JUST AS THE U.S. Securities and Exchange
Commission requires investment advisors
to disclose interests they have in the
companies they recommend to investors,
the U.S. Federal Trade Commission
(FTC) requires bloggers to disclose to
their readers and followers any potential
conflicts of interests (COI) regarding
the products and services they recommend,
such as commissions or other
financial incentives from companies.
But does the presence of a disclosure
make readers more skeptical of a blogger’s
recommendations?
Sunita Sah, assistant professor of
management and organizations at Cornell
University’s SC Johnson Graduate
School of Management in Ithaca, New
York, has explored this question with
Prashant Malaviya and Debora Thompson,
associate professors of marketing
at Georgetown University’s McDonough
School of Business in Washington, D.C.
They analyzed more than 150,000 posts
on 60 fashion and beauty blogs over two
years—of these posts, only 350 disclosed
a potential conflict of interest. The research team discovered that posts
with disclosures attracted more positive
reader comments than those without.
In an additional experiment, Sah,
Malaviya, and Thompson asked study
participants to read various blog posts—
some with disclosures and some without.
They then determined how likely participants
were to share the information. The
researchers found that participants were
more likely to share posts that included
the disclosures, especially if those disclosures
were included at the end rather
than at the beginning of posts.
The researchers deduce that because
people often look for quicker ways to
process and react to large amounts of
information, they view disclosure statements
not as warnings, but as shorthand
for expertise—what the researchers call
“expertise cues.” However, in this study,
participants who exhibited a greater
tendency to take time to deliberate over
information were less trustful of that information.
Their deliberation mitigated
the effect of expertise cues, so that they
were less likely to share posts.
The researchers were troubled by the
fact that so few of the posts in their sample
contained disclosures at all. “While
we do not claim that these bloggers did
not disclose a COI when they should
have disclosed,” they write, “industry
analysts predict that an estimated 93
percent of online sponsored content
violates FTC guidelines for disclosing
sponsored content.”
In any case, their findings reveal a
potential risk to consumers, particularly
those who might follow financial or
medical advice online. “If disclosure is
there to protect consumers, it’s having
an adverse effect, which is probably not
what the policymakers intended,” says
Sah in the Cornell Chronicle. “A better
approach would be to place the burden of
managing conflicts of interest on advisers
or regulators to encourage reduction
or elimination of such conflicts.”
“Conflict of Interest as an Expertise
Cue: Differential Effects Due to Automatic
Versus Deliberative Processing”
was published in July in Organizational
Behavior and Human Decision Processes.