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George Clooney is Paid That Much? Regulating Celebrity Advertisements
Ahmed Taha
University of Missouri-Kansas City Law Review, forthcoming
Abstract:
The Federal Trade Commission ("FTC") generally requires product advertisements featuring compensated endorsers to disclose that the endorsers were compensated. However, the FTC does not require advertisements featuring celebrity endorsers to disclose whether or the amount that the celebrities were compensated. This exception exists because the FTC assumes that this disclosure is unnecessary because consumers already know that celebrity endorsers are compensated. However, existing psychological and marketing research provides reasons to suspect that, even if consumers know celebrities are compensated for endorsements, requiring advertisements to disclose the existence and/or amount of this compensation would still make consumers more skeptical of the endorsements. This article presents two controlled experiments finding significant evidence that requiring advertisements to disclose the amount of celebrity compensation would cause consumers to discount substantially the endorsements of at least highly-paid celebrities. The experiments find that consumers greatly underestimate the compensation that celebrity endorsers receive. Disclosing this compensation reduces consumers' perceptions of the endorsements' sincerity and of the advertised products' quality.
Estimating the Value of Offsite Tracking Data to Advertisers: Evidence from Meta
Nils Wernerfelt et al.
NBER Working Paper, August 2024
Abstract:
Third-party cookies and related 'offsite' tracking technologies are frequently used to share user data across applications in support of ad delivery. These data are viewed as highly valuable for online advertisers, but their usage faces increasing headwinds. In this paper, we quantify the benefit to advertisers from using such offsite tracking data in their ad delivery. With this goal in mind, we conduct a large-scale, randomized experiment that includes more than 70,000 advertisers on Facebook and Instagram. We first estimate advertising effectiveness at baseline across our broad sample. We then estimate the change in effectiveness of the same campaigns were advertisers to lose the ability to optimize ad delivery with offsite data. In each of these cases, we use recently developed deconvolution techniques to flexibly estimate the underlying distribution of effects. We find a median cost per incremental customer at baseline of $38.16 that under the median loss in effectiveness would rise to $49.93, a 31% increase. Further, we find ads targeted using offsite data generate more long-term customers per dollar than those without, and losing offsite data disproportionately hurts small scale advertisers. Taken together, our results suggest that offsite data bring large benefits to a wide range of advertisers.
How Do Real Estate Actors Advertise in Mixed-Income Neighborhoods? The Importance of Home Security
Mahesh Somashekhar et al.
Socius: Sociological Research for a Dynamic World, July 2024
Abstract:
Throughout its history, the real estate industry has emphasized privacy and exclusion in housing advertisements, helping entrench patterns of residential segregation in the process. Recently, however, some forms of neighborhood-level social diversity are becoming more common, as indicated by the growing number of neighborhoods that are mixed-income. Does the proliferation of income-diverse neighborhoods suggest that advertisers are curtailing their exclusionary rhetoric when marketing homes in mixed-income communities? To answer this question, this study analyzes over one million Craigslist rental listings posted in the 100 largest U.S. metropolitan areas in July and August of 2019. Findings show that real estate advertisers continue to rely on rhetorical strategies that likely reinforce, if not encourage, privacy and exclusion in mixed-income neighborhoods. Specifically, rental advertisements in mixed-income neighborhoods were disproportionately likely to mention that the advertised unit came with a home security device, a rhetorical tool likely aimed at calming homeseekers' apprehension toward living in an income-diverse neighborhood. This finding suggests that scholars have underexamined the strategies that real estate actors use to persuade homeseekers to live in diverse neighborhoods. Furthermore, the security rhetoric prevalent in income-diverse neighborhoods may encourage homeseekers' fears of mixed-income settings and impede cross-class social integration.
