacking regarding ways in which to design
sweepstakes-based social media marketing. By applying expected utility theory, this
study examines sweepstakes-based social media marketing strategies, particularly
designs based on the combination of promotion characteristics, prize types and cat-
egories, and prize payment type, to enhance customer engagement with a brand in
the context of Facebook brand fan pages. The study in general, as well as the testing
results, provides guidance to social media marketers and explains ways in which to
design sweepstakes in social media marketing for customer engagement. This study
contributes to the literature by demonstrating the significance of sweepstakes design
factors and the combinations for customer engagement.
Keywords Customer engagement · Social media marketing · Expected utility

theory · Brand fan pages · Sweepstakes
* Hee‑Woong Kim
kimhw@yonsei.ac.kr
Woo‑Jin Jung
hygm2003@gmail.com
Seungjun Yang
yangguda@gmail.com
1
Barun ICT Research Center, Graduate School of Information, Yonsei University, 50 Yonsei‑ro,
Seodaemun‑gu, Seoul 03722, Republic of Korea
2
Deloitte, Seoul, Republic of Korea
3
Graduate School of Information, Yonsei University, 50 Yonsei‑ro, Seodaemoon‑gu,
Seoul 03722, Republic of Korea
13
Vol.:(0123456789)
120 W.-J. Jung et al.
1 Introduction
As potential customers, users on Facebook, click “like” buttons, share, or com-

ment to participate in various promotions on brand fan pages [72]—unique and
simple features that make users spread the fan page to their friends, which can
positively affect the brand or firm [59]. The brand or firm can expect a higher
promotion effect when compared with the cost [30]. Smaller firms, in particular,
often use Facebook to conduct various low-budget promotions [20].
Because traditional marketing channels are solely based on push strategies,
where the brands or products/services of a firm are forced on customers through
various media, customers respond to the growing information overflow with low
media involvement and engage actively in various risk avoidance strategies [31,
42, 53]. Social media as a new marketing channel has emerged with a commu-
nication structure between marketers and customers [73] and can be used not
only as a communication channel targeting very specific customers but also as an
effective customer engagement tool [16, 44]. Therefore, marketers market their
wares through social media (called “social media marketing”). According to a
2014 survey, 97% of approximately 2800 marketers globally answered that they
were using social media as a marketing tool for their firms and 92% felt that it had
a major role in business management [57].
Social media marketing in the late 2000s was generated mainly from Facebook—
the preferred social media platform of marketers. Marketers allocate considerable
time and money to engage customers in a meaningful way on Facebook. Facebook
social media marketing pertains to ways of delivering information to users who are
deemed to be either present or potential fans of the brand fan pages. With the growth
of Facebook, numerous firms have utilized the brand fan page as an effective mar-
keting channel for customers who have been obtaining information regarding prod-
ucts/services from the existing media [72]. The brand fan page can manage and
engage customers and fans more accurately than the existing traditional communi-
ties can, thereby raising the information delivery effect [72]. Fan pages also forge a
relationship between a brand and its customers, which can be defined as “customer
engagement”. Customer engagement is the major goal of firms that conduct social
media marketing through Facebook brand fan pages [14, 22].
High customer engagement, motivated by customers’ need for entertainment,
social connection, or information [29], in brand communities such as Facebook
brand fan pages was found to be related to high product/service consumption [51,
69]. Therefore, sales promotions to attract customers to Facebook brand fan pages
are important and practicable. As a form of sales promotion, sweepstakes allow a
firm to target customers by enhancing or creating their brand image through associa-
tion with a particular promotion. Sweepstakes have only been sporadically treated
in the literature, and it is still difficult to explain and capture their effect on social
media marketing [58]. In particular, few previous studies have focused on sweep-
stakes in social media communities such as Facebook brand fan pages [4].
This notwithstanding, whatever little research exists in the specific area of
sweepstakes can be used to develop the unique concepts and models needed
13
Design of sweepstakes-based social media marketing for online… 121
within social media marketing. Prior studies exploring customer engagement

focused not on the strategic factors affecting customer engagement but on the
types of engagement behavior [45, 51, 71]. In sweepstakes, the type or category
of prize is the strategic stimulus for customers and is regarded as being key to
a successful promotion [39, 40]. The strategic stimulus to customers represents
the added stimulus after purchase, and the type or category of stimulus has been
studied as being important toward extracting customer behavior. Therefore, the
prize type or prize category can be said to be the main factor in raising promotion
participation rates and positively affecting customer engagement.
This study identifies ways in which to increase customer engagement in sweep-
stakes through social media marketing and then organizes the sweepstakes combina-
tion strategies influencing customer engagement. In detail, this study extracts the
strategic factors (promotion characteristics, prize type or prize category, and prize
payment type) of sweepstakes on Facebook brand fan pages by classifying varia-
bles that affect customer engagement on the basis of expected utility theory (EUT).
Thereafter, this study estimates the effect of the strategic factors and the effect of
interaction between them on customer engagement.
Beyond the findings of previous research, this study demonstrates customer
engagement as being affected by interaction between the factors (promotion charac-
teristics, prize type or prize category, and prize payment type). Therefore, it answers
two questions: (1) which strategic factors have an effect on customer engagement?
(2) how to design sweepstakes combination strategies by the factors on Facebook
brand fan pages?
2 Conceptual background
2.1 Expected utility theory for the participation choice of customers
In research on decision-making, EUT, as a typical normative theory, predominantly

serves as the theoretical background. EUT has been studied for numerous variations;
however, most of them propose risk-averse behavior as being the most important
proposition that is common to these variations. Thus, decision-makers prefer the
definite alternative over the uncertain alternative under the same expected utility
[26].
Decision theories under conditions of uncertainty specify the objects of choice,
a valuation rule, and the characteristics of the functions that map uncertain promo-
tions and possible outcomes into their subjective counterparts. Here, the objects of
choice are probability distributions over wealth, and the valuation rule is expected
utility. A decision that maximizes expected utility also maximizes the probability
of the decision’s consequences being preferable over some uncertain condition [6].
Likewise, EUT is a theory regarding ways in which to make optimal decisions under
conditions of risk and uncertainty. It has been proven as being useful in explaining
some popular choices that seem to contradict the expected value criterion, which
considers only the payment size and the probabilities of occurrence. It also provides
necessary and sufficient conditions under which EUT holds true. It was accepted
13
that some of these conditions would be violated by real decision-makers in practice

[63].
The utility function of von Neumann–Morgenstern is a major theme of EUT,
in which an individual chooses not the highest expected value but rather the high-
est expected utility. In the absence of uncertainty, expected utility maximization
becomes expected value maximization. Customers choose more stable and certain
options following their risk-averse tendency; however, they accept the risk situation
following their risk-taking tendency [21]. In the presence of uncertainty, however,
a decision-maker could use the expected value criterion as the rule of choice. For
example, higher expected value investments are simply the preferred ones; however,
some people would be risk-averse enough to prefer the sure thing [6]. After all, the
expected net gain from promotion participation should be positive in the absence of
uncertainty [55]; however, promotion marketers cannot assure of this in the presence
of uncertainty.
2.2 Social media marketing and brand fan pages on Facebook
Marketing strategies enable firms to address customers’ choice of products/services

