The Effectiveness of Social Advertising

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.