Are Auction-Based Promotions More Profitable for Short Video Platforms than Fixed Pricing?

Short video platforms increasingly offer paid promotion tools that allow creators to boost the visibility of their content. These tools are typically priced through either fixed fees or auction-based bidding systems. We examine how these two promotion mechanisms affect platform revenue, creator incentives, and the engagement of promoted content. Our results show that auction-based promotion does not universally outperform fixed pricing. Auctions generate higher platform revenue only when competition for viewer attention is sufficiently intense—that is, when the number of creators relative to viewers is high. When competition among creators is limited, fixed pricing can produce greater revenue while maintaining stronger engagement. We also find that auctions attract more creators to promote their videos, but this broader participation can dilute engagement by allowing lower-appeal videos into the promotion queue. For creators, auctions tend to benefit those with very high-appeal or very low-appeal content, whereas those with moderately appealing content may be disadvantaged. These findings suggest that platforms should align their promotion policies with the maturity of their creator ecosystems, utilizing fixed pricing in early stages and shifting to auction mechanisms as competition intensifies. Ultimately, our framework empowers managers to dynamically adapt their pricing strategies as their user bases evolve.