Native Advertising on Social Media: the Effect of Heuristics on Attitudes and Purchase Behavior’

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Native Advertising on Social Media: the Effect of Heuristics on Attitudes and Purchase Behavior’ ‘Native Advertising on Social Media: the effect of heuristics on attitudes and purchase behavior’ Author: Jekaterina Smakova Student number: 11139366 Programme: MSc Business Administration- Marketing Thesis supervisor: Tina Dudenhöffer Word Count: 11,208 i Statement of Originality This document is written by Jekaterina Smakova who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents. ii Acknowledgements I would like to thank my supervisor, Tina Dudenhöffer, for taking the time to discuss my ideas, provide helpful recommendations and support. Without her direction and feedback this project would not have been successfully completed. I am also grateful for the support of my friends and family, who helped me to stay focused and offered moral support when I experience some setbacks in the process of conducting this study. Moreover, I would like to thank all the participants that completed the survey and made this research study possible. iii TABLE OF CONTENT: Abstract……………………………………………………………………………….…….2 Chapter 1. Introduction………………….…………………………………………….…....3 Chapter 2. Literature Review……………………………………………………….…..…5 2.1 Advertising industry trends …………………………..………………...5 2.2 Native advertising ………………………………….…….....................6 2.3 Benefits of native advertising…………………………………..…..….7 2.4 Challenges for native advertising. ……….……….………………....9 2.5 Research gap……………………………………………………………….….11 2.5 Heuristics………………….…………………………………………............12 a. Source credibility…………….. ...………………………….…14 b. Brand familiarity……………………………………..............16 c. Bandwagon effect…………………………….……….…….…17 d. Interaction effects among source credibility…..….18 brand familiarity and bandwagon effect 2.6 Conceptual Framework……………………………………………………19 Chapter 3. Theoretical Framework………………………………………….………...20 3.1 Research design…………………………………………………….………..20 3.2 Measures……………………………………………………………….……….20 3.3 Stimuli development………………………………………………..……..22 3.4 Subjects…………………………………………………………………………..23 3.5 Procedure……………………………………………………………………….24 Chapter 4. Results……………………………………………………………………………..25 4.1 Frequency check……………………………………………………………..25 4.2 Manipulation check…………………………………………………………25 4.3 Reliability Analysis…………………………………………………………..26 4.4 Hypotheses testing………………………………………………………….26 Chapter 5. Discussion and conclusions………………………………………..……..34 5.1 Limitations and future research……………………………………….36 5.2 Conclusion……………………………………………………………………….37 References……………………………………………………………………………………...…39 Appendix A. Questionnaire…………………………………………………………........47 Appendix B. Stimulus materials………………………………………………………….53 1 Abstract It is becoming increasingly difficult for marketers to attract consumer’s attention in an overcrowded on-line environment and native advertising is left as one of the few bright spots in the advertising landscape (Marvin, 2013). While the industry has embraced this new tool, the academic literature has been quite limited in the area of native advertising. This study, therefore, contributes to the existing literature by exploring different factors that affect the way consumers evaluate native adverts and to what extent are these factors important in producing attitude and behavior change. A 2 x 2 x 2 on-line experiment systematically varied two levels of the source credibility, two levels of brand familiarity and two levels of perceived popularity (bandwagon effect) in order to investigate the effect of those cues on consumer evaluations and purchase behavior. The findings show that all three cues- source credibility, brand familiarity and bandwagon cues had a significant effect on consumer’s evaluations of the advertisement as well as the brand, but did not have a significant effect on purchase intent or intention to share the advertisement. Moreover, the results support previous research showing that there is a cue-cumulation effect, suggesting that these cues can work together to influence consumer evaluations. 