What s done in the dark will be brought to the [609743]

What ’s done in the dark will be brought to the
light: effects of in fluencer transparency on
product ef ficacy and purchase intentions
Parker J. Woodroof
Department of Marketing and Management, University of Central Arkansas, Conway, Arkansas, USA
Katharine M. Howie
Department of Marketing, University of Lethbridge, Lethbridge, Canada
Holly A. Syrdal
Department of Marketing, Texas State University, San Marcos, Texas, USA, and
Rebecca VanMeter
Department of Marketing, Ball State University, Muncie, Indiana, USA
Abstract
Purpose –The purpose of this paper is to examine the impact of the type of disclosure used by social media in fluencers on consumer evaluations of
influencer transparency, product performance expectations and how those factors ultimately in fluence purchase intentions.
Design/methodology/approach –An experiment was conducted with 321 participants recruited from MTurk to test a moderated serial-mediation
model.
Findings –The results indicate that when consumers become cognizant that an in fluencer ’s branded promotional post may have been motivated by
an underlying financial relationship, they evaluate the in fluencer as signi ficantly less transparent if a more ambiguous disclosure is used relative to a
clearer disclosure. Transparency perceptions of the in fluencer impact consumers ’perceptions of product ef ficacy as well as purchase intentions.
Originality/value –Social media in fluencers are rapidly emerging as a popular marketing tool for brand managers, but consumer response to this
form of promotion is not well understood. To the best of the authors ’knowledge, this is the first study to investigate how the type of endorsement
disclosure used by a social media in fluencer impacts consumer perception of in fluencer transparency, product ef ficacy and purchase intentions.
Further, this research demonstrates the applicability of the persuasion knowledge model in the domain of in fluencer marketing.
Keywords Instagram, Transparency, Persuasion knowledge, Covert marketing, Endorsement disclosure, Native marketing, Social media in fluencer
Paper type Research paper
Introduction
Consumers are increasingly exposed to marketing messages
while simultaneously becoming more adept at tuning out thesemessages (
Campbell et al., 2013 ). In response, marketers are
motivated to develop communication strategies that consumersdo not easily identify as a persuasive marketing attempt by thebrand ( Weiet al.,2 0 0 8 ). One strategy that is increasingly being
used is in fluencer marketing, which allows brands to
communicate to an interested audience through the voice ofsomeone they ostensibly trust ( Newman, 2015 ). Previous
research demonstrates that the utilization of in fluencers, such
as celebrities ( Djafarova and Rushworth, 2017 ;Jin and Phua,
2014 ), brand community members ( Kim et al. , 2014 )a n d
bloggers ( Lee and Watkins, 2016 ) for marketing efforts
enhances consumers ’brand attitudes and increases purchasing.The ability to reach a sizeable portion of the target market
quickly and cost-effectively makes in fluencer marketing an
increasingly popular promotional tool ( Phua et al.,2 0 1 7 ).
In 2019, 89 per cent of marketers report that ROI from
influencer marketing is similar to, if not better than, other
marketing channels and as of 2018, 65 per cent of marketerssaid they planned to increase their in fluencer marketing
budgets (
Mediakix, 2019 ). Currently, in fluencer marketing
growth is estimated to be $6.5bn, with earned media value upto $18 per dollar invested ( Influencer Marketing Hub, 2019 ).
By 2022, the industry is expected to be worth $15bn(Mediakix, 2019 ). Furthermore, consumers have long held that
celebrities are authentic customers who are motivated by agenuine predilection for the product or brand rather thanfinancial gain ( Atkin and Block, 1983 ). However, roughly 50
per cent of social media users are not able to identify whenpromotional posts are sponsored ( Sterling, 2017 ). This
suggests that consumers are likely to be unduly in fluenced by
T h ec u r r e n ti s s u ea n df u l lt e x ta r c h i v eo ft h i sj o u r n a li sa v a i l a b l eo n
Emerald Insight at: https://www.emerald.com/insight/1061-0421.htm
Journal of Product & Brand Management
29/5 (2020) 675 –688
© Emerald Publishing Limited [ISSN 1061-0421][DOI 10.1108/JPBM-05-2019-2362 ]Received 3 May 2019
Revised 10 October 2019
11 December 2019
14 December 2019Accepted 16 December 2019
675

influencer marketing campaigns they perceive to be genuine,
non-commercial content.
Influencer marketing is defined as the practice of leveraging
opinion leaders to spread word-of-mouth about brands and
their products to target audiences ( Thorne, 2008 ).
Interestingly, in fluencers often fail to disclose their commercial
relationships with brands and organizations, with only 11 per
cent of in fluencers complying with Federal Trade
Commission ’s (FTC) or the Competition and Markets
Authority ’s (CMA[ 1]) guidelines ( Influencer Marketing Hub,
2019 ). The recently updated FTC (2019) guidelines indicate it
is important for in fluencers to disclose the nature of the
relationship because it encourages honest and truthfulrecommendations, and allows consumers to weigh the value of
individual endorsements. When in fluencers do attempt to
disclose these relationships, the details are often unclear andconfusing to the consumer ( Evans et al., 2017 ). Unsurprisingly,
the covert nature of in fluencer marketing has raised concerns
among regulators and the public over the ethicality of this
practice ( Leeet al., 2016 ;Wojdynski ,2016a, 2016b ).
According to the FTC Endorsement Guides ( FTC, 2019 )[2]
and Advertising Standards Authority (ASA) In fluencer ’sG u i d e
(ASA, 2018), if there is a connection that consumers would not
expect between a social media in fluencer (SMI) and the
promoted brand, it could affect how consumers evaluate theendorsement. Therefore, the clear disclosure of the connection
is imperative. According to the FTC Endorsement Guides, if
the SMI has been paid, given something for free, or receiveddiscounted product or service in exchange for his/herendorsement, the in fluencer must disclose the connection in the
social media post ( FTC, 2019 ). In response to the increased
prevalence of in fluencer marketing and the frequent lack of
disclosure on the part of in fluencers and brands, the FTC and
ASA have both increased their regulation of in fluencer
marketing in recent years.
There is a litany of examples of promotional posts from high
profile SMIs that illustrate how in fluencer marketing can be
deceiving when underlying financial relationships are not
disclosed. As consumers become more aware of strategies used
by brands on social media, they will become more discerning in
their evaluations of promotional content. Currently, however,many consumers do not understand that SMIs are required to
disclose their relationships with brands. Research by
Ad
Standards Canada (2018) asked respondents if the following
statement was true or false: “Influencers do not have to state
that they have been paid to talk about a product ”(p. 19). The
majority of respondents responded “true ”(60 per cent) and a
significant number responded, “Id o n ’t know ”(19 per cent).
This suggests that the majority of consumers do not understandwhat the acceptable practice is for in fluencers. Consumer
knowledge of marketing tactics is important for brands to
understand as it largely in fluences how consumers respond to
marketing messages. The persuasion knowledge model (PKM)suggests that consumers learn how to manage persuasive
attempts and develop certain coping strategies that impact the
effectiveness of marketing communication ( Friestad and
Wright, 1994 ). Researchers have de finedpersuasion knowledge
as the ability to recognize marketing communication and its
intentions ( Rozendaal et al. ,2 0 1 0 ). The activation of
persuasion knowledge is generally associated with negativeeffects on performance outcomes for the brand ( Nelson and
Ham, 2012 ). Therefore, even when SMIs use a form of
disclosure considered appropriate by regulatory agencies, thetype of disclosure used may cause consumers to evaluate the
product differently depending on whether or not persuasion
knowledge is activated.
