Optimal livestreaming strategy of brands considering the flow cost and spillover effect

Purpose Driven by the rapid growth of livestreaming e-commerce, many brands adopt two distinct livestream sales strategies. One is selling directly through brand-hosted rooms only, and the other is implementing hybrid campaigns that involve both brand-hosted rooms and collaborations with key opinion leaders (KOLs). Brand-hosted livestreams foster product loyalty at low cost but face constraints of insufficient organic traffic, compelling firms to purchase platform traffic. In contrast, hybrid campaigns leverage KOL fan bases yet entail high commission fees. Therefore, this study aims to explore the best choice for the brand between a brand-based livestream mode and a hybrid mode. Design/methodology/approach To address this research gap, this study constructs a Stackelberg game model involving a brand, a live-streaming platform and a KOL, to determine the product price and traffic expenditure, followed by the simultaneous decisions on selling effort by the brand and KOL. The demand functions are formulated to incorporate traffic conversion rate, KOL spillover effects and consumer acceptance of KOLs. Through numerical studies, the study explores how different parameters affect supply chain members’ decisions. Findings (1) The brand’s profit jumps once traffic conversion exceeds a threshold. (2) Equilibrium price and effort of both stream types first increase, then decrease in KOL commission rate. A higher commission shifts profit from the brand to the live-streaming platform. But the brand’s loss outweighs the live-streaming platform’s gain, thus reducing the profit of the total supply chain. (3) When consumers value the KOL more, the brand gains more than the KOL. (4) A win-win region exists for both modes. The hybrid mode becomes more preferable as the positive spillover effect strengthens. Originality/value Despite the prevalence of livestreaming, the integrated decision-making regarding traffic purchase, livestream format selection and pricing remains underexplored in existing literature. This study contributes theoretical insights into brands’ traffic purchasing strategies and livestream format decisions within the livestreaming e-commerce context.