Abstract: As consumer traffic in the mobile app market continues to increase, advertisers in increasing numbers choose to post promotion ads in mobile app market. In online market places, a primary concern for sellers planning an online promotion advertising has been how to publish the promotion advertising on the basis of consumer traffic. Compared with the offline market, the entry cost for consumers to enter the mobile app market becomes lower. With the consumers’ movements in online market places becoming more common and general, consumer traffic could affect the sellers in two ways: Traffic changes and traffic switches. Traffic changes mean the traffic of an online market place increases or decreases independently. For example, from Jan. 2019 to Jan. 2020, the traffic in Tiktok increased by 25% monthly on average. It reveals that the traffic increases in Tiktok App, while this kind of increase does not concern the traffic in other market places. Traffic switches mean the traffic transfers from one online market place to another, leading to a decreasing traffic of one market place and an increasing traffic of another. For example, if there is a consumer who is browsing the Tiktok, when he switches to Amazon at the next second, the traffic in Amazon increases, and decreases in Tiktok. In this context, traffic switches do not change the overall consumer traffic in the market, but only shift traffic between the market places.
Accordingly, traffic changes and switches make the sellers’ decisions on online promotion advertising more complicated. Understanding the effect of the traffic changes and switches on online promotion advertising has become increasingly critical to sellers’efforts to improve their marketing strategies. In this paper, we mainly investigate sellers’ optimal promotion advertising in terms of traffic changes and switches, trying to answer these following questions: (1)What is the optimal promotion advertising on the basis of online traffic? (2)As an online seller, how to adjust its promotion advertising with traffic changes and switches among the markets? (3)If sellers are given the different traffic initially, how do they, with traffic advantage or disadvantage, adjust their promotion advertising?
We aim to address the above questions by developing a Hotelling city model with two sellers and a continuum of consumers. Our research has separated this city into three markets: One competitive market and two non-competitive markets. In competitive market, two sellers compete for the online promotion advertising; In non-competitive market, there is only one seller publishing the online promotion advertisement.
The results first show that when consumer traffic changes, the share of the competitive market and the change of consumer traffic interactively affect the optimal promotion price and advertising level. Note that, the variation of promotion pricing and advertising level decisions are not the same. Then, when consumer traffic switches among non-competitive market and competitive market, the seller also needs to consider the share of competitive market and the initial consumer traffic in competitive market to adjust its price promotion advertising strategy. Third, we also find that the increasing consumer traffic does not always benefit the demand and profit. Finally, when the traffics in single markets are not the same, this paper also provides guidance for sellers in traffic advantages or disadvantages on how to make pricing and advertising level strategy.
We mainly examine the online promotion strategies (including pricing decision and advertising level decision) with the effect of consumer traffic changes and switches. Our findings provide the following useful insights for management practice. First, online promotion strategies should be adjusted by different market situations: When consumer traffic changes in the market, competitive market share and the change of consumer traffic interactively affect the strategies of online promotion. When consumer traffic switches from one market to another, the amount of consumer traffic in initial market should also be considered to affect the promotion strategies. In addition, pricing and advertising level does not always vary in the same direction. Initially, pricing and advertising level could vary in opposite direction if the share of competitive market is extremely small, and when the share of competitive market is gradually large, the directions become the same. Later, they will be opposite again if the share of competitive market is large enough. These findings provide useful guidelines for adjusting the advertising strategies dynamically on the basis of the share of competitive market. Moreover, the increasing consumer traffic does not always benefit the demand and profit. The consumer traffic is not the only factor that affects the demand and profit, and it can also be affected by the increasing consumer traffic in the market and its share of competitive market. Besides, the comparison between the initial consumer traffic in different markets provides sellers with management insights into how to adjust their price promotion advertising strategies based on their traffic advantage and disadvantage.

Key words: mobile app market, promotion advertising decisions, traffic changes, traffic transfers

摘要： 随着移动App市场中消费者流量的不断增加,越来越多的广告主选择在移动App市场中投放价格促销广告。本文分析了当移动App市场中的流量分别发生局部变化或相互转移时,广告主应如何制定其最优促销广告定价与最优广告投放水平。我们首先假设市场不完全覆盖的情境,结果表明:(1)在广告主的局部市场与竞争市场中的流量发生局部变化下,广告主的产品定价与广告投放水平和竞争市场大小、竞争市场流量大小以及局部市场流量大小有关;(2)当流量在局部市场与竞争市场之间相互转移时,广告主还需考虑原市场中流量的大小来调整其价格促销广告策略;(3)当局部市场的流量大小不相等时,本文也为处于流量优势或劣势的广告主提供了相应的最优产品定价与广告投放水平策略的指导。本研究为移动App环境下网络营销企业广告策略的制定提供了理论参考。

关键词: 移动App市场, 价格促销广告策略, 流量局部变化, 流量转移