This research examines how various types of SMI disclosure
language affect brand- and product-related outcomes. Consumerinferences about how well a product will perform are crucial in an
online marketing context because the consumer has no physical
product or packaging with which to interact. It is likely thatinfluencer marketing posts largely determine consumers ’product
evaluations because of the weight consumers attach to external
cues to make product predictions (
Kramer et al.,2 0 1 2 ;Srivastava
and Mitra, 1998 ). Moreover, the use of unclear disclosure
language has been shown to confuse consumers and is potentiallyharmful to the overall credibility of the promotional tool ( Jung
and Heo, 2019 ). Despite increased attention and concern,
research on SMI disclosure is still in its nascency and only a few
studies have speci fically investigated the in fluence of disclosure
language. As far as the authors are aware, no research to date hasexamined the potential impacts of disclosure language onconsumer perceptions of the in fluencer or product ef ficacy. To
fill this gap in the marketing literature, the current study
examines the impact of the type of disclosure language used by aSMI on consumers ’transparency perceptions of the in fluencer.
Additionally, this research i nvestigates how consumers ’
expectations of product performance and their purchase
intentions are affected by transparency perceptions of the
influencer.
This paper is organized as follows. First, a discussion of
influencer marketing is presented, grounded in theory from the
persuasion knowledge literature. Next, an exploratory pilot study
investigates consumer response to different forms of disclosure
used by SMIs. Subsequently, the main study proposes and tests amodel examining the role of persuasion knowledge in consumers ’
experience with in fluencer marketing. Finally, key contributions,
study limitations, and suggestions for future research are offered.
Theoretical background
Influencer marketing, native advertising and
disclosures
Advertising messages can be broadly categorized as both
traditional advertisements that are obviously paid-for contentand native advertising that attempts to blend in with a non-commercial context. Native advertising is defined as “paid ads
that are made to look very similar to editorial content ”(
Evans
et al.,2 0 1 7 ) and it can take many forms. Examples include
magazine ads that look like featured stories, paid search ads,sponsored blog posts, etc. Influencer marketing is the practice of
leveraging opinion leaders to spread word-of-mouth about
brands and their products to target audiences ( Thorne, 2008 ).
Influencer marketing on social media is a type of native
advertising that mimics the look and feel of any normal socialmedia post ( Campbell and Grimm, 2019 ).
Empirical research on native advertising largely focuses on
factors related to advertising disclosures. In general, disclosureshave been found to have an adverse effect on ad performancebecause of consumers ’increased scrutiny of advertising contentEffects of in fluencer transparency on product ef ficacy
Parker J. Woodroof et al.Journal of Product & Brand Management
Volume 29 · Number 5 · 2020 · 675 –688
676

relative to content that was not paid-for promotion ( Wojdynski
and Evans, 2016 ). Recently, scholars have examined the effects
of explicitness (versus implicitness) in advertising disclosure
(Jung and Heo, 2019 ). Explicit and clear disclosures, relative to
implicit and ambiguous disclosures, help customers recognize
that the natively formatted content is actually an advertisement
(Wojdynski and Evans, 2016 ).
Native advertising falls under the umbrella of covert
marketing, which encompasses communication methods that
consumers do not easily identify as persuasive marketing
attempts. Campbell et al. (2013) examined another form of
covert marketing, product placement, in TV shows and blogs
and found this subtle tactic can increase both brand recall andbrand attitudes. They determined that product placement was
less effective at increasing brand recall when consumers were
made aware of a sponsorship through a disclosure.
Additionally, the researchers found consumers were more likely
to adjust their brand evaluations when the disclosure was after,
rather than before, the presentation of the product. Similar
research has found the recognition of a native ad, relative to an
ad perceived as noncommercial content, leads to a decrease in
ad credibility, attitude toward the sponsor, and intention to
share the ad ( Wojdynski and Evans, 2016 ;Wuet al., 2016 ). In
other words, disclosure of the relationship alerts consumers of a
persuasion attempt, ultimately making consumers more
cautious and critical ( Quinn and Wood, 2004 ). This is likely
why, even when brands and SMIs comply with regulatory
agencies ’disclosure guidelines, many choose to use a version of
disclosure language that they think will be least likely to alert
consumers of a persuasive attempt on behalf of a brand.
From a regulatory perspective, SMIs are technically required
to disclose underlying relationships with brands “if there ’sa
connection between an endorser and the marketer that
consumers would not expect and it would affect how
consumers evaluate the endorsement ”(FTC, 2017 ). However,
the FTC does not mandate the use of speci fic hashtags or
wording for disclosure. Rather, the agency provides guidelines
and examples of compliant disclosures for a variety of
contextually different situations. For example, use of the words
“ad,”“sponsored ”or“promotion ”with or without “#”before
the words is deemed appropriate by the FTC. Although merely
saying “thank you, brand ”is not compliant with current FTC
guidelines, the agency does view “thank you ”language as
acceptable if the in fluencer indicates that he/she received a
“gift”or free product and that is all the in fluencer received in
exchange for his/her endorsement. For example, “Thanks XYZ
for the gift of ABC product ”is currently deemed an acceptable
form of disclosure if the in fluencer did not receive anything
other than the gift from the brand. Little is known about which
forms of compliant disclosure language are effective for
promoting consumer recognition of in fluencer posts as
advertising and whether these various disclosures have a greater
likelihood of activating persuasion knowledge and affecting
important brand outcomes ( Jung and Heo, 2019 ).
Persuasion knowledge and in fluencer marketing
The PKM is commonly used as a framework to examine covert
or native advertising and the importance of disclosures
(Campbell and Grimm, 2019 ;Jung and Heo, 2019 ;Campbell
et al., 2013 ). This theory posits that throughout life, consumersdevelop knowledge about how, why and when a message
intends to in fluence them resulting in the consumer developing
various coping strategies ( Friestad and Wright, 1994 ). In order
for consumers to learn a coping strategy, they need to realize
that:
/C15they are being exposed to ads;
/C15marketers want to cultivate positive ad and brandattitudes; and
/C15marketers have selling goals ( Moses and Baldwin, 2005 ).
Consumers identify an action as a persuasion effort if they
believe the message or sales tactic is deliberately constructed to
change their beliefs, attitudes or behavior. Generally,
persuasion knowledge remains inactive unless triggered by a
persuasion knowledge activating action ( Van Vaerenbergh,
2017 ). Activating actions might include product or brand name
placement contexts ( De Pelsmacker and Neijens, 2012 ) such as
brand name placements in song lyrics ( Van Vaerenbergh,
2017 ), a salesperson ’sflattery ( Campbell and Kirmani, 2000 ),
a company ’s pricing scheme ( Kachersky and Kim, 2010 ),
advergames ( Redondo, 2012 ), or sponsorship ( Carrillat and
d’Astous, 2012 ). Once consumers recognize that a message has
a persuasive intent, the message is no longer perceived as an
authentic message but as a persuasion goal-directed message.