that satisfy their needs. Marketers conduct the processes of informing, persuad-
ing, and removing all barriers impeding customers’ possession of the products/ser-
vices. In recent years, they have been faced with the problem of customers becom-
ing increasingly nonresponsive to traditional channels [4]. Firms or brands can no
longer be distinguished on the basis of their quality and functional benefits alone
[65], and the effectiveness of traditional channels is decreasing steadily consequent
to stiff competition among modes of communication [68].
To overcome this, marketers have exhibited increasing interest in social media as
new, Internet-based marketing channels. Social media refers to second-generation
web development and design features that facilitate communication, information
sharing, and collaboration on the World Wide Web. They allow the creation and
exchange of user-generated content [37] and connect to the symmetry between firms
(or brands) and customers in their communication process.
Extant research on social media marketing has empirically investigated specific
objectives, including stimulating sales, increasing brand awareness, improving brand
image, generating traffic to online platforms, reducing marketing costs, and creat-
ing customer interactivity on platforms by stimulating customers to post or share
content [22]. Besides these predominantly proactive objectives, firms can use social
media marketing in a more reactive way [54]. Thus, additional research is impera-
tive for understanding the social media marketing strategies of firms [7].
In a short duration, marketers have embraced social media for various marketing
objectives, including branding, research, customer relationship management, ser-
vice, and sales promotion [15]. They have various options within the social media
for “branding”, including placing paid display advertisements, participating in social
networks, publishing branded content in social media, and developing branded
engagement opportunities for customers [62]. Branding is considered to be a power-
ful means of establishing long-term relationships between businesses and customers
13
[9]. Customers who are committed to a brand are more likely to spread positive
word-of-mouth (WOM), generate repeat purchases, and be willing to pay more for
products/services from the preferred brand [66].
As described earlier, social media marketing in the late 2000s was generated
through Facebook. It is the most preferred social media for these marketers. Social
media marketing on Facebook considers ways in which to deliver information to
users who are either present or latent fans of brand fan pages. With the growth of
Facebook, a number of firms have utilized brand fan pages as an effective market-
ing channel for customers who were being provided variable information regarding
products/services by the existing media. The brand fan page can manage and engage
customers more accurately than the existing traditional communities can and raise
the information delivery effect [72].
2.3 Sweepstakes‑based social media marketing for customer engagement
Customer engagement involves a certain degree of psychological or behavioral inter-

action between brands (or firms) and customers [8] and is the major goal of firms
performing social media marketing through Facebook brand fan pages [14]. High
customer engagement was found to be related to high product/service consumption
[51, 69]. Therefore, sales promotions aimed at attracting customers to Facebook
brand fan pages are important and practicable. Sweepstakes represent one type of
sales promotion that allows a firm to target customers by enhancing or creating their
image through association with a particular promotion. Sweepstakes have only been
sporadically treated in the literature, and it remains difficult to explain and capture
the effect of sweepstakes through social media [58].
Sales promotion has been defined as “a direct inducement that offers an extra
value or incentive for the product to the sales force, distributors, or the ultimate con-
sumer with the primary objective of creating an immediate sale” [28]. These sales
promotions can be categorized as either consumer-oriented sales promotions or
trade-oriented ones. Consumer-oriented sales promotion is targeted at the ultimate
user of a product/service and is designed to induce them to purchase products from
the marketer’s brand. Trade-oriented sales promotion is targeted at marketing inter-
mediaries such as wholesalers, distributors, and retailers [4].
Activities involved in customer-oriented sales promotion include sampling, coupon-
ing, premiums, contests and sweepstakes, refunds and rebates, bonus packs, price-offs,
frequency programs, and event marketing. Sweepstakes are promotions where winners
are determined purely by chance; they cannot require proof of purchase as a condition
for entry. In general, entrants need only submit their names for drawing the prize. One
form of sweepstakes is a game, which has a chance element or odds of winning. Some
games occur over a longer period and require more customer involvement [32].
Extant sweepstakes research has applied survey and experimental methods [12,
36, 55, 60]. First, the research by Selby and Beranek [55] is based on a survey of
national advertisements. The authors identified sweepstakes that a risk-neutral or
risk-averse person would enter and those that would be avoided, determined the
optimum number of entries and the expected return from the entries, and tested the
13
hypothesis of risk aversion among participants. They insist that sweepstakes condi-
tions for both single and multi graded payment prizes predict the entry behavior of
risk-neutral persons and the optimum number of entries that they would submit to
maximize expected profits.
The research by Chandon et al. [12] builds a framework of the multiple customer ben-
efits of sweepstakes. The authors find monetary and nonmonetary promotions as pro-
viding customers with different levels of three hedonic benefits (opportunities for value
expression, entertainment, and exploration) and three utilitarian benefits (savings, high
product quality, and improved shopping convenience). Further, they develop a benefit
combination framework purporting the effectiveness of sweepstakes as being deter-
mined by the utilitarian or hedonic nature of the benefits they deliver and the combina-
tion of these benefits with the promoted prize. Among other results, those of two choice
experiments are in line with predictions for high-equity brands that state that monetary
promotions are more effective for utilitarian products than they are for hedonic products.
Teichmann et al. [60] conducted two surveys: one for offline sweepstakes and the
other for online sweepstakes. The authors found that sweepstakes attracted differ-
ent customers and that the problems that needed solving by a customer in order to
enter sweepstakes were of more consequence online than they were offline. They
also found that customer heterogeneity in preferences for characteristics of sweep-
stakes was larger online than it was offline; however, customer characteristics can
only explain a small part of that heterogeneity.
Karla and Shi [36] examined sweepstakes reward structures that maximized cus-
tomers’ valuations. Such customer value-maximizing sweepstakes should effec-
tively motivate customers’ participation. The results of this research suggest that a
firm should begin by setting an objective to either attract switchers or target current
users. If the current users are risk-neutral, the customer value-maximizing award is
a single grand prize. If the current users are risk-averse, the award should consist
of multiple large prizes. In cases where the targets are current users, fewer prizes
should be awarded than are awarded in cases where the targets are latent switchers.
If the non-loyal customers are risk-averse, the best prize allocations should have a
healthy mix of multiple large prizes and several small prizes. Table 1 is a summary
of previous research in the sweepstakes literature.
Today, sweepstakes-based social media marketing is used to reward existing
customers and to draw attention to a product. Sweepstakes, with their large, grand
prizes, tend to attract more entries regardless of the odds of winning. Because this
high expected value investment is simply the preferred one [6], winning accords the
possibility of reaching a state of high income that provides disproportionate ben-
efits [23]. These high-priced prizes or large, grand prizes, such as electronic prod-
ucts, cannot be divided infinitely [43]. Rational customers participate in sweepstakes
because these limited resources do not allow customers to receive fractions of prize.
Karla and Shi [36] also noted that the number of winners and the promotion
period affected customer participation in sweepstakes, with the level of their chances
of winning making customers perceive the message from the promotions as being
positive [36]. The number of winners can be considered to be the winning chance,
which represents the probability of winning. The probability of winning a sweep-
stake can be the major factor explaining customer participation [12]. Second, the
13
Table 1 Summary of previous research on sweepstakes

