Income Inequality and Digital Advertising Strategies: Evidence from a Field Experiment
35 Pages Posted: 6 Oct 2017 Last revised: 7 Feb 2018
Date Written: October 24, 2017
In a globalized digital economy, it is not clear whether it is better to use globally- or domestically-oriented images in marketing communications, or how the optimal strategy would be affected by economic inequality. We explore this using field experiment data from Facebook in India. In these field experiments, consumers were shown ads that encouraged them to join an online community that shared reviews of wedding vendors. These ads randomized the extent to which the images of weddings showed global versus local aspirations. In general, the globalized images performed poorly. However, this is moderated by the degree of inequality in the surrounding region. People living in more unequal regions are more likely to embrace globalized images. We present suggestive evidence that this has to do with consumers trying to distance themselves from an environment of poverty, rather than because inequality is correlated with other regional characteristics that make the globalized image appealing.
Keywords: Online Word of Mouth, Income Inequality, Facebook
JEL Classification: L86, M37
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