Influencer Marketing on Instagram An Analysis of the Effects of Sponsorship Disclosure , Product Placement , Type of Influencer and their Interplay on Consumer Responses

Influencer marketing is a relatively new marketing strategy that came up in the course of the growing popularity of social media. Influencer marketing can be seen as a modern form of celebrity endorsement, in which both celebrities and micro-celebrities function as influencers and promote brands or products on their own social media channels. Especially on Instagram many posts can be observed, in which products are prominently placed and supposedly recommended. This has been part of several discussions in the past, since some people see influencer marketing as covert advertising and demand sponsorship disclosure.  The type of influencer, sponsorship disclosure and product placement are important components of influencer marketing and especially concerning the setup of (sponsored) Instagram posts. On the one hand, they serve as a means to effectively promote a product or a brand while on the other hand, sponsorship disclosure helps consumers to identify sponsored content on Instagram. Since influencer marketing is believed to persist, it seems important to get more insight into how different setups of (sponsored) Instagram posts are perceived, which is why the study at hand aims to investigate how these three aspects as well as their interplay affect consumer responses.  To this end an online experiment was conducted, employing a 2 (type of influencer: celebrity vs. micro-celebrity) x 2 (sponsorship disclosure: “#sponsored” vs. no disclosure) x 2 (product placement: product placement vs. no placement) between groups design. 240 German females, all registered for an Instagram account, took part in this study, which measured, message credibility, brand attitude and purchase intention as consumer responses. Attitude towards the Instagram post as well as source credibility were added as mediators; persuasion knowledge and product involvement were included as moderating variables.  The celebrity could be found to generate a higher purchase intention than the micro-celebrity. No main effects for sponsorship disclosure and product placement were found. However, the interaction of type of influencer and sponsorship disclosure affected message credibility, whereas the interaction of all three independent variables had an effect on brand attitude. No sponsorship disclosure had a more positive effect for celebrities, but a more negative effect for micro-celebrities. Source credibility mediates the effect of type of influencer on purchase intention, while the hypothesized mediating effect of attitude towards the post could not be supported. The moderating effects of product involvement and persuasion knowledge could not be confirmed, but persuasion knowledge did negatively affect message credibility. Furthermore, persuasion knowledge was not activated by sponsorship disclosure, but could be found to be high across all conditions.  The research at hand is one of the, so far, very few studies to provide information regarding influencer marketing on Instagram. The findings can help marketers with the choice of a fitting influencer and influencers with the setup of their sponsored Instagram posts, as both important selection criteria and relevant components of a post on Instagram are discussed. At the same time, the insight gained in this study gives reason to further investigate additional characteristics that determine whether an influencer is successful as well as what exactly activates persuasion knowledge within influencer marketing on Instagram. Supplementary research is necessary so that in the future sponsored posts can be created in a way that is both beneficial for businesses and their influencers, but also transparent and fair to consumers.