Research Context Method Finding
Selby and Offline Survey Prize payment type (single and multi payment type)
Beranek [55] Predict entry behavior of risk-neutral persons
Predict the optimum number of entries
Chandon et al. Offline Experiment Determined by the utilitarian or hedonic nature of the
[12] benefits
Determined by the combination of the promoted prize
More effective for utilitarian products than they are
for hedonic ones in monetary promotions
Teichmann Online and Survey More entry problems online than offline
et al. [60] Offline Larger online than offline in customer heterogeneity
Karla and Shi Offline Experiment Sweepstakes reward structures that maximize custom-
[36] ers’ valuations
Single grand prize in risk-neutral persons.
Multiple large prizes risk-averse persons.
features of sweepstakes that need these simple actions can affect customers under
a choice situation with a time constraint [38]. Solomon [56] defined the “time con-
straint” as the “subjective psychological status of customers who feel time poverty”.
It can affect an individual’s decision-making because of their limited cognitive abil-
ity to perceive and absorb the information.
A situation in which people represent a behavior followed by a different certain
behavior is called “operant conditioning” [47]. The form or type of prize turns out
to be the important factor in optimizing operant conditioning and attracting the cus-
tomer [52]. The prize type as one of the stimuli for the customers is regarded as
being particularly important in determining the success of a promotion [39, 40]. The
stimulus to customers represents the added stimulus after purchase, and the type of
stimulant to be administered has been studied as an important factor in the extrac-
tion of customer behavior. Nord and Peter [47] determined that the type of stimulus
is important in optimizing the operant conditioning and that it is more effective in
the operation of plans as it offers items using different methods. Therefore, the prize
type can be of particular significance in raising promotion participation rates and in
positively affecting customer engagement.
Sweepstakes could enhance the attractiveness of a marketer’s sales promotion by
supplying more details on prize values, providing more information on the drawing
procedure, and displaying the number of entries in similar promotions conducted in
the past [55]. However, the information provided by sweepstakes is severely limited,
and the value of individual and total prizes is frequently difficult to discern. Thus, it
was not possible to establish precise entry conditions for the rational entrant. If the
customers are heterogeneous, the firm should measure the extent of risk aversion
and the degree of heterogeneity. Under certain conditions, such as when there is a
large segment of risk-averse customers, it is profitable to increase the level of prizes.
The promotion marketers cannot be assured of the maximized expected utility for
sweepstakes in the presence of uncertainty. Therefore, marketers need to try to
13
reduce uncertainty. Because sweepstakes are easier and less expensive to administer,
they present marketers with a fixed cost, which is a major advantage when budgeting
for a promotion [73]. Thus, the costs of sweepstakes are very predictable. Marketers
use social media for their sweepstakes because of its cost efficiency, immediate data
collection capabilities, and the ability to keep customers engaged [4].
2.4 The importance of a cashable prize in sweepstakes
Customers may derive utility simply by participating in sweepstakes; e.g., sweep-

stakes with cashable prizes have a higher overall utilitarian mean. However, sweep-
stakes with non-cashable prizes are more heterogeneous. Their higher overall
hedonic appeal is mainly due to the gift, reward, or prize. They are dominated by all
other types of promotions; they are rated in terms of hedonic benefits [12]. There-
fore, if the customers are heterogeneous, the promoting firm should measure the
extent of risk aversion and the degree of heterogeneity. When there is a large seg-
ment of risk-averse customers, it is profitable to raise the prize level such as the total
prize amount [36]. This dynamic of participation increases on the basis of the total
prize amount despite the winning probability [23].
Karla and Shi [36] noted that if the risk-taking tendency of the participants in
the promotion was high, the promotion, regardless of the odds of winning, was pre-
ferred. This means that the participants in promotions who tend to prefer promotions
are risk-taking. They tend to use coupons faster than others [5], which implies that
coupons should have fixed expiration dates [41]. Moreover, Raju et al. [50] dem-
onstrated instantly redeemable or cashable coupons, such as gift certificates, to be
more effective when targeting risk-takers, whereas they found in-pack coupons, such
as movie tickets, to be better when targeting the risk-averse. Since a cashable prize
is more convenient to redeem and offers more flexibility, participants prefer cashable
prizes over non-cashable prizes of the same value. They could be seeking quality,
convenience, and entertainment benefits through the cashable prize [33].
Aside from the functional, social, psychological, and hedonic benefits, which
have been previously investigated in online communities [19], monetary benefits
were added to the theoretical model in the present study in light of the special offers
typically provided by businesses (e.g., discount coupons and free meals offered)
[27]. Monetary benefits can be influential in increasing customer engagement; how-
ever, their influence on increasing the level of subsequent participation is not so
straightforward [35]. Despite monetary benefits having been used widely in industry
practices, studies have not delved into their role in encouraging customer partici-
pation. Monetary benefits may give researchers an opportunity to examine whether
monetary value can be a reason for customer engagement on the Facebook fan page.
2.5 The features of prize payment type in sweepstakes
The prize payment type varies from one level for a single graded payment to several
levels for multi graded payments. Designing multi graded payments is more com-
plicated and stochastic because they involve several interrelated decisions, such as
13
determining the total prize amount and the number of winners and allocating prizes
among the winners [36]. Moreover, the theme of promotion, prize type (cashable or
non-cashable), duration, frequency of multi graded payments, whether the prizes are
immediate or delayed, and the quantum of effort that the customer must expend to par-
ticipate are required to be considered [36]. Therefore, the promotion of multi graded
payments has higher uncertainty than that of single graded payments. Therefore, under
conditions of multi graded payments, customers could use the expected value criterion
as the rule of choice [6]. Even though customers prefer high-priced prizes or large,
grand prizes under multi graded payments, marketers cannot be assured of the maxi-
mization of the expected utility of sweepstakes in the presence of uncertainty. There-
fore, marketers need to make efforts to reduce uncertainty for promotion.
Nevertheless, reasonable people typically generate only a single or a very limited
number of situations [24]. This means that a single graded payment exists in relaxed
uncertainty. Under a single graded payment, therefore, expected utility maximiza-
tion focuses on maximizing the probability of achieving a fixed target [6]. All things
considered, to maximize customer engagement, marketers should choose the single
graded payment [55] or provide the high-priced prizes or large, grand prizes in multi
graded payments regardless of the odds of winning [6].
3 Research methodology
3.1 Data collection
We collected sweepstakes data on Facebook. Figure 1 explains the data collection

and research procedure. (1) We collected posting data for 4 months using the open
Graph API of Facebook and developed a “crawler” program to select the expired
promotion information, which was uploaded on the online promotion curation web-
site, and collected the promotion data of brand fan pages. (2) We then extracted the
brand list from the collected data, and (3) utilized the search function in Facebook
provided by Facebook’s open Graph API to get the list information. (4) After mov-
ing to the brand fan pages that were searched by the search function, we collected
information on the company (not the product) brand as well as the posts and (5)
processed it by matching the two types of data. (6) From the integrated data that was
matched in the fifth step, we extracted the types of promotion prizes and payment
information to define the payment structure either as a single graded payment if the
promotion host gave only one prize category to winners or as a multi graded pay-
ment if the promotion host gave two or more prize categories to winners. (7) Finally,
we analyzed a total of 14,230 posts with promotion information using an economet-
ric modeling method, (8) and then, we deduced the results.
All the data used in this study were collected after the promotion participation
deadline. The promotion data consisted of 14,230 promotion posts, and the total
number of brands that proceeded with promotions was 2215. On the basis of the
data that we crawled, this study analyzes the factors that affect customer engage-
ment scores, which are calculated as the sum of the number of likes, comments, and
shares for each promotion post [17].
13
Data Collection Data Collection
Facebook Open
F.eventhouse.kr
Graph API
£
¦
Collect Promotions ¥
¤ Collect
Econometric
Information of Brand
Modeling
& Promotion Postings
Extract Brand
Information
© ª
§
Investigate Facebook +
Price of Prizes & ¨ Promotion Analysis Result
Types of Payment Data Matching
Fig. 1 Research procedure
3.2 Methodology
To analyze the promotion data of 14,230 posts with promotion information that were
extracted using an econometric modeling method, we proposed a research frame-
work in Fig. 2 for four model groups. We examined the effect of Promotion Charac-
teristics (total prize amount, promotion period, and number of winners), Prize Pay-
ment Type (single graded payment vs. multi graded payment), Prize Type (cashable
prize or non-cashable prize), and Prize Category (gift certificates, electronic items,
Promotion Characteristics
- Total Prize Amount Online
- Promotion Period Customer Engagement
- Number of Winners
Prize Type (Prize Category)

