IF IT'S LEGAL, IS IT ACCEPTABLE? Consumer Reactions to Online Covert Marketing

The authors examine the impact on consumers' purchase likelihood after learning about online covert marketing practices. The findings suggest that while learning of online covert marketing practice lowers purchase likelihood, it is moderated by contextual factors including prior purchase experience, whether the company is well known or a start-up, and whether covert marketing involved information gathering or promotions. Consumer background variables were also found to moderate the negative impact on purchase likelihood resulting from consumers learning about online covert marketing activities. Conjoint scenarios were examined and a segmentation study was conducted based on a national survey of U.S. consumers. Implications for advertisers and regulatory action are discussed.