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ABSTRACT

Social media advertising is a powerful tool in contemporary times. The study sought to explore customer’s exposure and response to social media advertising by examining the customer’s exposure to social media advertising of SMEs on consumer decision- making with the mediating effect of consumer engagement in Nigeria. Three constructs in assessing the customer’s exposure to social media advertising which included emotional appeal, informativeness and advertising creativity were used. There were two objectives of the study. The first objective was to determine the relationship between social media customers exposure constructs and consumer response in form of decision-making. Another objective was to determine the mediating role of consumer engagement on social media customers exposure constructs and consumer decision- making. The study employed exploratory and confirmatory factor analyses along with structural equation modelling to evaluate a proposed model for understanding the relationships among the constructs and to examine the mediating effects. The findings indicated that there was no significant relationship between emotional appeal in social media advertising and consumer decision-making. And as a result, there was no mediation of consumer engagement in the relationship. Again, there was a significant relationship between informativeness in social media advertising and consumer decision-making and consumer engagement partially mediated the relationship. In addition, there was a significant relationship between advertising creativity in social media advertising and consumer decision-making and consumer engagement fully mediated the relationship. Thus, apart from emotional appeal, informativeness and advertising creativity in social media advertising affected the decisions that consumers make. Furthermore, consumer engagement influenced the relationship between informativeness and advertising creativity in social media advertising and consumer decision- making. Therefore, consumer engagement which is the responses of consumers to brand – related content such as likes and comments influenced the decisions that other consumers made based on informativeness and advertising creativity in social media advertising.

 

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to Study

Rapid technological innovation has taken place over a couple of decades (Lingelbach, Patino & Pitta, 2012; Moore, 2012) and improvements in technology have dramatically transformed the advertising industry in the 20th and 21st centuries. Radio broadcast discovery led to re- evaluation of the business of newspapers and the same occurred with the advent of television broadcasting and as a result, famous businesses which include Unilever and Procter & Gamble introduced advertisements (Barnes, Mattsson & Hartley, 2015; Kim & Lee, 2015).

 

Subsequently, technology led to the invention of yellow pages, cable, mobile phones and the internet. The invention of the internet aided in re-defining the worldwide nature of advertising (Woo, Choi, Shin & Lee, 2014; Internet Advertising Bureau, 2014). According to Chen and Hsieh (2012), this evolution in information and communications technology (ICT) has affected consumer purchasing behaviour and this has also led to a change in corporate advertising strategies. Armstrong and Kotler (2000) defined advertising as any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.

As a means of getting the attention and meeting specific needs of customers, experts in advertising have begun the use of social media website appeals in crafting advertisement in order to motivate users to share brand image (Waters, Canfield, Foster & Hardy, 2011; Gallaugher & Ransbotham, 2010; Dickey & Lewis, 2010).Thus, Lariscy, Avery, Sweetser and Howes (2009) argue, that businesses have integrated social media in their communication strategies in order to influence customers and achieve competitive advantage. According to Kaplan and Haenlein (2010), social media is “a group of internet-based applications that build on the ideological and technological foundations of Web 2.0 and that allow the creation and exchange of User Generated Content”. In 2012, research revealed an increase in businesses that make use of social media who are part of Fortune 500 firms. The study further indicated that, 73 of these businesses possess a Twitter page and 66 percent have Facebook account. In the year 2011, there was a surge in the corporate blogs of these companies which indicated the highest increase since 2008 (Barnes, Lescault & Andonian, 2012). Brands such as Coca- Cola, Starbucks, Red Bull, and Converse each boasts of over 35 million fans on Facebook alone and spend significant organisational resources managing them. Firms have created specialised positions to handle their social media marketing activities. For instance, New York Times found it necessary to employ a social media editor (Nolan, 2009) and Honda Motor Company created a new social media position (Rechtin, 2012). Kaplan and Haenlein (2010) concluded that social media is found worldwide due to the increase of individuals who use internet and this has totally developed into an innovative way of business interaction.

 

 

According to Shopify (2014), the largest online social medium worldwide is Facebook, with

 

1.32 billion active members and Facebook is regarded as the leading social business site because 85 per cent of customer orders on social media are through it. e-Marketer (2015) asserts that, an increase in online communities in recent times has resulted in substantial spending in social media advertising with an estimated growth of 25.4% globally in 2015. Social media still presents a less expensive and less risky solution to business than paying huge sums of money to advertise in a non-virtual world (Johns & Perrot, 2008). Thus, social media provides a cost-effective means of advertising. Social media trend also indicates a yearly increase in membership. Dossier (2014) assert that, there will be an increase of social media users from 0.97 million to 2.67 billion in the year 2018. In Nigeria, as at June, 2016, there was an increase in users to 3,500,000 from a subscription base of 2,900,000 by Nov, 2015 on Facebook alone (Internet World Stats, 2017).