Network Size
Cashable
(number of fans)
- (gift certificate)
Non-cashable
- (electronic)
- (movie ticket) Model 1 group
- (life/food) Prize Payment Type
Model 2 group
- (beauty product) (Single vs. Multi-graded)
Model 3 group
Fig. 2 Research framework
13
movie tickets, life/food items, and beauty products) as detailed examples of Prize
Type on customer engagement through social media promotion participation.
There may be a cognitive constraint on the size of social networks that consist of
intensely social groups as opposed to simple aggregations. Network Size means the
number of members in a network. More members imply more diverse information.
Social networks are often delimited by Network Size. Many studies have tended
to focus on determining total network size [34]. The importance of social media is
owed to their huge number of customers [18]. Therefore, this study considers the
power or capability of Network Size as a control variable. Network Size in this study
is the number of members who access resources embedded in brand fan pages on
Facebook.
We assumed reactions such as likes, comments, and sharing for Promotion Charac-
teristics. Prize Payment Type, and Prize Type (or Prize Category) can be seen in Face-
book promotions and the econometric model that explains the demand of the reactions
and can be defined as the Model 1 group [2]. Demand is the online customer engage-
ment score and includes the participation scale as a dependent variable that represents
the sum of the users’ promotion responses. Demand represents a constant term, and the
coefficients of each variable. 𝛽 is the coefficient of Promotion Characteristics’ variables
(Total Prize Amount, Promotion Period, and Number of Winners). Prize Payment Type
is 1 if it is a multi graded payment and 0 if it is a single graded payment. Prize Type is
1 if it is cashable (e.g., gift certificate) and 0 if it is non-cashable (e.g., electronic items,
movie tickets, life/food items, and beauty products). The coefficient of each dummy
variable is 𝛿, and i is each expired promotion information.
In Model 1-2, Prize Category as detailed examples of Prize Type is a nominal vari-
able; i.e., Electronics, Movie Ticket, Life/Food, Beauty, and Gift Card represent the
coefficients for dummy variables, and the error term follows normal distribution. j is
each Prize Category, and 𝛿k is the coefficient of each one.
Model 1-1
Di = 𝛽0 + 𝛽1 Amounti + 𝛽2 Periodi + 𝛽3 Winneri + 𝛿1 Payment Typei + 𝛿2 Prize Typei + 𝜀i
Model 1-2
Di = 𝛽0 + 𝛽1 Amounti + 𝛽2 Periodi + 𝛽3 Winneri + 𝛿1 Payment Typei
2
∑
+ 𝛿k Prize Categoryij + 𝜀i
6
Promotions allow a firm to target a customer by enhancing or creating their image

through association with a particular promotion. In particular, prize type is a stimulus
to customers that is regarded as being important in determining the success of a promo-
tion [39, 40]. The stimulus to customers represents the added stimulus after purchase,
and the type of stimulant has been studied as being important for extracting customer
behavior. Therefore, Prize Category as detailed examples of Prize Type can be the
main factor in raising promotion participation rates and in positively affecting customer
engagement. To propose ways in which to strategically design the Prize Category (Gift
Card, Electronics, Movie Ticket, Life/Food, and Beauty), we examined the effect of the
13
interaction between Prize Category and Promotion Characteristics on customer engage-

ment. Thus, the Model 2 group added the effect of the interaction between Prize Cat-
egory and Total Prize Amount (Model 2-1), between Prize Category and Promotion
Period (Model 2-2), and between Prize Category and Number of Winners (Model 2-3)
on customer engagement. 𝛾k is the coefficient of each of the interaction variables.
Model 2-1
2
∑
Di =𝛽0 + 𝛽1 Amounti + 𝛽2 Periodi + 𝛽3 Winneri + 𝛿1 Payment Typei + 𝛿k Prize Categoryij
6
1
∑
+ 𝜸 k Amounti ∗ Prize Categoryij + 𝜀i
5
Model 2-2
2
∑
6
1
∑
+ 𝜸 k Periodi ∗ Prize Categoryij + 𝜀i
5
Model 2-3
2
∑
6
1
∑
+ 𝜸 k Winneri ∗ Prize Categoryij + 𝜀i
5
Designing a multi graded payment unlike designing a single graded payment

involves several interrelated decisions [36]. This study verifies the effect of the inter-
action between Prize Payment Type and Promotion Characteristics and between Prize
Payment Type and Prize Category as detailed examples of Prize Type on online cus-
tomer engagement. Model 3-1 added the effect of the interaction between Prize Pay-
ment Type and Promotion Characteristics to Model 1-1 except Prize Type on online
customer engagement. Model 3-2 also added the effect of the interaction between
Prize Payment Type and Prize Category on online customer engagement to Model 1-2.
Model 3-3, as a robustness test, added Model 3-2 to Model 3-1, representing the coef-
ficients for moderating effect variables.
Model 3-1
Di =𝛽0 + 𝛽1 Amounti + 𝛽2 Periodi + 𝛽3 Winneri + 𝛿1 Payment Typei

+ 𝜸 1 Payment Typei ∗ Amounti
+ 𝜸 2 Payment Typei ∗ Periodi
+ 𝜸 3 Payment Typei ∗ Winneri + 𝜀i
13
Model 3-2
2 1
∑ ∑
+ 𝛿k Prize Categoryij + 𝜸 k Payment Typei ∗ Prize Categoryij + 𝜀i
6 5
Model 3-3
+ 𝜸 1 Payment Typei ∗ Amounti
+ 𝜸 2 Payment Typei ∗ Periodi
+ 𝜸 3 Payment Typei ∗ Winneri
2
∑
+ 𝛿k Prize Categoryij
6
4
∑
+ 𝜸 k Payment Typei ∗ Prize Categoryij + 𝜀i
8
3.3 Descriptive statistics
Table 2 presents the summary statistics of the main variables in the sample. First,
the mean of Customer Engagement as a dependent variable that represents the
Table 2 Descriptive statistics
Variable Mean SD Min Max
Facebook promotion data of brand fan page

Customer engagement (like + comment + share) 119.943 219.718 8 6313
Number of fans (1000 s) (thousand number criteria) 162.417 1068.499 0.22 47,887.28
Promotion characteristics
Total prize amount ($: criteria) 254.293 979.907 7 46,500
Promotion period (day) 6.024 4.789 1 62
Number of winners (n) 19.182 97.907 1 7000
Prize payment type 0.298 0.458 0 1
Prize category
Electronics 0.015 0.121 0 1
Movie ticket 0.117 0.321 0 1
Life/food 0.153 0.360 0 1
Beauty 0.108 0.310 0 1
(Non-cashable) 0.393 0.488 0 1
Gift card (cashable) 0.202 0.402 0 1
Observations 14,230
13
sum of the users’ promotion responses is approximately 120. The mean of Promo-
tion Characteristics of Facebook promotion is $254,293 (Total Prize Amount),
6.024 days (Promotion Period), 19,182 people (Number of Winners), and 162,417
members (Number of Fans). The mean of graded payment type as binary data (0
and 1) is 0.298. In addition, the mean values of Prize Category as binary data (0
and 1) are 0.015 (Electronics), 0.117 (Movie Ticket), 0.153 (Life/Food), 0.108
(Beauty), and 0.202 (Gift Card).
4 Data analysis and results
This study utilized the STATA tool to analyze the customer engagement of Face-
book promotion using an econometrics method and conducted multi regression
analysis. With the results of the Model 1 group as base models, we examined
the effect of Promotion Characteristics (Total Prize Amount, Promotion Period,
and Number of Winners), Prize Payment Type (Single Graded Payment vs. Multi
Graded Payment), and Prize Type (Cashable or non-Cashable) or Prize Cate-
gory (Gift Card, Electronics, Movie Ticket, Life/Food, and Beauty) on customer
engagement through social media promotion participation.
4.1 The result of base models on customer engagement
In the Model 1 group, as base models, all variables show values between 1.00 and
1.14, and the total mean variance inflation factor (VIF) is approximately 1.0. This
result of VIF was verified in that there is no multi collinearity problem. However,
the results of the Breusch-Pagan/Cook-Weisberg test and White’s test were verified
in that the presence of heteroscedasticity was established. There was heteroscedas-
ticity in the results of all models in this study as well as in the Model 1 group. Thus,
we conducted weighted least squares (WLS) and multi regression analysis, a com-
bination that is more efficient than ordinary least squares (OLS) when we assume
heteroscedasticity [67]. Table 3 shows the result of the Model 1 group.
Regression estimates, shown in the result of Model 1-1 assuming heteroscedastic-
ity, indicate that all variables are significant at the 0.01 level. These results show that
all variables affect customer engagement. First, Total Prize Amount shows a positive
effect on customer engagement. This result is in line with the argument of Friedman
and Savage [23] that the participation tendency of customers increases according to
Total Prize Amount. Second, Promotion Period shows a negative effect on customer
engagement. This means that a short Promotion Period positively affects customer
engagement. This result is keeping with the argument of Kerr and Drennan [38]
that the time constraint affects the decision-making of customers. Third, Number
of Winners has a positive effect on customer engagement. This result is in line with
Karla and Shi’s [36] argument that the increase in winning chances through Number
of Winners can affect customer engagement through promotions. Fourth, Prize Pay-
ment Type has a negative effect on customer engagement. This means that Single
13
Table 3 Testing results for the base models