As a result, consumers will use their previously developed
persuasion knowledge to cope with the persuasion attempt byeither embracing or rejecting the persuasion ( Friestad and
Wright, 1994 ).
In addition to identifying persuasive intention, persuasion
knowledge in fluences both affective and behavioral responses
to persuasive attempts. Studies have largely found that
persuasion knowledge acts as a defense mechanism when
evaluating an ad ( Robinson et al. , 2001 ). Once customers
perceive a persuasion attempt, they are more likely to activateand apply this knowledge as a critical defense while processing a
persuasive message ( Moses and Baldwin, 2005 ).Jung and Heo
(2019) examined native advertising, speci fically in the context
of social media, and compared the effects of disclosures to
consumer persuasion knowledge regarding advertising tactics.
In a series of experiments, they found that knowledge regarding
advertising tactics on social media was positively related to
participants ’ability to identify native ads. Further, consumers
with more expertise had less favorable brand attitudes whenexposed to native ads. The effect of consumer knowledge was
more predictive of both the correct identi fication of the ad and
brand attitudes compared to disclosures. The results of the
research highlight the importance of existing persuasion
knowledge in determining how consumers respond to native
advertising. Lorenzon and Russell (2012) examined
advertisements embedded in videogames and measuredconsumers ’ambivalence towards the tactic. The research took
a nuanced view of persuasion knowledge to examine whether
different types of persuasion knowledge vary in their effects on
attitudes. Consumers with greater agent and topic knowledge
were more likely to have positive attitudes, while those with
greater persuasive intent knowledge were more likely to have
negative attitudes. The findings highlight both the importance
and complexity of persuasion knowledge.
Additional research on persuasion knowledge finds it
negatively impacts customers ’attitudes toward the ad and theEffects of in fluencer transparency on product ef ficacy
Parker J. Woodroof et al.Journal of Product & Brand Management
Volume 29 · Number 5 · 2020 · 675 –688
677

brand, trustworthiness of the ad, intention to share the ad
messages and to buy the advertised product ( Vashisht and
Pillai, 2017 ;Livingstone and Helsper, 2006 ;Nelson et al. ,
2009 ;Van Reijmersdal et al. , 2015 ;Wojdynski and Evans,
2016 ). Importantly, research in nontraditional advertising
formats, such as social media campaigns, finds that consumers
are less likely to recognize the persuasive intent in this format
compared to traditional media ( Van Noort et al.,2 0 1 2 ;Van
Reijmersdal et al. ,2 0 1 0 ). Further, it can be dif ficult for
consumers to differentiate commercial content from non-commercial content when SMIs share it ( Stubb and
Colliander, 2019 ;Boerman et al.,2 0 1 7 ).
Influencers seem to be savvy to consumers ’aversion to
persuasion attempts. According to Jaclyn Johnson, President ofCreative Services at Small Girls PR, audiences “have a very
visceral reaction to ‘#ad ’or“#spon ”or whatever it is, where
they don ’t want to know people are getting paid for stuff even if
they are. ”She also states, “A few bloggers we work with say:
I want you to know, my engagement on posts that are tagged “#ad ”or
“#spon ”get lower engagement than if that wasn ’t there ’(Maheshwari,
2016 ).
Thus, in fluencers are motivated to make disclosures less
obvious and less likely to invite the attention of consumers.
SMIs and marketers often do not comply with disclosure
standards set by agencies such as the FTC because they believedoing so will diminish the positive outcomes they garner from
using the promotional tactic. The overarching goal of the
current research is to shed light on what happens when SMIs
do include disclosures in promotional posts as prescribed by
regulatory agencies. In this work, consumer sensitivity to clearand more ambiguous forms of FTC-compliant disclosures are
explored. Subsequent, downstream impacts on consumer
evaluations of the promoted product and intention to purchase
it are also investigated. This research begins with a pilot study
that examines how two types of disclosure commonly used bySMIs affect consumer perceptions of in fluencer transparency.
Pilot study: disclosure type
The FTC ’s Endorsement Guides rest on a simple premise:
consumers will react differently to recommendations from
influencers who are financially incentivized to endorse a
product or service compared to recommendations from
influencers independently advocating for a brand without an
incentive. SMIs can comply with FTC regulations in a variety
of ways, including by using “#ad ”in a promotional post to
clearly indicate they received something of value in exchange
for touting the brand. In fluencers may also use somewhat more
ambiguous forms of disclosure, such as “thanks Brand XYZ for
the gift of ABC product, ”as long as the free product is the only
thing the in fluencer received from the brand.
While SMIs and brands are reluctant to provide clear
disclosures in promotional posts, the only evidence that doing so
will have any negative impact is anecdotal ( Maheshwari, 2016 ).
Consumers admire the lifestyle and expertise of SMIs, andresearch has found they view and trust these individuals similar to
the way they trust a friend ( Oppenheim, 2016 ). Given that
consumers seem to have a high level of trust for in fluencers, the
pilot study tests whether the type of FTC-compliant disclosure
used by an in fluencer (clear vs ambiguous) impacts consumerperceptions of how transparent they believe the in fluencer is
being. The pilot study addresses the following research question:
RQ1. Does the type of disclosure language used in a SMI
promotional post result in differences in consumer
perceptions of transparency of the in fluencer?
Method
Pretest. To develop experimental disclosure language stimuli, a
pretest was conducted with 162 students from a Midwest
university, in the age group of 18-37 years ( M= 20.6, 59 per
cent female). A between-subjects design was used for anexperiment in which participants viewed a mock Instagrampost designed to look like it was created by a celebrity (Ryan
Seacrest) and captioned with either a clear disclosure or a more
ambiguous disclosure. The disclosure conditions were basedon two variations of what the FTC deems acceptable regarding
endorsement disclosure in social media contexts. In the clear-
disclosure condition, the post caption began with “#ad ”(the
caption read: “#ad I ’ve been using @brightwhitesmile for a few
months and I love it. ”) In the ambiguous-disclosure condition,
the brand is merely “thanked ”for providing the product as a
gift (the caption read: “I’ve been using @brightwhitesmile for a
few months and I love it. Thanks @brightwhitesmile for thegift”). Bright White Smile, a teeth-whitening tool, was chosen
as the focal product because it is a gender-neutral product and
the brand has used SMIs previously. Thus, the choice ofproduct provides ecological validity.
The experiment began by asking participants to view the post
and then respond to questions pertaining to it. To measure the
clarity of the disclosures, participants read the prompt: “Ryan
Seacrest was paid by the Bright White Smile company to postthe teeth whitener and endorse the product. How clear was the
post in communicating these details? ”Participants responded
on two semantic differential items anchored by 1 = unclear/confusing and 7 = clear/understandable (
Grossbart et al.,1 9 8 6 ).
