How disclosing sponsored content affects consumer trust in bloggers

By: Katelyn Godoy
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By Sunita Sah, Assistant Professor of Management and Organizations
and the John and Norma Balen Sesquicentennial Fellow

Sponsored content is everywhere. It’s on the blogs you read, the Instagram accounts you follow, the podcasts you listen to, and the YouTube channels you subscribe to. According to data collected by influencer marketing platform Collective Bias, more than 30 percent of U.S. consumers have made a purchase based on sponsored content. By partnering with influencers in a particular target market, brands are able to engage new audiences in a way that feels authentic.

While sponsored content has proven effective for brands and lucrative for influencers, new regulations by the Federal Trade Commission (FTC) require content that is sponsored to be disclosed as such. In our recently published research paper on this topic, my colleagues Prashant Malaviya, Debora Thompson, and I examine how consumers react to disclosures of sponsorship from fashion bloggers. In contrast to much of the previous research on conflict of interest disclosures, we found that in the context-rich setting of online blogs, conflict of interest disclosures have the unanticipated consequence of increasing, rather than decreasing, consumer trust in the blogger and their expertise.

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Does disclosure affect readers of blogs?

In recent years, the FTC has cracked down on bloggers and social media influencers, requiring them to explicitly disclose to their followers any conflicts of interest. The rationale behind mandated disclosure is simple—to alert consumers of the conflict so that they can accurately adjust for any bias and make a more informed decision. However, the question that naturally arises from these regulations is whether disclosure is effective. Does it really lead to this type of judgment correction by consumers?

My previous research has shown that when disclosure is presented in a way that is salient, simple, and bold, people trust advisors less when they disclose a conflict of interest. In this new research, my colleagues and I focused on the blogging domain specifically because blogs contain lots of information that is interesting to the reader. We were curious what impact conflict of interest disclosures would have in a context-rich setting in which the disclosure is short and clear but embedded with other competing information.

We first examined disclosures in the field focusing on the top 99 U.S. fashion blogs in 2015. Industry analysts report that established bloggers in the fashion industry are frequently approached by companies to promote their products. We found a significant association between the rate of disclosure in a blog and consumer sentiment (positive comments to the blog posts).

Next, in five experiments, participants viewed a blogger’s online profile and read a post written by the blogger. We randomized participants to view the blog post either with a disclosure (stating that the blogger was sponsored to write the post) or with no disclosure statement. We found that recipients who read a blog post containing a conflict of interest disclosure reported increased trust in the blogger and evaluated the blogger, the blogger’s recommendation, and the sponsoring organization more favorably than recipients who read a post with no disclosure. Put a different way, the disclosure mandated by the FTC may actually have had the opposite effect of what was intended.

How are disclosures processed?

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We were curious to know what was driving this unintended effect of disclosure. Why did readers trust a blogger who disclosed a conflict of interest more than the same blogger who did not disclose a conflict of interest? We found that the moderator was whether consumers actively deliberate on the disclosure or not.

When there is competing information, readers are more likely to process a conflict of interest disclosure automatically, using what is known as “peripheral processing.” In this way, disclosure acts as a heuristic cue to infer greater trust in the blogger’s expertise and consequently greater persuasion. In other words, readers who automatically process a disclosure statement are more likely to be persuaded to try the product or service being promoted because they perceive sponsorship as a signal of expertise.

However, the inference of greater expertise and its effect on persuasion are mitigated when the recipient deliberates on the disclosure and engage in “central processing.” When readers were asked to think about the conflict of interest disclosure, they realized that the blogger could be biased and trust decreased as a result.

How can disclosures be used more effectively in the blogging industry?

Before disclosures are mandated, it’s necessary to step back and consider what the purpose of disclosure is. If the purpose is to protect consumers by assuming they will make the necessary adjustments to the advice they receive, it’s crucial that we consider the impact of processing by readers and thoroughly understand any unintended consequences that may occur. We may just have to think harder for solutions other than disclosure to manage conflicts of interest.

About Sunita Sah, assistant professor, management and organizations

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Sunita’s research focuses on institutional corruption, ethical decision-making, bias, transparency, improving decisions, and influence and advice—in particular, how professionals who give advice alter their behavior as a result of conflicts of interest and disclosure policies. She holds a PhD and MS in organizational behavior from Carnegie Mellon University, an MBA with distinction from London Business School, an MB ChB (UK equivalent to the US MD) in medicine and surgery, and a BSc (hons) in psychology from the University of Edinburgh. Sunita’s work has been published in top academic journals in management, science, medicine, economics, and psychology. Learn more about Sunita here.