Variables Model 1-1 Model 1-2
Constant 109.709*** (2.420) 98.945*** (2.647)

Total prize amount (amount) 0.095*** (0.015) 0.093*** (0.015)
Promotion period (period) − 2.956*** (0.359) − 3.543*** (0.363)
Number of winners (winner) 0.125*** (0.010) 0.127*** (0.010)
Prize payment type (single graded/multi graded) − 21.973*** (2.918) − 21.843*** (2.924)
Prize category (non-cashable)
Electronics 46.397*** (14.125)
Movie ticket 22.812*** (5.403)
Life/food 31.976*** (3.972)
Beauty 33.305*** (4.254)
Prize category (cashable) Gift card 29.209*** (3.803) 43.226*** (4.024)
Adjusted R-squared 0.032 0.039
Observations 14,230 14,230
* significant at the 0.1 level

** significant at the 0.5 level
*** significant at the 0.01 level
Graded Payment affects customer engagement positively. This result is in line with
the argument of Griffin et al. [24] that people typically generate only a single situa-
tion or a very limited number of situations. Fifth, Prize Type has a positive effect on
customer engagement. This result is in line with the argument of Jang and Mattila
[33] that since Cashable prize is more convenient to redeem and offers more flexibil-
ity, customers prefer Cashable prizes over non-Cashable prizes of the same value.
The results of Model 1-2 show the effect of Prize Category. Each of the variables
in Prize Category is significant at the 0.01 level. This result is consistent with Nord
and Peter’s [47] and Kivetz’s [40] argument that Prize Category, as a stimulus to
customers, is important for a successful promotion.
However, all these results have been derived in the presence of uncertainty, which
dictates that most customers should use the expected value criterion as the rule of
choice [6]. Therefore, marketers cannot be assured of the maximization of expected
utility for which customers take part in sweepstakes-based social media marketing
under conditions of uncertainty.
4.2 Tests of interaction effect with prize category
With the results of the Model 2 group, Table 4 shows the effect of the interaction
between Prize Category and Promotion Characteristics on customer engagement. In
Model 2-1, estimating the effect of the interaction between Prize Category and Total
Prize Amount on customer engagement, the adjusted R-squared is 3.8%. All vari-
ables in Prize Category are significant at the 0.01 level except Movie Ticket. In the
13
Table 4 Testing Results of the Interaction Effect with Prize Type

Variables Model 2-1 Model 2-2 Model 2-3
Interaction (amount) Interaction (period) Interaction (# of winners)
Constant 101.624*** (2.707) 94.371*** (3.231) 102.988*** (2.662)

Total prize amount (amount) 0.089*** (0.023) 0.092*** (0.015) 0.061*** (0.016)
Promotion period (period) − 3.611*** (0.363) − 1.830* (0.584) − 3.709*** (0.365)
Number of winners (winner) 0.129*** (0.010) 0.130*** (0.010) 0.128*** (0.010)
Prize payment type (single − 22.607*** (2.923) − 22.907*** (2.924) − 22.521*** (2.925)
graded/multi graded)
Prize category
(Non-cashable)
Electronics 49.170*** (15.009) 96.398*** (23.667) 46.327*** (15.264)
Movie ticket 1.157 (6.349) 4.383 (7.967) 3.490 (6.292)
Life/food 33.948*** (4.313) 54.136*** (6.689) 29.647*** (4.498)
Beauty 37.789*** (4.659) 44.401*** (7.221) 32.351*** (5.118)
(Cashable)
Gift card 44.601*** (4.397) 61.601*** (6.224) 40.069*** (4.486)
Interaction variable × electron- − 0.016 (0.081) − 6.913*** (2.430) 0.297 (0.576)
ics
Interaction variable × movie 0.318*** (0.055) 3.770*** (1.334) 2.851*** (0.490)
ticket
Interaction variable × life/food − 0.041 (0.043) − 4.423*** (1.054) 0.543 (0.396)
Interaction variable × beauty − 0.097* (0.056) − 2.281* (1.176) 0.476 (0.613)
Interaction variable × gift card − 0.028 (0.037) − 3.889*** (0.963) 0.589* (0.336)
Adjusted R-squared 0.038 0.038 0.037
Observations 14,230 14,230 14,230
*Significant at the 0.1 level

**Significant at the 0.5 level
***Significant at the 0.01 level
effect of the interaction between Prize Category and Total Prize Amount on cus-
tomer engagement, only Movie Ticket is positively significant at the 0.01 level. This
means that high Total Prize Amount makes Movie Ticket advantageous. Accord-
ing to the argument of Chandon et al. [12], Movie Ticket, being non-Cashable, is
more heterogeneous than a Cashable prize and offers hedonic benefits. In addition,
it is generally popular and cheap, whereas Beauty is negatively significant at the
0.1 level. According to the argument of Chandon et al. [12], Beauty, being a non-
Cashable prize, is also more heterogeneous than a Cashable prize and offers hedonic
benefits. Beauty has the limitation as the strongest personal predilection of Prize
Category. Therefore, Beauty can be generally cheap although not popular. Beauty
as a Prize Category can have its limitations as to when the customer chooses it. This
can explain why if Total Prize Amount is high, non-Cashable and popular prizes,
such as Movie Ticket, are more strategically advantageous and that when Total Prize
13
Amount is low, personal predilection prizes, such as Beauty, are more strategically
advantageous.
In Model 2-2, estimating the effect of the interaction between Prize Category
and Promotion Period on customer engagement, the adjusted R-squared is 3.8%. All
variables in Prize Category are significant at the 0.01 level except Movie Ticket. In
the effect of the interaction between Prize Category and Promotion Period on cus-
tomer engagement, all variables are significant. In keeping with Kerr and Drennan’s
[38] argument that the time constraint affects the decision-making of customers, if
Promotion Period is short, it affects customer engagement more positively, i.e., if
Promotion Period is short, all prizes are strategically advantageous. Nevertheless,
only Movie Ticket is positively significant at the 0.01 level. This means that when
Promotion Period is long, Movie Ticket is more advantageous. Movie Ticket as an
in-pack coupon prize has fixed expiration dates [41] and is better for holding loyal
customers [50]. In other words, if the promotion deadline is close, Movie Ticket is
popular because the screening period is temporary and exchange is impossible. This
explains the fact that when Promotion Period is long, in-pack coupon prizes, such as
Movie Ticket, are strategically advantageous.
In Model 2-3, estimating the effect of the interaction between Prize Category and
Number of Winners on customer engagement, the adjusted R-squared is 3.7%. All
variables are significant except Movie Ticket. In the effect of the interaction between
Prize Category and Number of Winners on customer engagement, Movie Ticket and
Gift Card are positively significant at the 0.01 and 0.1 levels. This means that when
Number of Winners is high, Movie Ticket and Gift Card are advantageous. Movie
Ticket and Gift Card are the strongest popular prizes of Prize Category without
personal predilection. This explains that when Number of Winners is high, popular
prizes such as Movie Ticket and Gift Card are strategically advantageous.
In practice, a company should decide Prize Category (i.e., Electronics, Movie
Ticket, Life/Food, Beauty, or Gift Card). In the case of Electronics, companies
should consider short Promotion Period. In the case of Movie Ticket, companies
should consider high Total Prize Amount, long Promotion Period, and high Number
of Winners. In the case of Life/Food, companies should consider short Promotion
Period. In the case of Beauty, companies should consider low Total Prize Amount
and short Promotion Period. In the case of Gift Card, companies should consider
short Promotion Period and high Number of Winners. Through the result of this test,
we can identify the type or category of prize in sweepstakes that is regarded as being
pivotal to the success of a promotion [39, 40].
The findings of this study enable us to design strategies for Prize Category for
sweepstakes on social media. If a firm plans a long-term promotion, then it should
establish the strategy in offering Movie Ticket as the prize. In contrast, if a firm
plans a short-term promotion, then it may establish its strategy by considering the
categories of Electronics, Life/Food, Beauty, and Gift Card as prizes. If a firm plans
a short-term promotion with enough investment, it should establish its strategy by
considering minimum Number of Winners with Gift Card as the prize. In contrast,
if a firm plans a short-term promotion with deficient investment, it should establish
its strategy by considering Beauty as the prize. Firms use prize items as one of the
stimuli; thus, Prize Type or Prize Category plays a very important role in optimizing
13
Table 5 Testing results of interaction effect with prize payment type