The items were averaged to form a composite measure of clarity
(a=0 . 8 3 , M=4 . 6 0 , SD=1.44). Analysis revealed that the clear
disclosure ( M=4 . 8 3 )w a ss i g n i ficantly clearer than the
ambiguous disclosure ( M=4 . 3 5 )( F(1, 161) = 5.59, p=
0.019).
Study design. An experiment was conducted with 502
participants on Amazon Mechanical Turk who use social media
at least three times a week. The sample was constrained to USconsumers and the participants ranged in age from 18 to78 years ( M= 37, 70 per cent female). Participants were shown
one of the pretested disclosure stimuli (i.e. a mock Instagram
post in which a celebrity endorses Bright White Smile).Participants were randomly assigned to either the clear(#ad) or
ambiguous (“thanks for the gift ”) disclosure condition. To
account for potential gender and/or age effects, two celebrities,Selena Gomez and Ryan Seacrest, were selected as in fluencers.
Each participant saw only one post (clear or ambiguous) from
one in fluencer (Selena Gomez or Ryan Seacrest).
Procedure. Participants were given the following instructions:
Please imagine you ’re scrolling through your Instagram feed and see the
following post recently made by [INFLUENCER] on Instagram that was
also shared on [his/her] Facebook, Twitter, and Snapchat accounts.Effects of in fluencer transparency on product ef ficacy
Parker J. Woodroof et al.Journal of Product & Brand Management
Volume 29 · Number 5 · 2020 · 675 –688
678

These instructions were followed by either the clear or the
ambiguous version of the stimulus depending on the condition.
Dependent variable. Perceptions of in fluencer transparency
were measured with three items adapted from Hustvedt and
Kang (2013) . The measure included items such as
“[INFLUENCER] is honest about the post [he/she] was paid
to make ”. A full list of items appears in the following:
Constructs and measures: clarity of the disclosure (adapted
from Grossbart, Muehling, and Kangun, 1986 ) seven-point
semantic differential scale:
1 (ambiguous/unclear/confusing/unfair) to 7 (not ambiguous/
clear/understandable/fair)
Influencer transparency (adapted from Hustvedt and Kang,
2013 ):
1 Seven-point Likert scale (1 = Strongly Disagree to 7 =
Strongly Agree) :
/C15“[INFLUENCER] is honest about the post [he/she]
was paid to make. ”
/C15“I can rely on [INFLUENCER] to post only
products [he/she] believes in. ”
/C15“I can rely on [INFLUENCER] to post only
products [he/she] personally uses. ”
Persuasion knowledge (adapted from DeCarlo et al., 2013 ;Wei
et al.,2 0 0 8 ):
2 Seven-point Likert scale (1 = Strongly Disagree to 7 =
Strongly Agree) :
/C15“Social media in fluencers have an ulterior motive for
their posts. ”
/C15“Influencer posts about products are suspicious. ”
/C15“Social media posts exaggerate the quality of the
product. ”
/C15“Influencers endorse products because they were
paid to. ”
Product ef ficacy ( Chae et al., 2013 )
3 Seven-point Likert scale (1 = Not At All to 7 = Very
Much):
/C15“How much do you believe the product will work? ”
/C15“How reliable would you expect the new product to
be?”
/C15“How effective do you think the new product will be? ”
/C15“How likely do you think it is that the product will be
more effective than other brands? ”
/C15“To what extent do you expect the product to address
the problem? ”
/C15“How likely do you think it is that the new product
will have unwanted side effects? ”
Purchase intention ( Eisend, 2008 )
4 Seven-point Likert scale (1 = Extremely Unlikely to 7 =
Extremely Likely)
/C15“Please indicate the likelihood that you would
purchase the teeth whitener. ”
The original scale from Hustvedt and Kang (2013) measured
perception of corporate transparency. The authors maintainedthe same themes from their scale (honesty, reliability, andbelievability) to measure transparency as it relates to an SMI.Responses to the items were measured using a seven-pointLikert scale (1 = Strongly Disagree to 7 = Strongly Agree). The
items were averaged to form a composite measure (
a= 0.88,M= 3.54, SD= 1.40). The adapted scale demonstrated
internal reliability. The participants subsequently responded to
basic demographic measures.
Results
To address RQ1, an ANOVA was conducted to determine
whether the type of disclosure signi ficantly impacted
perceptions of in fluencer transparency. The analysis revealed
that participants ’perceptions of in fluencer transparency were
not signi ficantly different in the clear-disclosure condition ( M=
3.49, SD= 1.37) compared with the ambiguous-disclosure
condition ( M= 3.59, SD= 1.44; F(1, 502) = 0.630, p=
0.428). The source of the post (i.e. the celebrity; Selena Gomez
or Ryan Seacrest) was included as covariate in the model and
was not a signi ficant factor ( F(1, 502) = 0.146, p= 0.703).
Discussion
The pilot study was designed to assess potential differences in
transparency perceptions of SMIs depending on whether a
clear (#ad) or an ambiguous disclosure ( “thanks for the gift ”)i s
used in a promotional post. The results of the pilot studyindicate that consumers do not distinguish between these two
forms of FTC-compliant disclosures. In fluencer marketing is a
relatively new phenomenon, and consumers may lack the
requisite knowledge of various regulatory agency standards to
effectively evaluate in fluencers ’posts. However, as in fluencer
marketing becomes more pervasive, consumers will acquire
more experience and will become savvier regarding this newer
form of brand promotion. Additionally, persuasion knowledge
will increase as negative media coverage of non-FTC-
compliant SMIs becomes more prevalent, which is expected
(
Maheshwari, 2016 ). Therefore, as time goes on, consumers
are likely to become more discerning and skeptical of this typeof covert or native advertising.
Main study: the role of persuasion knowledge
Thefindings from the pilot study indicate that consumers do
not perceive differences in how transparent an in fluencer is
being when an ambiguous form of disclosure is used to indicate
involvement with a sponsoring brand. This naturally leads to
the following questions. First, if consumer knowledge of
influencer marketing increases as is expected ( Maheshwari,
2016 ), do consumers become more critical of SMI
transparency? Second, if consumers become more
knowledgeable about in fluencer marketing tactics, how does
that knowledge affect product- and brand-related outcomes
stemming from this form of promotion? The next study
addresses these questions by examining perceived in fluencer
transparency and product ef ficacy as drivers of consumer
purchase intentions when consumers ’persuasion knowledge is
activated.
Transparency
In this study, the authors use the PKM to make predictions
about how the type of disclosure used in an in fluencer ’sp o s t
will impact consumers ’perceptions of in fluencer transparency
when consumers ’persuasion knowledge is induced. As
consumers become aware that in fluencer marketing is a covert
persuasion attempt, they are likely to perceive ambiguousEffects of in fluencer transparency on product ef ficacy
Parker J. Woodroof et al.Journal of Product & Brand Management
Volume 29 · Number 5 · 2020 · 675 –688
679

disclosures as somewhat manipulative, and the persuasive
intent should be more apparent ( Friestad and Wright, 1994 ).