2 Chapter 1. Introduction It is not a secret that advertising is vital for any company that wants to be successful. Recent economic climate and technological changes, however, have been making it increasingly difficult for marketers to find ways to attract consumers’ attention with traditional marketing techniques. Native advertising has been gaining recognition over the past few years as one of the most promising and powerful new techniques in marketers’ tool kit. As a term it can generally refer to any paid advertising that takes the specific form and appearance of editorial content from the publisher itself (Wojdynski & Evans, 2015). Even though the term itself is quite recent, the concept is not new. Advertisers disguised promotional messages to look like regular content since the early days of newspapers and magazines (Pollitt, 2014). Those kind of adverts are known as advertorials, and they would be placed alongside the content simulating publishers’ editorial style but would feature an ‘advertisement’ label to distinguish from other content (Van Reijmersdal et al., 2005). Developments in technology, however, lead to more opportunities for marketers to take this type of advertisement even further. While some may be similar to advertorials in their execution, others may take completely different forms. For example, some native advertising may appear in the form of a paid search listings, recommendation units or sponsored social media posts (IAB, 2013). Consumers in general find native ads less irritating than banner advertising (Becker-Olsen, 2003), have more positive attitudes towards the brand (Wojdynski and Evans, 2015) and native ads tend to generate greater engagement among consumers (Wojdynski, 2016; Wang, 2006; Konrad, 2015). This resulted in 9% higher brand lift, 18% higher purchase intent and 21% higher personal identification with the brand (Sharethough, 2013) that consumers experienced compared to traditional banner ads. With significant increase in internet and social media use among consumers, the importance of those channels for advertisers has become undeniable (Swedowsky, 2009). Social media is particularly attractive to advertisers due to its wide reach (eg. Facebook has 1.28 billion daily active users (Statista, 2017), Instagram- over 500 million and Snapchat over 150 million (Statista, 2016)), cost effectiveness, superior targeting (Wright et al., 2010) and ability to build 3 relationships with consumers through two-way interaction (Hensel & Deis, 2010). Due to its non-intrusive nature and generally more positive attitudes of consumers, native advertising has taken over the social media platforms (Dix & Phau, 2009 in Lee et al., 2016), representing 38.8% of entire social media spending in 2014 and it predicted to reach 42.4% of the total spending in 2017 (eMarketer, 2015; Lee et al., 2016). Despite growing popularity, the research in the area of native advertising has been fairly limited. For example, it is still not completely clear how exactly consumers process native advertising and which factors might moderate the effectiveness of those ads in leading to attitude and behavioral change. It is largely presumed that individuals generally evaluate information in a cognitively effortful fashion (Metzger et al., 2010). There has been significant evidence, however, that in everyday situations involving efforts to persuade, consumers are more likely to use quick judgement rules or heuristics rather than systematically processing the message (Iyengar & Valentino, 2000; Metzger et al., 2010; Sundar, 2008; Go et al., 2014). There is a number of potential heuristics that consumers might employ when processing persuasive messages, from specific homepage presentation factors such as use of photos and graphics, headline characteristics or source credibility to pre-existing attitudes towards the advertiser, brand or product and many others (Wojdynski, 2016; Sharethrough, 2013; Keller 1993; Wei et al., 2008; Petty and Cacioppo 1983). Currently, nonetheless, little research has been done to examine how much influence those different cues might have on consumers’ processing of a persuasive message. This research aims to contribute to the existing literature by examining the effects of three separate heuristics- brand familiarity, source credibility and bandwagon effect on the consumer attitudes and purchase behavior in the context of native advertising. Additionally, it aims to fill the gap in the existing research regarding the potential interaction effects among these cues. The main research question of this paper is: To what extent source credibility, brand familiarity and the bandwagon effect affects consumers’ evaluations and purchase behavior in the native advertising context? 4 The rest of the paper is divided into four main chapters. The next chapter outlines the main concepts, introduces a review of existing literature and introduces the proposed hypotheses. The subsequent two chapters go into explaining the methodology used in this study to test the hypotheses and then provides the results of the data collection. Lastly, the paper will present the discussion of the findings, including theoretical and managerial implications, conclusions and directions for further research. Chapter 2. Literature Review 2.1 ADVERTISING
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