Variables Model 3-1 Model 3-2 Model 3-3
Promotion characteristics Prize Category Main
Constant 118.807*** (2.601) 100.160*** (2.824) 103.074*** (2.979)

Total prize amount (amount) 0.106*** (0.017) 0.093*** (0.015) 0.097*** (0.169)
Promotion period (period) − 3.468*** (0.431) − 3.517*** (0.364) − 4.269*** (0.456)
Number of winners (winner) 0.125*** (0.010) 0.130*** (0.010) 0.128*** (0.010)
Prize payment type (single − 39.583*** (4.935) − 19.844*** (4.149) − 36.127*** (5.464)
graded/multi graded)
Prize payment type × amount − 0.094** (0.039) − 0.097** (0.039)
Prize payment type × period 2.039*** (0.781) 2.040*** (0.792)
Prize payment type × winner 1.734*** (0.390) 1.963** (0.390)
Prize category
(Non-cashable)
Electronics 57.439*** (17.306) 60.659*** (17.320)
Movie ticket 21.875** (6.145) 21.907*** (6.134)
Life/food 34.942*** (4.754) 36.019*** (4.762)
Beauty 29.826*** (5.508) 30.640*** (5.508)
(Cashable)
Gift card 48.253*** (4.734) 49.050*** (4.738)
Prize payment type × electronics − 29.540 (29.894) − 36.749 (29.973)
Prize payment type × movie 1.638 (12.979) 0.380 (13.020)
ticket
Prize payment type × life/food − 9.129 (8.587) − 10.688 (8.660)
Prize payment type × beauty 10.227 (8.650) 9.863 (8.704)
Prize payment type × gift card − 19.815** (8.925) − 21.021** (9.028)
Adjusted R-squared 0.026 0.035 0.038
Observations 14,230 14,230 14,230
*Significant at the 0.1 level

**Significant at the 0.5 level
***Significant at the 0.01 level
the operant conditioning [47]. This result gives business insights to companies that
design sweepstakes combination strategies into the selection of the appropriate prize
items with a limited marketing budget.
4.3 Tests of interaction effects with prize payment type
The Model 3 group results listed in Table 5 show the effects of the interaction
between Prize Payment Type and Promotion Characteristics on customer engage-
ment and between Prize Payment Type and Prize Category. This study conducted
hierarchical regression analysis to yield successive tests of the validity of the Model
13
3 group. The result of Model 3-3 draws very similar inferences to those drawn from
the results of Models 3-1 and 3-2. Therefore, Model 3-3, as a main model in the
Model 3 group, is valid for this study. The adjusted R-squared is 3.8%. Regression
estimates, shown in the results of Model 3-3, indicate that each variable in Promo-
tion Characteristics is significant at the 0.01 level. The results of Models 3-2 and 3-3
show the effect of Prize Category. Each of the variables in Prize Category is signifi-
cant at the 0.01 level or the 0.05 level.
All effects of the interaction between Prize Payment Type and the Promotion
Characteristics are significant at the 0.5 level or the 0.01 level. They show that Prize
Payment Type in association with Total Prize Amount, Promotion Period, and Num-
ber of Winners affects customer engagement. First, the interaction between Prize
Payment Type and Total Prize Amount shows a negative effect on customer engage-
ment. This means that customers prefer the promotion of high Total Prize Amount
when Prize Payment Type is Single Graded Payment, whereas customers prefer the
promotion of Multi Graded Payment if Total Prize Amount is low.
Second, the relationship between Prize Payment Type and Promotion Period
shows a positive interaction effect on customer engagement. This means that cus-
tomers would prefer short Promotion Period when Prize Payment Type is Single
Graded Payment, whereas they would prefer the promotion of Multi Graded Pay-
ment if Promotion Period is long. Third, the interaction between Prize Payment
Type and Number of Winners shows a positive effect on customer engagement. This
means that customers prefer the promotion of low Number of Winners when Prize
Payment Type is Single Graded Payment. Because the total prize amount may be
fixed, the prize amount for each winner may increase if the number of winners is
reduced. This explains why people as latent winners prefer a high prize amount even
with the Single Graded Payment, whereas customers prefer the promotion of Multi
Graded Payment if Number of Winners is high. This explains that from a risk-taking
perspective, an individual as a winner wants to get a higher-ranked prize (i.e., rela-
tively bigger amount of prize) if there is Multi Graded Payment with more winners.
Fourth, in the effect of the interaction between Prize Payment Type and Prize
Category on customer engagement, only Gift Card is negatively significant at the
0.1 level. This means that customers prefer Gift Card prize when Prize Payment
Type is Single Graded Payment. According to the argument of Griffin et al. [24],
Single Graded Payment has relaxed uncertainty. Therefore, this can explain why
if Prize Payment Type is Single Graded Payment, customers prefer high expected
value investments. Under Multi Graded Payment, however, customers could use the
expected value criterion as the rule of choice [6]. Marketers cannot be assured of the
maximization of expected utility for which customers participate in sweepstakes-
based social media marketing under this Multi Graded Payment.
In main model test results (Model 3-3), a firm should decide Prize Payment Type.
If the firm has enough Total Prize Amount, then limited Promotion Period is advan-
tageous, and if the marketers of the firm think of the combination of limited Number
of Winners and cashable Gift Card, they should choose Single Graded Payment as
the prize. If the firm has limited Total Prize Amount and sufficient Promotion Period
and the marketers of the firm think of high Number of Winners, they should choose
Multi Graded Payment as the prize. However, they cannot be convinced about
13
customers’ participation in sweepstakes-based social media marketing under Multi