Prior research found that when persuasion knowledge is
activated or used it can negatively impact factors such as
attitude toward the ad and the brand, trustworthiness of the ad,intention to share the ad ’s messages, and to buy the advertised
product ( Vashisht and Pillai, 2017 ;Livingstone and Helsper,
2006 ;Nelson et al. , 2009 ;Van Reijmersdal et al. , 2015 ;
Wojdynski and Evans, 2016 ).Lorenzon and Russell (2012)
examined advertisements embedded in videogames and found
that when users had greater persuasive intent knowledge they
were also more likely to have negative attitudes. Similarly, theauthors predict that activated persuasion knowledge will lead
consumers to be more critical of ambiguous disclosures and
evaluate them as less transparent. Therefore, based on the
theory underlying the PKM, the authors hypothesize:
H1. The interaction between persuasion knowledge and
disclosure type will have an impact on in fluencer
transparency perceptions, such that the use of clear
disclosures will result in greater perceptions of in fluencer
transparency compared to the use of ambiguous
disclosures.
Product ef ficacy
Furthermore, it is important to understand the downstream
outcomes of in fluencer transparency perceptions. Products,
brands and services are using SMIs for advertising purposes in
an attempt to convince consumers that they should purchase a
product or service. However, if consumers do not believe the
product is of adequate quality or they think that it will not
perform well, they will not be likely to purchase the product.
Ilyuk and Block (2015) defineproduct ef ficacyas the power or
capacity of a product to produce a desired effect. Additionally,
the researchers note “consumers ’inferences about –and actual
experiences of –product ef ficacy are highly malleable and often
biased by factors that have little to do with a product ’s actual
efficacy ”(p. 59). Research has yet to examine how native
advertising, including social media in fluencer marketing,
affects product ef ficacy perceptions. Prior research found that
factors such as price ( Shiv et al.,2 0 0 5 ), information about the
manufacturer ’s pro fits (Posavac et al. ,2 0 1 0 ), “green ”
characteristics ( Pancer et al.,2 0 1 7 ), and the attractiveness of
packaging ( Sundar et al. , 2013 ) can all in fluence consumer
perceptions of the product ’s performance. In the context of
influencer marketing, the consumer is presented with very
limited information about the product in the post. For
example, the product ’s packaging and pricing information may
be omitted. Thus, the literature on product ef ficacy perceptions
provides little insight into how consumers will form
expectations about the product in this setting. Considering that
most, if not all, purchases are driven by the consumer ’s belief in
a product ’s capacity to produce desired bene fits (Kramer et al.,
2012 ), it is critical to explore the effects of SMI promotional
communications on consumer product ef ficacy perceptions.
When persuasion knowledge is activated, consumers spend
more time evaluating a message and assessing the appropriateway to respond to it (
Friestad and Wright, 1994 ). Thus, it is
predicted that during this process, consumers will attempt tomake attributions as to why the persuasion tactic was used by
the SMI and the brand. Attribution theory is commonly used to
explain how consumers evaluate external situations. According
to this theory –which addresses how consumers evaluate the
behavior of other people and companies and make causal
inferences ( Folkes, 1984 )–consumers attempt to construct
their own explanations for why companies behave as they do.
Main et al. (2007) found that persuasion knowledge processes
involve consumers making various types of causal inferences
about the message source. Speci fically, it was determined that
when salespeople use flattery, consumers generated
attributional thoughts about what ulterior motives that
salesperson might have. In the present context, when a
consumer encounters a social media post that seems to be
concealing the commercial nature of the content, he or she will
likely try to understand what is motivating this action. When
persuasion knowledge is active, consumers are more likely to
engage in critical thinking and generally lower their attitudes
about the brand ( Boerman et al. , 2014 ,2012 ). During this
critical thinking and devaluation phase, consumers may infer
that the brand is being misleading in an attempt to compensate
for a shortcoming of the product. Moreover, based on the very
limited information (no physical product to interact with and
generally very brief descriptions) consumers are presented with
via SMI promotional posts, the authors expect disclosures to be
influential in forming product evaluations. Therefore, when the
disclosure is unclear and the in fluencer is not seen as
transparent, it is predicted that consumers will make negative
inferences about the product. However, based on the findings
of the pilot study, this should occur only for consumers whose
persuasion knowledge has been activated. Thus, the authors
hypothesize:
H2. When persuasion knowledge is activated, disclosure type
significantly predicts product-ef ficacy perceptions indirectly
through transparency per ceptions, such that clear
(ambiguous) disclosures will be positively (negatively)
related to product ef ficacy perceptions.
Purchase intentions
The type of disclosure used in social media posts may
ultimately in fluence how inclined consumers are to purchase
products featured by SMIs. This research proposes that
transparency perceptions of the SMI affect product-ef ficacy
expectations, which are closely linked to purchase behavior
(Kramer et al.,2 0 1 2 ). Importantly, the relationship between
consumers and companies is in fluenced not only by transparent
actions taken by the company but also by the consumer ’s
estimation of how the company is behaving when transparencycannot be observed ( Kitchin, 2003 ). Transparency is one of the
basic conditions and values establishing positive relationships
between customers and companies ( Reynolds and Yuthas,
2008 ). Thus, the authors propose that when consumers with
activated persuasion knowledge are exposed to SMI posts with
clear disclosures, their perceptions of both in fluencer
transparency and product ef ficacy will be more positive,
resulting in greater intention to purchase the product being
promoted by the in fluencer. Speci fically, the authors
hypothesize:Effects of in fluencer transparency on product ef ficacy
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680

H3a. For consumers with activated persuasion knowledge,
the effect of disclosure type positively impacts purchase
intentions indirectly through in fluencer transparency.
H3b. For consumers with activated persuasion knowledge, the
effect of disclosure type positively impacts purchase
intentions indirectly through both in fluencer transparency
and product ef ficacy.
Method
Pretest. The purpose of the pretest was to test experimental
stimuli that would be used to activate persuasion knowledge in
the main study. An experiment was conducted with 199
students from a Midwest university, in the age group of 18-37years (M = 20.9, 63 per cent female). The study used a
between-subjects design with each participant viewing one
news headline –either a headline designed to prime persuasion
knowledge or a neutral headline (
Minton et al. ,2 0 1 7 , for
information on priming methods). Participants were asked to
view the headline and respond to the questions that followed.
In the activated-PK conditions, participants saw a headline
from Bloomberg stating, “FTC to Crack Down on Paid
Celebrity Posts That Aren ’t Clear Ads, ”followed by this text:
Celebrities are being paid to post about brands on social media. Some
celebrities do not make it clear if their post is an advertisement. Instead, they
use vague language or only hint at the paid relationship.
In the neutral condition, participants saw a headline from
Bloomberg about Apple that read, “Apple Said to Plan First
Pro Laptop Overhaul in Four Years, ”followed by this text:
Apple Inc. is preparing the first signi ficant overhaul of the MacBook Pro
laptop line in over four years. The overhaul comes on the heels of two
quarters of sliding sales.
To measure persuasion knowledge, four questions were
adapted from DeCarlo et al. (2013) andWeiet al. (2008) . The
items from DeCarlo et al. (2013) originally measured
persuasion activation in the form of suspicion toward
salespeople. These items were changed minimally for use in an
SMI context rather than a salesperson context. The item
adapted from Wei et al. (2008) measured general persuasion
knowledge about awareness of brands paying for advertising
regarding radio messaging. This item was adapted for the topic
of influencers being paid to make posts. Participants saw the
following prompt: “Please respond to the statements below
with your opinions and views about social media in fluencers.
