Ethics in social media marketing: How should sponsorship information be disclosed in online product reviews?

Consumer-generated online product reviews (OPRs) have become a crucial source of information for consumers; however, OPRs are increasingly being incentivized. The purpose of this paper is to find a method of sponsorship and disclosure that could be considered ethically sound.

This study adopted a quasi-experimental approach to clarifying how the method of sponsorship impacts reader perceptions of OPRs in terms of helpfulness, credibility and purchase intention. Two experiments were performed on an online platform using data from 480 participants. Hypotheses were tested using analysis of covariance.

Meaning under the premise that sponsorship information is disclosed and not withheld from the readers, Study 1 revealed that experiential sponsorship is the best sponsorship. Study 2 revealed that featuring reviewers with greater influence in the online community increases the positive influence of disclosing experiential sponsorship on OPR persuasiveness.

The findings in this study provide rational incentives for firms to disclose sponsorship information, i.e. demonstrate high ethical standards in marketing. This was shown to create a win-win-win situation for consumers, firms and reviewers. Managerial implications for online marketing managers are also discussed.