The Effectiveness of Social Advertising

45 Pages Posted: 8 Jun 2020 Last revised: 18 Jun 2020

See all articles by Shan Huang

Shan Huang

University of Washington - Michael G. Foster School of Business

Song Lin

Hong Kong University of Science & Technology (HKUST) - Department of Marketing

Date Written: May 26, 2020

Abstract

Although social advertising has grown to be one of the major online advertising channels in recent years, its effectiveness is not been fully understood. In this study, we use data from a large-scale field experiment on a major social media platform (WeChat Moments) to investigate how the display of social cues (friends' likes) in an advertisement affects users' responses. In the experiment, we randomly manipulate the presence of social cues in ads shown to 37 million users. We distinguish two types of consumer response: publicly observable responses that reveal whether a user has liked an ad, and private responses whereby a user clicks on an ad. We find that on average, displaying the first social cue significantly enhances the liking and clickthrough rates. However, while showing additional social cues can further increase users' tendency to like, it does not increase the clickthrough rate any further. This empirical pattern is consistent with the coexistence of informational social influence and normative social influence in social advertising. We find evidence that informational influence has a greater impact on the clickthrough rate, whereas normative social influence has a more prominent effect on the liking rate. Our results provide rich implications for advertisers and social media platforms in designing social advertising policies.

Keywords: social networks, social advertising, social influence, field experiment

JEL Classification: M3, D8, C93

Suggested Citation

Huang, Shan and Lin, Song, The Effectiveness of Social Advertising (May 26, 2020). Available at SSRN: https://ssrn.com/abstract=3610513 or http://dx.doi.org/10.2139/ssrn.3610513

Shan Huang (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States
2066166638 (Phone)
98125 (Fax)

HOME PAGE: http://www.shanhhuang.com/

Song Lin

Hong Kong University of Science & Technology (HKUST) - Department of Marketing ( email )

LSK 4005, HKUST Business School
Clear Water Bay
Hong Kong, Hong Kong, China na
Hong Kong
Clear Water Bay (Fax)

HOME PAGE: http://www.bm.ust.hk/mark/staff/song_lin.html

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
42
Abstract Views
271
PlumX Metrics