Disclosure of Incentives in Word of Mouth Marketing – 5 Questions for Prof. Abendroth Susie Eckstein '03 B.A., '09 M.B.A. June 28, 2012 Professor Lisa AbendrothLisa Abendroth, associate professor in the marketing department recently presented research she conducted with James Heyman on the ethical implications and role of incentives in word of mouth marketing. We hear about celebrities being paid to tweet about brands or students being offered perks to talk about products, but how does this change the effectiveness of the message? We asked Profesor Abendroth five questions to find out:Q: Word of mouth marketing has evolved to a point where it is often difficult to differentiate between someone who is sincere about an opinion and someone offering a recommendation because they are offered an incentive to do so. What have you found in your research about this phenomenon? A: Consumers have long found recommendations from peers to be more reliable than promotional communications such as advertising. Recently, marketers have gotten smarter about how to leverage this credibility by providing incentives to everyday consumers to generate word-of-mouth about their products. The problem is that consumers on the receiving end of these recommendations may not know that their peers are acting as marketing agents, which raises a host of ethical issues. In 2009 the Federal Trade Commission got involved, mandating that agents disclose material relationships with the firm, but many are still hesitant to disclose their role as agents for fear of how it will make them look to their peers. Plus there is a shared belief by marketers and agents that disclosure will negate the effectiveness of the technique. The research I’ve been doing with James Heyman looks specifically at how learning about an agent-brand relationship impacts consumers’ response to the recommendation. In other words, we wanted to know if honesty really can be the best policy.Q: Why is this topic of interest to you?A: I became interested in the topic after talking with James about his research on ethical perceptions of stealth marketing techniques such as this. College-age kids, who have grown up with stealth marketing, don’t necessarily perceive an ethical dilemma. If that’s the case, then perhaps disclosure won’t have the negative impact everyone fears. Q: What are you hoping to accomplish with this research?A: Our main goal was to understand what really happens when consumers learn about a recommender’s relationship with a brand. That’s the first step to helping marketers and agents learn how to use the technique more ethically and effectively.Q: Will this research impact your teaching at St. Thomas?A: It already has impacted my teaching in both the undergraduate and graduate programs. For starters, one of our undergraduate students, Elizabeth Glover, did an independent study with me at the beginning of the project. I also regularly discuss word-of-mouth marketing and our findings whenever I teach marketing communications.Q: What was the most surprising finding from this project?A: There were several interesting findings. First, consumers don’t like learning about an agent-brand relationship after the fact. What’s surprising is that although this late knowledge hurts their attitude toward the person who made the recommendation, even if that person is a friend, it does not negatively impact their likelihood to purchase the product. In other words, although people don’t like being duped, they take it out on the person who duped them, not the brand. Second, compared to word-of-mouth that seems to be organic, disclosing a brand connection at the time of the recommendation positively impacts effectiveness. Consumers feel better informed and view the product more positively, and as a result are more likely to consider purchasing the product. In other words, we found that honesty is indeed the best policy.You can learn more about this research in our forthcoming article in the Journal of Marketing Communications, available online at: http://www.tandfonline.com/doi/abs/10.1080/13527266.2011.631567.