Graded Payment where uncertainty exits.
5 Discussion and implications
5.1 Discussion of findings
To identify ways in which to increase customer engagement in sweepstakes on social

media, this study extracted the factors that are meaningful for a successful promo-
tion using sweepstakes to draw more participation on social media and designed
sweepstakes combination strategies in social media. To propose a sweepstakes com-
bination strategy influencing customer engagement through social media, this study
examined the interaction effects between promotion characteristics, prize payment
type, and prize category and on Facebook brand fan pages.
First, from the overall research result, this study found that a high total prize
amount, high number of winners, short promotion period, single graded payment,
and cashable prize category have a positive effect on customer engagement. There-
fore, when the marketers of firms conduct promotion as sweepstakes-based social
media marketing, they should preferentially consider a high total prize amount, lim-
ited promotion period, high number of winners, single graded payment, and cash-
able prize category.
Second, this study found that non-cashable and popular prizes such as movie
tickets are advantageous when the total prize amount is high; that the personal
predilection prizes such as beauty products are advantageous when the total
prize amount is low; that all prizes except movie tickets are advantageous in a
short promotion period; and that movie tickets and gift certificates are advanta-
geous when the number of winners is high. When the marketers of firms conduct
promotion as sweepstakes-based social media marketing, they should choose
Electronics for a short promotion period; movie tickets for a high total prize
amount, when the promotion period is longer, or when the number of winners if
high; life/food items for a short promotion period; beauty products for a reduced
total prize amount or a short promotion period; and gift certificates for a short
promotion period or when there are more winners. After all, when the marketers
of firms conduct promotion as sweepstakes-based social media marketing, they
should strategically consider each of these situations.
Third, this study found that when the prize payment type is a single graded
payment, customers prefer the promotion of a high total prize amount, short pro-
motion period, a few winners, and prizes in the form of gift certificates. There-
fore, if the firm has a high total prize amount and a limited promotion period
and the marketers of the firm think of combining a few winners and cashable
gift certificates, they should choose single graded payment as the prize. The
first and second research results are in the presence of the uncertainty that most
customers should use the expected value criterion as the rule of choice [6, 10].
It is difficult for marketers of firms to decide regarding the promotion because
they cannot assure of the maximization of expected utility for which customers
13
participate in sweepstakes-based social media marketing in the presence of this

uncertainty. According to the argument of Griffin et al. [24], however, single
graded payment has relaxed uncertainty. Customers prefer high expected value
investments [63]. Therefore, marketers of firms can decide on the type of pro-
motion because they know whether customers participate in sweepstakes-based
social media marketing under single graded payment. If the firm has a limited
total prize amount and sufficient promotion period and the marketers of the firm
think of combining these factors with more winners, they should choose multi
graded payment as the prize. However, they cannot be convinced that customers
will participate in sweepstakes-based social media marketing under multi graded
payment. Therefore, it is difficult for marketers of firms to decide on the type of
promotion because they cannot assure of the maximization of expected utility
for which customers participate in sweepstakes-based social media marketing in
the presence of multi graded payment.
Through the results of this study, Table 6 shows a totally sweepstakes-based
social marketing design on Facebook brand fan pages from the perspective of a
promotion marketer. It shows that under relaxed uncertainty, marketers of firms
can decide on the type of promotion. The promotion marketer in EUT has as
their aim the gaining of latent customers and the provision of the promotion
prize through customer engagement.
5.2 Limitations and future research
This study proposed an econometric model that uses sweepstakes-based social media
marketing to influence customer engagement. However, the study has several limita-
tions, and these should be considered in future research. First, the EUT of main con-
cept in this study is an abstraction and simplification of reality. This mathematical
correctness of EUT does not guarantee that EUT is a reliable guide to human behav-
ior or optimal practice. In addition, equally important factors (e.g., emotion) of the
decision-making process have not been included in this model. Besides, this study
lacks information on comments, through which customers express their thoughts,
Table 6 Sweepstakes-based social media marketing design recommendations

Marketing element Condition Design recommendations
Total amount of marketing (average in our Large Alike payment

study = $254.293)
Promotion period (average in our Short Alike payment
study = 6.024 days)
Number of winners (average in our Small Alike payment
study = 19.182)
Prize payment type Single graded Payment Large total prize amount
Short promotion period
Small number of winners
Cashable prize such as Gift card
Prize category Cashable (gift card) Alike payment
13
opinions, and tendencies under the posts. For example, we wonder whether a cus-
tomer is risk-neutral or risk-averse and active or passive. Particularly, passive people
who do not take much effort to participate in sweepstakes do not think that their
failure to obtain a reward is a sort of loss. These tendencies appear as responses to
the sweepstakes on social media, and this analysis gives useful business insight into
customers’ opinions and tendencies. In future research, content analysis as well as
sentiment analysis of the comments should be conducted for further understanding.
Second, this study suggested a single graded payment as being relaxed uncer-
tainty and recommended promising combinations to marketers. However, the results
obtained in the presence of uncertainty were ignored because promotion marketers
could not assure of the maximization of expected utility. Future research could add
various control factors as relaxed uncertainty.
Third, the limitations of data collection mean we may have omitted some vari-
ables or permitted some latent endogeneity. We are especially aware of limited con-
trol of financial issues. Future research can consider adding financial controls (e.g.,
total assets and return on assets for each firm) to the engagement model. Future
studies can also consider adding industry fixed-effects and customers’ average age
fixed-effects. To this purpose, future research needs to identify the industry of each
firm and contain members’ personal information (e.g., age) for each firm. By doing
this, future studies can conduct fixed- effect and robustness checks based on the base
model or the model with interactions. Future studies can also consider dealing with
the endogeneity problem with additional tests such as the Hausman test [25].
Fourth, this study uses total prize amount information that is accessible to the
public. For a more detailed analysis, it would be better to analyze the effect with the
actual price of the item and the investment cost. Specific results based on actual pri-
vate data would give more precise insights for companies to set a proper marketing
budget. Future research could departmentalize the customer cognized value to figure
out the exact effect per customer on customer engagement.
Fifth, providing cashable benefits to participants on Facebook brand fan pages
was identified as a likely effective strategy. Non-cashable credits may make active
participants feel valuable and important to an online community. Successful Face-
book brand fan pages can help members make group identification and establish
effective bonds. Marketers, therefore, are advised to consider member feedback
when making decisions regarding changes to products/services. Future research can
consider investigating into how brand trust and other mediator variables together
influence the relationship between community participation and brand commitment.
Sixth, Okleshen and Grossbart [49] proposed two types of community participa-
tion: observation frequency and community interaction. Observation frequency indi-
cates the extent to which customers visit a social media community but do not par-
ticipate in community activities, whereas community interaction denotes the extent
to which customers actively participate in community activities, such as initiating
conversations with others and replying to messages. This study cannot explain how
customers participate in community activities. Future research could add two types
of community participation.
Last, customers are less likely to purchase from a brand that they do not recognize
or hardly recognize as it can be perceived as a risk by them. They do not typically
13
like risks as they have negative connotations in that they could potentially waste
their money. Nevertheless, a famous brand has a greater chance as it can increase
their positive evaluation on the good aspects and reduce the risks involved in trying
a new product that the customer is not confident of buying, meaning that the brand
with a higher awareness can strengthen its customer loyalty as the customer con-
tinues to purchase the brand they know and love. Therefore, future research could
contribute to the identification of the role of brands on Facebook brand fan pages by
adding brand factors or variables.
5.3 Implications for research
This study has several research implications. First, this study contributes to the
development of a model that measures comprehensive customer engagement on
the basis of an econometric modeling method for social media marketing strate-
gies beyond previous research [2]. Extant studies related to social media market-
ing remain empirical studies, using mostly survey methods [13]. This study devel-
oped an econometric model to analyze and evaluate relatively large amounts of data
crawled from web pages. It used data from 2215 brand pages and 14,230 promotions
in total and categorized the brand promotion posts for further analysis as well as
evaluation.
Extant research on sweepstakes was investigated by survey and experiment [36,
55, 60]. Particularly, Teichmann et al. [60] only made a comparative study between
online and offline sweepstakes. In addition, few studies have focused on sweepstakes
in social media communities such as Facebook brand fan pages. This study pays
close attention not only to promotion characteristics but also to the prize payment
type and the prize category that customers are engaged in observing in sweepstakes-
based social media marketing on Facebook brand fan pages. In conclusion, even
though understanding is lacking regarding analyzing the factors of sweepstakes-
based social media marketing on customer engagement in the Facebook context, this
study contributes to the customer engagement literature by developing an empirical
model measuring customer engagement and by moderating uncertainty.
Extant literature has associated a high level of customer engagement with cus-
tomer loyalty [8] and customer satisfaction [11] as well as the tendency of reputation
to spread by WOM [13]. In essence, the concept of engagement is closely related
to involvement and interactivity—two factors that reflect customers’ attention to or
interest in a brand, a firm, or a product/service [1]. Since customer engagement is a
kind of measure that represents how firms actively participate, it is very important
for the marketing strategy of firms [3]. This study contributes toward identifying the
importance of customer engagement in social media marketing.
All things considered, social media marketing for a brand fosters the customer
base of that brand. Exposure to social media marketing for brands significantly and
positively impacts customers’ likelihood of purchasing products of the brands [70].
Customers receiving brand-related information from social media can be more likely
to trigger purchasing behavior than those receiving brand-related information from
traditional media [48, 61]. The high brand valuation segment consists of customers
13
who have a relatively high preference for the brand than they do for brands of com-
petitors. Firms may target high brand valuation customers to increase consumption
through the purchase of additional units or by encouraging purchase acceleration
[5].
5.4 Practical implications
This study has several practical implications. First, this study represents the effec-
tiveness of the factors affecting, as well as customer engagement from social media
marketing. By verifying the effectiveness of the key factors on customer engage-
ment, this study provides some new insights to managers who want to gain an
advantage using sweepstakes on social media. In particular, by performing combina-
tion analysis through the application of data crawling and an econometrics method,
this study contributes toward making objective decisions regarding how to map
out the strategies of sweepstakes-based social media marketing on Facebook brand
fan pages. In particular, Table 6 shows a totally sweepstakes-based social market-
ing design from the promotion marketer’s perspective on Facebook brand fan pages
under conditions of relaxed uncertainty as to whether the marketers of firms can
decide on the type of promotion. This study will help marketers to effectively man-
age sweepstakes-based social media marketing.
Second, the key toward operating successful sweepstakes-based social media
marketing is delivering customer value or creating the types of benefits that custom-
ers pursue. If a sweepstake fails to deliver regular benefits to customers, its success
may be jeopardized [64]. When customers perceive the benefits that they receive as
being worthwhile, they are likely to become more active participants [46]. The ben-
efits to customers should be consistent with encouraging active participation, com-
mitment, and loyalty to the community and its products/services [35]. The effective-
ness of sweepstakes is determined by the utilitarian or hedonic nature of the benefits
delivered and the combination of these benefits with the promoted prize [12]. In this
study, movie tickets and beauty products as non-cashable prizes are more hetero-
geneous than cashable prizes and offer hedonic benefits. However, beauty products
have the strongest personal predilection of all prize categories analyzed. Therefore,
positioning beauty products that are generally inexpensive and not popular as the
prize category can have its limitations with respect to whether the customer chooses
them. Despite the fact that monetary benefits have been widely used in industry
practices, no studies have questioned their role in encouraging customer participa-
tion. In this study, providing cashable benefits to participants on Facebook brand
fan pages was identified as being likely an effective strategy. However, non-cash-
able credits may make active participants feel valuable and important to an online
community.
In conclusion, by using the guidelines that this study proposes, firms will be able
to evaluate and design optimized sweepstakes-based social media marketing strate-
gies in pursuit of their goals. The validated framework can help managers to better
13
understand the diversity of messaging components as well as offer an analytical tool