There are no right or wrong answers. ”Participants indicated
their agreement on a six-point scale (1 = strongly disagree to 6 =
strongly agree ; Constructs and Measures). These items were
averaged to create a composite score of persuasion knowledge
(Cronbach ’sa= 0.79, M= 3.62, SD= 0.94). The adapted
scale demonstrated internal reliability. As expected, the results
revealed that the persuasion-active prime led to signi ficantly
higher persuasion knowledge (M = 3.84) compared to the
control group [ M= 3.38; F(1, 198) = 12.389, p= 0.001].
Main study design. An experiment was conducted with 321
participants recruited from Amazon Mechanical Turk. The
sample was limited to US consumers and the participants ’ages
ranged from 18 to 77 years ( M= 36, 59 per cent female). In a 2
(persuasion knowledge: activated vs neutral) /C22 (disclosure
type: clear vs ambiguous) between-subjects factorial design,participants were randomly assigned to one of the four
conditions and then exposed to a mock Instagram post for the
same teeth-whitening product used in the pilot study pretest,
Bright White Smile. Because no differences were found in the
pilot study based on the source of the posts (i.e. the celebrity
influencer), the posts seen by participants in all four conditions
in this study were all attributed to the same in fluencer (Ryan
Seacrest).
Procedure. Participants were recruited on Amazon
Mechanical Turk and screened to ensure they use social media
at least three times a week. Participants were paid $0.75 for
their participation. Before being exposed to the mock
Instagram posts, participants saw the headline of a news story
(determined by the main study pretest; see pretest section for
information) and were instructed to carefully read it, as they
would need to recall the information later. They were not able
to advance screens for 15 s to ensure they spent time looking
over the headline. After being exposed to either the PK or
neutral news story stimulus, participants were given the same
instructions and shown the same mock Instagram posts
(attributed to Ryan Seacrest) that were used in the Pilot Study.
Finally, participants completed measures of purchase
intention, in fluencer transparency, and product ef ficacy.
Dependent measurements. Influencer transparency was
measured with the same three items used in the pilot study,
which were averaged to form a composite measure ( a= 0.89,
M= 3.50, SD= 1.40). Product ef ficacy was assessed using a
composite measure of six items on a seven-point Likert scale
(1 = Not at all to 7 = Very much; Chae et al.,2 0 1 3 ;a= 0.83,
M= 3.88, SD= 1.13). Purchase intention was measured with a
single item using a seven-point Likert scale (1 = Extremely
unlikely to 7 = Extremely likely; Eisend, 2008 ;M= 2.49, SD=
1.77). A full list of survey items can be found in Constructs and
Measures ( Figure 1 ).
Results
H1proposed that the type of disclosure interacts with
persuasion knowledge to predict perceptions of in fluencer
transparency, and support was found for this hypothesis
[F(1, 320) = 5.467, p= 0.02]. A pairwise comparison illustrates
significant differences within the ambiguous-disclosure
condition such that in fluencer transparency is signi ficantly
lower when persuasion knowledge is activated ( M= 3.09, SD=
2.79) versus when it is not activated [ M= 3.628, SD= 3.3; F(1,
317) = 5.623, p= 0.018]. Table I includes descriptive statistics
for transparency perceptions by condition. The effect of
disclosure type (clear vs ambiguous) on perceptions of
influencer transparency is conditional on whether or not
persuasion knowledge has been activated. Figure 2 illustrates
that participants in the neutral condition were not sensitive to
the disclosure type, whereas participants with activated PK
found the in fluencer to be signi ficantly more transparent in the
clear-disclosure condition compared to the ambiguous-
disclosure condition.
Next, to test H2, H3a andH3b, Hayes ’PROCESS model 85
was used, which tests a first-stage moderated serial-mediation
model ( Hayes, 2017 ;Figure 1 ). A bootstrap technique was
used to test the mediators and moderator and to derive
confidence intervals for the indirect and direct effects. The
analysis was conducted with 20,000 resamples and a 95 perEffects of in fluencer transparency on product ef ficacy
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681

cent con fidence interval. Figure 1 depicts the tested model with
path coef ficients and associated p-values.
H2predicts that disclosure type affects perceptions of the
product ’se fficacy through transparency perceptions when PK
is activated. Support is found for in fluencer transparency as a
mediator between disclosure type and product ef ficacy when
PK is active (effect = 0.330; p= 0.014), and this relation is
nonsigni ficant when PK is neutral (effect = /C00.036; p= 0.790).
Thus, hypothesis 2 is supported. When participants were more
aware of the persuasion attempts, ambiguous disclosure ledthem to evaluate the featured product as less effective
compared to the clear-disclosure condition, and this occurred
through perceptions of transparency.H3a predicts that disclosure type affects purchase intentions
through transparency perceptions when PK is activated(disclosure !transparency !purchase intentions). Support is
found for this conditional indirect effect (Index = /C00.261; CI
[/C00.465, /C00.083]). Also as predicted, this mediated path is
nonsigni ficant when PK is not activated (effect = 0.034; CI
[/C00.150, 0.225]). H3bproposed the full model. For consumers
with activated persuasion knowledge, the authors predictedthat disclosure type affects purchase intentions through both
transparency perceptions and product-ef ficacy expectations
(disclosure !transparency !product ef ficacy!purchase
intentions). This indirect effect was signi ficant when PK was
active (effect = /C00.214; CI [ /C00.390, /C00.070]) and
nonsigni ficant when PK was inactive (effect = 0.028; CI
[/C00.132, 0.183]).
Figure 1
illustrates the relationships, and Table I presents the
transparency means (by condition). Table II includes relevant
statistics for the individual model paths, both hypothesized and
not hypothesized.
Discussion
The main study further investigated consumer response to clear
and ambiguous forms of FTC-compliant disclosures used by
SMIs, speci fically examining whether activating persuasion
knowledge makes consumers more attentive to the type of
disclosure used by the in fluencer. The findings indicate that
once consumers become cognizant that SMIs are paid forendorsements, they evaluate in fluencers as signi ficantly less
transparent when the SMI uses an ambiguous form of
disclosure as compared to a clear type. In line with persuasionknowledge theory, consumers responded more critically once
they became mindful of these persuasive attempts. Perceptions
of influencer transparency were found to be an important driverFigure 1 The in fluence of disclosure type and persuasion knowledge on purchase intention
Purchase
Inten/g415on
Disclosure
Type
Product-Efficacy
Percep/g415ons
Transparency
Percep/g415onsPersuasion
Knowledge (PK)
PK * Disclosure
β = 0.83, p = 0.713β = 0.406,
p ≤ 0.001β = 0.67,
p ≤ 0.