The success of a business is based on decisions that customers make when buying goods and

 

services.   According to Liang and Lai (2002), and Darley, Blankson and Luethge ( 2010),

identifying problem, searching for information , evaluating alternatives, purchase, and post purchase behaviour are the purchasing process that consumers go. Kotler et al.(2009) also posit that there are instances where not all consumers of a product go through all the steps. Consumer decision-making in this study takes into consideration the purchasing decision as a whole and not the individual steps.

 

Social media plays a substantial role in firms and marketers’ ability to communicate and influence attitudes of consumers, opinions and purchasing behaviours. For instance, retail stores continuously advertise new goods and services, provide discounts, engage with customers and seek feedback via social media (Oh, Roumani, Nwankpa & Hu, 2017). Brands that want to have visible networks within the social context develop a virtual presence which helps interaction and engagement with the users of their brands (Enginkaya & Yılmaz, 2014). Social media is regarded as a means of developing communities which make both old and new customers co-operate and engage with each other (Oh, Rouman, Nwankpa & Hu 2017).

 

Barger, Peltier and Schultz (2016) makes a distinction between firm’s engagement and consumer engagement. Firm engagement is when businesses respond to user generated content from customers. A firm’s engagement has similarities with consumer engagement but the main distinction is that, the response of a firm to the content generated by consumers is a firm engagement whereas consumer engagement is the response of consumers to a firm’s brand- related content in a social media setting.

 

Barger et al. (2016) therefore conceptualise consumer engagement as ‘a set of measurable actions that consumers take on social media in response to brand-related content: reacting to content (e.g. likes, hearts, _1s, 1 to 5 star ratings), commenting on content (e.g. Facebook comments, Twitter replies), sharing content with others (e.g. sharing of content on Facebook

product reviews, Facebook posts about brands)’. According to Hadija, Barnes and Hair (2012), social media users do accept advertisements as content they have to participate in order to get the services on the various networks for free. Scholars have argued that social media advertising must be effective in order to have impact on consumer decisions. As a result, Lee and Hong (2016) conducted a research and tested the impact of emotional appeal, informativeness and advertising creativity in social media advertising.

 

 

1.1              Research Problem

 

Social media platforms are important digital communication channels for consumers in learning, information sharing and interacting with brands they consider, purchase and evaluate (Chappuis, Gaffey & Parvizi 2011; Qualman, 2013). However, some scholars such as Edelman (2010) and Barwise and Meehan (2010) argue that, how social media really impact on consumer decisions are yet to be well understood.

 

Studies on social media have been done by scholars from different perspectives (see Kleinrichert, Ergul, Johnson & Uydaci, 2012; Tsimonis & Dimitriadis, 2014; Rohm, Kaltcheva & Milne, 2013; Barger et al.,2016; McCarthy, Rowley, Jane & Pioch, 2014; Zhang & Vos, 2014) but there is little literature in the area particularly of social media advertising and consumer decision-making.

 

Furthermore, some scholars argue that consumers are suspicious of social media advertisements by firms and rather trust opinions of other consumers. However, other scholars also doubt whether social media advertisements are noticed by consumers. Gillin (2007) in particular argue that although consumers are increasingly using social media, the views of other buyers are regarded as more objective by other consumers than promotional messages from businesses. This view is also shared by Akar and Topçu (2011). Gruber (2006) on the other hand argue that, the unanswered question is whether advertisements are noticeable by consumers in social media sites and whether those advertisements have an impact on consumer decision making.

 

Again, within the Nigerian context, there are studies in the area of social media (see Ahenkorah-Marfo & Akussah, 2016; Boateng 2016) and few studies on social media advertising and consumer decision-making. The need for more research on social media

Some studies have shown that consumer engagement influences other consumers’ attitude to content (Ludwig et al. 2013; Lepkowska-White, 2013). Jiménez & Mendoza (2013) also posit that consumer engagement also influences purchase intentions. Despite the importance of consumer engagement, Barger et al. (2016) indicated that although marketers have been able to increase the creation and patronage of social media sites, there is only a small proportionate rise in consumer-brand engagement and therefore proposed that marketers should create a long-lasting engagement with changing technologies. Studies from large scale businesses in recent times indicate that consumer engagement is still a problem for users of social media. This is an indication of failure on the part of companies to “exploit the opportunities arising from the data explosion and advanced analytics” (IBM, 2014 p. 4). Even researchers of social media have not been able to prove as to whether engagement relates to metrics such as loyalty or sales and the extent to which, engagement relates to such metrics (Elliott, 2014).So even though at least 100 workers in almost nine out of ten companies in the United States are visible on social media for marketing purposes, how their presence is able to generate customer value is a mystery (e-Marketer, 2015).