for assessing the nature of engagement associated with each appeal and category.
Social media does not merely offer significant cost advantages when compared with
traditional media channels [30]. This study shows that social media opens up pos-
sibilities for targeting smaller niche markets and accruing unparalleled media expo-
sure and referral marketing.
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Design of Sweepstakes-Based Social Media Marketing For Online Customer Engagement

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Electronic Commerce Research (2020) 20:119–146

Design of sweepstakes‑based social media marketing

Woo‑Jin Jung1 · Seungjun Yang2 · Hee‑Woong Kim3

Published online: 4 January 2019

Keywords Customer engagement · Social media marketing · Expected utility

As potential customers, users on Facebook, click “like” buttons, share, or com-

within social media marketing. Prior studies exploring customer engagement

2.1 Expected utility theory for the participation choice of customers

In research on decision-making, EUT, as a typical normative theory, predominantly

that some of these conditions would be violated by real decision-makers in practice

2.2 Social media marketing and brand fan pages on Facebook

Marketing strategies enable firms to address customers’ choice of products/services

2.3 Sweepstakes‑based social media marketing for customer engagement

Customer engagement involves a certain degree of psychological or behavioral inter-

Table 1 Summary of previous research on sweepstakes

2.4 The importance of a cashable prize in sweepstakes

Customers may derive utility simply by participating in sweepstakes; e.g., sweep-

2.5 The features of prize payment type in sweepstakes

We collected sweepstakes data on Facebook. Figure 1 explains the data collection

Data Collection Data Collection

Prize Type (Prize Category)

Promotions allow a firm to target a customer by enhancing or creating their image

interaction between Prize Category and Promotion Characteristics on customer engage-

Designing a multi graded payment unlike designing a single graded payment

Di =𝛽0 + 𝛽1 Amounti + 𝛽2 Periodi + 𝛽3 Winneri + 𝛿1 Payment Typei

Facebook promotion data of brand fan page

4 Data analysis and results

4.1 The result of base models on customer engagement

Table 3 Testing results for the base models

Constant 109.709*** (2.420) 98.945*** (2.647)

* significant at the 0.1 level

4.2 Tests of interaction effect with prize category

Table 4 Testing Results of the Interaction Effect with Prize Type

Constant 101.624*** (2.707) 94.371*** (3.231) 102.988*** (2.662)

*Significant at the 0.1 level

Table 5 Testing results of interaction effect with prize payment type

Constant 118.807*** (2.601) 100.160*** (2.824) 103.074*** (2.979)

*Significant at the 0.1 level

4.3 Tests of interaction effects with prize payment type

customers’ participation in sweepstakes-based social media marketing under Multi

To identify ways in which to increase customer engagement in sweepstakes on social

participate in sweepstakes-based social media marketing in the presence of this

5.2 Limitations and future research

Table 6 Sweepstakes-based social media marketing design recommendations

Total amount of marketing (average in our Large Alike payment

understand the diversity of messaging components as well as offer an analytical tool

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2.1 Expected utility theory for the participation choice of customers

2.2 Social media marketing and brand fan pages on Facebook

2.3 Sweepstakes‑based social media marketing for customer engagement

Table 1 Summary of previous research on sweepstakes

2.4 The importance of a cashable prize in sweepstakes

2.5 The features of prize payment type in sweepstakes

4 Data analysis and results

4.1 The result of base models on customer engagement

Table 3 Testing results for the base models

Constant 109.709* (2.420) 98.945* (2.647)

4.2 Tests of interaction effect with prize category

Table 4 Testing Results of the Interaction Effect with Prize Type

Constant 101.624* (2.707) 94.371* (3.231) 102.988*** (2.662)

Table 5 Testing results of interaction effect with prize payment type

Constant 118.807* (2.601) 100.160* (2.824) 103.074*** (2.979)

4.3 Tests of interaction effects with prize payment type

5.2 Limitations and future research

Table 6 Sweepstakes-based social media marketing design recommendations