Consumer Acceptance of CRISPR-Edited Food Products and Implications for Online Grocery Shopping
Shuyue Deng, Aaron Adalja & Jura Liaukonyte
Cornell Working Paper, July 2024
Abstract:
CRISPR is an advanced gene-editing technology with the potential to positively impact global food productivity, quality, and sustainability. CRISPR technology has recently gained momentum in the food industry, with CRISPR-edited food products in development or already commercially available. Despite widespread recognition of the positive implications of CRISPR among the scientific community, there is uncertainty regarding consumer acceptance of CRISPR-edited food products leading to industry concerns about the commercial viability and future regulation. In this paper, we investigate consumer preferences for product attributes enhanced through CRISPR using an incentive-aligned conjoint experiment. Our findings indicate that willingness to pay (WTP) for CRISPR-edited foods is similar to that of conventional products, significantly higher than GMO products, but notably lower than organic products. When consumers are provided with information about the nutritional or environmental benefits of CRISPR, the disparity in WTP between organic and CRISPR-edited products shrinks substantially. We also find that the CRISPR attribute, when accompanied by benefits-focused information about the technology, can partially mitigate negative consumer preferences for purchasing fresh produce online, suggesting that CRISPR-edited products may have the potential to improve the marketability of fresh and perishable food, such as produce, in online shopping channels.
When Being Smart Trumps AI: An Exploration into Consumer Preferences for Smart vs. AI-Powered Products
MyungJin Chung Smale, Joseph Fox & Alexa Fox
Computers in Human Behavior, December 2024
Abstract:
Prior to the rapid growth of Artificial Intelligence ("AI") in the consumer market, smart products received great attention from marketers and consumers. Given the recent increase in attention to AI technologies, this research explores consumers' preferences and intentions when products are framed as "smart" versus "AI-powered." While previous literature has explored AI products and smart products individually, little is known about consumers' preferences between the two products simultaneously. Three empirical experiments demonstrate that consumers show preference for products labeled as "smart" over those labeled as "AI-powered." This preference is mediated by enhanced learning anxiety related to AI. The findings provide insights for marketers applying message framing, suggesting that labeling products as "smart" may evoke more favorable consumer behavior compared to the "AI-powered" label. Moreover, this research significantly contributes to the existing literature on perceptions and intentions related to AI and smart products by concurrently exploring consumer preferences regarding both smart products and AI-powered products.
The Visual Complexity = Higher Production Cost Lay Belief
Lauren Min, Peggy Liu & Cary Anderson
Journal of Consumer Research, forthcoming
Abstract:
Brands and retailers often offer different aesthetic versions of the same base product that vary from visually simple to visually complex. How should managers price these different aesthetic versions of the same base product? This research provides insights for such decisions through uncovering a novel consumer lay belief about the relationship between visual complexity and production costs. Consumers associate simple (vs. complex) visual aesthetics with lower production costs when evaluating different aesthetic versions of a product. This lay belief occurs in joint evaluation mode but is mitigated in separate evaluation mode. An important downstream implication of this lay belief is that consumers' willingness to pay is lower for visually simple (vs. complex) versions. This gap in willingness to pay occurs even when consumers like both product versions or aesthetics equally, and it is only eliminated when consumers like the visually simple version substantially more than the complex version. Finally, reducing the diagnosticity of the lay belief by disclosing information that the two versions took similar amounts of production time and effort reduces the gap in willingness to pay between visually simple (vs. complex) versions.
The Rank Length Effect
Vivian (Jieru) Xie, Fengyan Cai & Rajesh Bagchi
Journal of Marketing Research, forthcoming
Abstract:
Rank lists vary in the number of items ranked on the list (e.g., Top 5 vs. Top 20 movies on IMDb), that is, the rank length. Across ten studies, including both field and laboratory experiments, we examine the influence of rank length on evaluations, willingness to pay, and choice. We document a novel rank length effect: The same ranked items elicit more positive judgments when the rank length is longer (vs. shorter), although the differences in judgments between the ranked items are smaller. This effect is driven both by consumers' tendency to narrowly focus on the rank list and by the manner via which they map the rank list onto their mental number line. The rank length effect extends to willingness to pay, and choice. We explore three different kinds of choice contexts, discuss implications, and offer suggestions for future research.