 

There are factors that are associated with the social media engagement gap. To begin with, there is less experience in the creating, tracking and measuring of engagement because social media is a relatively new marketing phenomenon (Barger & Labrecque, 2013; Schivinski & Dabrowski, 2016).    Social media is fragmented due to the several platforms and different formats and this has resulted in the difficulty for companies’ ability to monitor and coordinate their efforts (King, Delfabbro, Kaptsis & Zwaans, 2014; Straker, Wrigley & Rosemann, 2015). The fragmentation together with the saturation of content across platforms does not make consumers pay attention to content or makes them less selective in watching and processing due to greater cognitive demands (IBM, 2014).There is therefore the need for research in social media advertising and consumer decision-making and the mediating role of consumer

In addition, Lindsey-Mullikin and Borin (2017) assert that SMEs like Marc Jacobs and Michael Kors that regularly use the traditional retail system to reach consumers are now adopting the use of social media channels to directly help their connection. For instance, Net- A-Porter, a SMEs has indicated its intention to create an application that will enable consumers to directly buy products viewed via social media platforms. The study of social media in SMEs will help ascertain how the shift to social media advertising in the small and medium scale industry is impacting on the consumer decision-making.

 

Other scholars have also researched social media advertising using only one or two social media platforms. For instance, Duffet (2015) studied Facebook advertising and the intention- to-purchase and purchase and indicated that studies could be done in other social media sites like Twitter, YouTube, Google+ and LinkedIn. Consistent with this, are several calls for more research into the usage of social media platforms such as Twitter, YouTube and Facebook in order to contribute knowledge that can help expand the theoretical pillar in the marketing field (Hennig-Thurau, Friege, Gensler, Lobschat, Rangaswamy & Skiera, 2010). This research thus focuses not only on Facebook advertising but other social media platforms as well which include Twitter, Instagram and YouTube.

 

1.2              Research objective

 

The study seeks to explore the customer’s exposure to social media advertising and its effect on customer response in form of consumer decision-making with the mediating effect of consumer engagement in Nigeria. In assessing the customer’s exposure to social media advertising, three constructs namely emotional appeal, informativeness and advertising creativity are used. The study therefore seeks to ascertain how the presence of emotional appeal, informativeness and advertising creativity in social media advertising can impact on consumer decision-making. The specific objectives of the study are;

1. To determine the relationship between social media customers exposure constructs and consumer decision-making.
2. To determine the mediating role of consumer engagement on social media customers exposure constructs and consumer decision-making.

 

1.3              Research questions

 

The study has the following research questions:

1. What is the relationship between social media customers exposure constructs and consumer decision- making?
2. What is the mediating role of consumer engagement on social media customers exposure constructs and consumer decision-making?

 

 

1.4              Research hypothesis

 

The hypotheses for the study  are stated below:

 

H1: There is a positive relationship between Emotional Appeal (EAA) in Social Media Advertising and Consumer Decision-Making (CDM)

H2: There is a positive relationship between Informativeness (INFOR) in Social Media Advertising and Consumer Decision-Making (CDM)

H3: There is a positive relationship between Advertising Creativity (ACCC) in Social Media Advertising and Consumer Decision-Making (CDM)

H4: Consumer engagement mediates the relationship between Emotional Appeal (EAAA) in Social Media Advertising and Consumer Decision-Making (CDM)

H5: Consumer engagement mediates the relationship between Informativeness (INFOR) in Social Media Advertising and Consumer Decision-Making (CDM)

H6: Consumer engagement mediates the relationship between Advertising Creativity and Consumer Decision-Making (CDM)

 

 

1.5              Significance of the Study

The significance can be viewed from two perspectives which are academia and industry. In the terms of academia, the study provides more insights into social media advertising in the small and medium scale industry and helps generate more interest in academia to undertake more research in the area of social media advertising, consumer engagement, consumer decision-making and the

small and medium scale industry as well. Furthermore, industry players and practitioners will also appreciate the role of social media advertising, consumer engagement and consumer decision-making. The research will also provide the necessary impetus that can help industry leverage on social media which is a fast growing promotional tool.

 

 

1.6              Scope of the Study

 

The study focuses on the small and medium scale industry and takes into consideration SMEs in Port Harcourt, Rivers state, Nigeria. The study also considers how social media advertising by firms affect consumer decision-making through consumer engagement.

 

1.7              Chapter Disposition

 

The first chapter focuses on background of the study, problem statement, research gap, research objectives and questions, significance and the scope of the study as well as the disposition of the thesis .The second chapter entails a review of existing literature in order to provide in-depth knowledge of web 2.0, insights into from Consumer Behaviour to response and Consumer Decision-Making, social media, advertising effectiveness in social media, the concept of consumer engagement, the theoretical background and the conceptual framework of the research. The third chapter provides insights into the the methods used in this   thesis   to provide a solution for the research questions posed earlier in this study. The methodology provides insights into the usage of the gathered data to answer the research questions. The chapter explains the research paradigm, research population, sampling, design of research instrument, ethical considerations, pre-testing of data instrument, data mediation analysis. The fourth chapter provides information on data analysis and discussion of the findings of   the study. Chapter five focuses on the summary of findings, conclusions and recommendations drawn from the findings of the study.