001β = 0.50, p ≤ 0.001
β = 0.34, p = 0.118β = –0.726, p = 0.02
Table I Main study summary of transparency perceptions as a function of disclosure type and persuasion knowledge
Persuasion knowledge Neutral Activated
Disclosure type Clear Ambiguous Clear Ambiguous
N 82 69 87 83
Transparency 3.54 (1.44) 3.63 (1.39) 3.73 (1.39) 3.09 (1.32)
Note: SD is in parentheses following mean. Scale ranges from 1 to 7, with higher numbers re flecting more favorable perceptions
Figure 2 Transparency perceptions by persuasion knowledge and
disclosure type
3.553.74
3.63
3.09
22.22.42.62.833.23.43.63.84
PK Control PK Ac/g415vatedTransparency Percep/g415ons
Persuasion Knowledge
Clear Ambiguous*
Note: *p < 0.05 Effects of in fluencer transparency on product ef ficacy
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682

of product evaluation. Consumers seem to infer an in fluencer ’s
lack of transparency is associated with promoting inferior
products. Speci fically, once consumers are aware of the
utilization of a persuasive tactic, the SMI is perceived as lesstransparent and the brand ’s products are viewed as less
effective. This suggests that consumers consider the deception
to be an attempt to compensate for a poorly made product.Ultimately, perceptions of transparency and expectations about
the ef ficacy of the product determined consumers ’intentions to
purchase the product. Importantly, the findings in this study
are conditional on whether or not persuasion knowledge has
been activated. Participants in the neutral condition did not
react differently to the two disclosures (thereby replicating thepilot study), whereas participants with activated persuasion
knowledge found the in fluencer to be signi ficantly more
transparent in the clear-disclosure condition compared to theambiguous-disclosure condition. This suggests that, over time,
as consumers become more knowledgeable of the practice of
influencer marketing on social media, brands that attempt to
use covert tactics when using in fluencer marketing may
experience backlash.
The presented findings uphold concerns about whether
marketers and SMIs are using disclosure language that fails to
activate consumers ’persuasion knowledge even though the
language is compliant with FTC guidelines. Therefore, theresults support the need for modi fication and clari fication of
FTC standards and highlight the susceptibility of consumers to
brand and SMI marketing strategies. It appears that consumersdo not detect the persuasion attempt unless their persuasion
knowledge is activated. The findings indicate that even minimal
exposure to information on this topic can increase consumers ’
awareness, resulting in more critical and skeptical evaluations
of brand-related content posted by SMIs. Thus, the results of
the present study suggest that in fluencer posts using ambiguous
disclosures will function differently as consumer learning
accumulates over time.
General discussion
As product and brand managers seek creative ways to penetrate
a congested communications environment, covert marketing,native advertising and in fluencer marketing are becoming more
prevalent. While such practices generate heightened consumer
engagement in the short term, consumers are increasinglygrowing skeptical (
Göbel et al.,2 0 1 7 ). Consumer response to
branded content posted by in fluencers on social media varies,
and the phenomenon begs further exploration. In this research,
the authors applied the PKM as an appropriate theoreticalparadigm for exploring the issue.
Theoretical implications
The research results offer several relevant theoretical
contributions. First, the findings contribute to the broader
knowledge of native advertising and covert marketing by
highlighting the negative consequences of the tactic via
influencer marketing as it relates to perceptions of product
efficacy. The results of the study con firm that consumers are
less likely to detect ambiguous language indicative of paid
sponsorship for the post unless persuasion knowledge isactivated. Thus, consumers need regulators, such as the FTC
and ASA, to protect their vulnerabilities by requiring SMIs to
use disclosure language that is clear and prominent concerningtheir compensatory relationships with brands. Otherwise,
consumers may not evaluate SMIs who use ambiguous
disclosures as less transparent and, in turn, these consumersmay make purchases they might have otherwise avoided.
Second, the study also evaluated how consumers respond
when they are more knowledgeable about advertising in the
context of social media, offering further insight into how theywill likely behave as they gain knowledge over time about this
newer marketing tactic. The results indicate that consumers
will perceive in fluencers who are not forthcoming about
commercial relationships with brands as promoters of inferior
products, and consumers will be less inclined to purchase the
products in the future. These findings imply that additional
consumer education and strong public policy are needed to
protect against unethical manipulations via predatorymarketing tactics.
Third, this research adds to the theoretical understanding of
persuasion knowledge and native advertising. The process
through which consumers form expectations about productperformance is complex and especially tenuous in online
settings (
Hsieh et al. , 2005 ). This research is the first to
demonstrate how the disclosure used by a SMI impactsconsumer perceptions of in fluencer transparency and
judgments of product ef ficacy. The authors ’findings suggest
that consumers need to believe an in fluencer is beingTable II The interaction of disclosure type and persuasion knowledge and the mediating role of transparency in predicting purchase intention
Mediator: transparency Mediator: product efficacyDependent variable: purchase
intention
Independent variables Coefficient t-value p-value Coefficient t-value p-value Coefficient t-value p-value
Disclosure type (clear
vs ambiguous) 0.083 0.368 0.713 /C00.037 /C00.266 0.790 0.232 1.44 0.152
Persuasion knowledge
(activated vs neutral) 0.918 1.90 0.058 /C00.583 /C01.94 0.053 0.474 1.02 0.309
Interaction (disclosure3persuasion
knowledge) /C00.727 /C02.34 0.020 0.367 1.89 0.060 0.394 /C01.31 0.191
Transparency –– /C0 0.501 14.38 /C200.001 0.406 5.902 /C200.001
Product ef ficacy –– /C0 ––– 0.667 7.720 /C200.001Effects of in fluencer transparency on product ef ficacy
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683

transparent to have con fidence that the promoted product is of
high quality.
Finally, this research is the first to explore how disclosures
impact the in fluencer (an independent brand entity). For an
influencer ’s brand to be valuable to companies, their brand
must be credible. The authors ’results find that ambiguous
disclosures can lead an in fluencer to be evaluated as less
transparent. Over time, this will likely cause the in fluencer to be
seen as untrustworthy and/or less “genuine, ”which directly
conflicts with the attributes required for meaningful and
successful connections between SMIs and their audiences
(Kowalczyk and Pounders, 2016 ).
Managerial implications
Beyond its importance for academicians, the present research
bears signi ficant implications for practitioners. First, the
language used to disclose the commercial relationship is
important. The findings from the pilot study verify that
attempts to conceal the commercial relationship between the
brand and in fluencer are effective, as evidenced by consumers
evaluating SMIs using ambiguous disclosures as being
essentially equally transparent compared with SMIs who use
clear disclosures. Thus, as suggested by the FTC (2019) , the
influencer “should make it obvious ”when a relationship exists.
As consumers become more discerning in their consumption ofsocial media content, brands risk damaging product
perceptions by using covert tactics, as shown in the main study.
The lack of transparency negatively affects consumers ’
perceptions of product ef ficacy and, ultimately, their purchase
intentions. Additionally, in fluencers themselves are potentially
damaging their own credibility by using these covert tactics.
Going forward, it will behoove companies and in fluencers to
clearly disclose their relationship so that consumer perceptions
of product ef ficacy and quality are not diminished. Previous
research has shown that about 40 per cent of people switch
brands because of perceptions of poor ef ficacy ( Rees, 2006 ).
Thus, marketing managers should have clear guidelines and
contracts for in fluencers detailing disclosure expectations.
Second, the way in which content is prioritized into news
feeds and subsequently shared on social media frequently
changes and impacts consumers. For example, Facebook
recently updated their algorithm to prioritize “meaningful user
content ”over public/commercial content. The update
prioritizes posts that “spark conversations and meaningful
interactions between people ”instead of posts that receive the
most views, clicks and reactions ( Mosseri, 2018 ). This update
has altered the content to which Facebook users are exposedand has contributed to a steep decline in engagement for many
brands that rely on the platform for promotion ( Erskine, 2018 ).
Because SMIs ’posts may be favored by algorithms, product
and brand managers may be more likely to turn to in fluencer
marketing as a means of more directly reaching consumers with
branded messages. Thus, it becomes increasingly important to
understand the nuances involved in crafting effective product-
and brand-related posts to be distributed by in fluencers. This
includes determining the best methods for disclosing the
commercial relationships underlying the SMI promotional
posts. The results of the studies in this research prescribe the
use of clear disclosure over vague nods at brand-in fluencer
relationships as the best long-term strategy. This con firmsprevious research indicating that covert marketing undermines
the building of relationships with consumers ( Milne et al. ,
2009 ).
Third, the current research suggests that individuals are
inherently trusting of social media content, consuming content
through a social lens rather than a consumer lens. Although clear
disclosures such as #ad and more ambiguous “thank you ”
language-type disclosures are both technically FTC-compliant,
it appears consumers do not understand that “thanking a brand
for a gift ”is an indication of an underlying relationship between
the brand and the in fluencer unless their persuasion knowledge
is activated. From a regulatory perspective, the findings of the
present research substantiate the need for the FTC to modify
its guidelines to disallow the use of “thank you ”language as an
acceptable form of sponsorship disclosure.
Fourth, it is important to note that the FTC guidelines for
SMIs are constantly evolving. For example, from the
conceptualization of this research to publication, the FTC
guidelines for SMIs changed multiple times. It is important for
managers to be aware that these guidelines change regularly as
the FTC evolves in its understanding of how to protect
consumers against unfair SMI practices. Many letters have
been written by the FTC to SMIs recently shunning unethical
behavior. SMIs merely altering a post retroactively once they
have been caught will likely not be adequate in the future as
consumers ’persuasion knowledge, skepticism and scrutiny of
SMI posts continue to increase. It is also important to note that
regulatory agencies differ from country to country. Therefore,
managers should be diligent in keeping abreast of regulations
regarding disclosures used in in fluencer posts.
Lastly, social media platforms (e.g. Facebook, YouTube,
Instagram and Twitter) and regulatory agencies (e.g. FTC,
CMA or ASA) should prioritize consumer education of
appropriate SMI behavior. These organizations have to
recognize that they have a responsibility to cultivate and mature
consumers ’persuasion knowledge so that consumers, SMIs and
brands have equitable and sustainable relationships. Failure to
actively strengthen consumers ’persuasion knowledge
undoubtedly demonstrates complicity by these organizations.
Limitations and directions for future research
The present research is subject to limitations that should be
acknowledged. First, the samples used in this research
consisted of US consumers only; thus, the findings may not be
generalizable to consumers in other countries and cultures.
Cultural values such as individualism/collectivism, masculinity/
femininity and uncertainty avoidance affect consumer
perceptions of various advertising appeals ( Aaker, 2000 ).
Therefore, consumers in other cultures may be more or less
sensitive to in fluencer promotional posts. Additionally, the use
of student and Amazon Mechanical Turk participants may
limit the generalizability of the findings to some degree.
This research focused on the type of disclosure used by
influencers promoting a speci fic product-a cosmetic teeth-
whitening product. There is a wide range of contextual
variables related to the inherent risk involved in makingpurchasing decisions that could potentially impact the findings.
These variables include price point, return policy leniency, and
whether the consumer is making a purchasing decision for a
good or service. The greater the perceived risk in a purchaseEffects of in fluencer transparency on product ef ficacy
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684

decision, the greater the importance of the trustworthiness and
credibility of the personal sources that consumers rely upon
when making these types of decisions ( Mitra and Reiss, 1999 ).
The authors expect that as perceived risk associated with aproduct purchase increases, perceptions of in fluencer
transparency in social media promotional posts are likely to be
weighted more heavily. Future research should examine this.
Another limitation of the present study is that only two forms
of FTC-compliant disclosures (#ad and “thank you ”language)
were examined. There are several additional disclosures that
are in line with FTC guidelines for clearly disclosing
influencer –brand relationships (e.g. #sponsored, #{BRAND}
partner, #{BRAND}-partner, “This post is sponsored by
{BRAND} ”;FTC, 2017 ;Tobin, 2018 ). It would be prudent
for future researchers to investigate whether these other forms
of disclosure impact consumer perceptions of SMItransparency. More generally, examining different types ofinfluencers (noncelebrities, micro-in fluencers, etc.), with
different types of followers, and a variety of products would
expand the generalizability of this work. Additionally, thepresent research used celebrities as the in fluencers in the
experimental stimuli. Implications drawn from the present
research may not be applicable to other categories ofinfluencers, including micro- and nano-in fluencers. As
revealed by this research, perceptions of in fluencer
transparency can ultimately impact important outcomes such
as purchase intention. Therefore, further investigation of bothadditional forms of disclosure and categories of in fluencers is
warranted.
Moreover, Instagram recently launched a paid partnership
program that offers an opportunity for brands and in fluencers
to attempt to be more transparent about their relationships.However, it is unknown whether or not this initiative (andothers like it) adequately alerts consumers to the relationships
between brands and in fluencers that underlie the promotional
posts. The FTC ’s current stance is that using built-in features
of social media platforms that allow in fluencers to disclose paid
endorsements does not automatically bring a SMI ’s
promotional post into compliance because there is “no
guarantee it ’s an effective way for in fluencers to disclose their
material connection to a brand ”(
FTC, 2017 ). Future research
should investigate whether programs such as the one launched
by Instagram are effective in alerting consumers to theinfluencer-brand connection underlying promotional posts.
Considering the ambiguity of the current FTC guidelines,
future research of the potential public-policy implications to
adequately protect consumers is worthwhile.
Finally, this research opens a pathway for additional
investigation of in fluencer marketing transparency in social
media. Theoretical constructs, such as social media
authenticity, could shed more light on the subject. Consumers
now have a plethora of ways to discover, research, andultimately purchase products and services. Brands relentlesslyconfront consumers with an onslaught of content in a
competition for their attention.
Stackla ’s (2017) Consumer
Content Report suggests that in a world of celebrityendorsements, sponsored posts and paid in fluencers,
consumers crave authenticity, with 86 per cent indicating that
authenticity is important when deciding on which brands they
support. Future research should investigate whether sponsoredcontent is perceived as less authentic than genuine product
advocacy.
Notes
1. Advertising Standards Authority (ASA) enforces the UK ’s
advertising regulations. ASA works with the Competition
and Markets Authority (CMA) to develop the country ’s
advertising regulations.
2. Accessed in 2019, the FTC website ’s most recent update
was November 2019.
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Corresponding author
Parker J. Woodroof can be contacted at: parkerw@uca.edu
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