The Impact of Retargeting on Social Media on Consumer Purchase Decision

The purpose of this research is to try and understand how retargeting on the social media platform Instagram, can influence the consumer purchase decision. Instagram is of particular interest as research carried out by marketing firms across the UK, suggest that social media users between the ages of 18 to 25 are leaving Facebook at a faster than anticipated rate, and flocking to Instagram. Instagram to-date has 800 million users worldwide; 63% of these users are aged between 18 and 25 years old. This creates a mass audience who organisations can target and subject to retargeting. It is therefore essential for marketers to know how best to advertise to this age group. The Uses and Gratification theory will help to understand why and how people seek out one social media platform instead of another, assuming that the consumer has complete control. This research will investigate the knowledge of retargeting among this age group within the UK and questions their understanding of what it is and how it works. It aims to find out if people within this age group find retargeting useful in their consumer purchase decision, or whether they believe it is unethical and an invasion of their privacy, and moreover, whether it deters people from buying from that organisation.

It also aims to explore more about the consumers knowledge of a company’s cookie data and usage. As consumers have become more aware of companies storing their personal data, due to new GDPR regulations, the research aims to reveal if people fully understand what personal data they are allowing companies to have and what online activities companies are able to track after accepting their cookie policies. To understand this, research has to be carried out on how GDPR has affected how organisations can use data tracking files, as well as looking at different cookie policies, to see how much information they reveal to the consumer at first glance. The Technology acceptance model will take the information found using the Uses and Gratification theory further, by mapping out and showing how, or if, consumers have come to accept cookie data technology and therefore, retargeting on social media platforms.

Research carried out by ‘Brandweek’ suggests that online advertising was least effective in engaging consumers and, as a result, influencing a purchase. This contradicts other research carried out, which found that retargeted marketing does influences the consumer purchase decision. However, research by Mangold and Faulds in 2009, explores social media as a new element in the promotional mix due to its multiple opportunities to influence the consumer purchase decision. Andrew Stephen agrees with this, saying information from social media is a major influence on consumer decision making. However, it cannot rule out that among 18- 25 year olds, retargeting might be becoming less effective, as they become more sceptical of their privacy, especially online. The technological determinism theory assumes technological advancements are the primary influence on social relations and cultural practices, therefore it will be useful to see how retargeting has affected the online shopping experience and what consumers think of the retargeted brand.

People between the ages of 18-25 use Instagram more than any other social media platform, therefore it is the ideal channel for businesses to retarget products and services to this age group, which helps to influence the consumer purchase decision. However, in a data conscious society, this age group find retargeting to be invasive and want to find solutions to stop it from happening. How does retargeting, through the use of Instagram, influence the consumer purchase decision among 18 to 25-year olds? To what extent does this retargeting become invasive?

Critical Analysis Statement

Technological Determinism: As this research concerns how retargeting affects the consumer purchase decision, it is important to explore the technological determinism theory, as it assumes that society’s technology drives the development of its social structure and cultural values. It argues that technological advancements are the primary influence on social relations and cultural practices. It will be able to investigate if the technological advancements of cookie usage, among online companies, is the main drive in the social change of purchase habits.

Uses and Gratification Theory: I want to understand why consumers are using one particular social media platform over others, and as a result of this, where companies are retargeting online. This theory seeks to understand why and how people actively seek out specific media to satisfy specific needs. However, it assumes people have power over the media they use, rather than positioning individuals as passive consumers of media. This will give me a different perspective as the research is looking at if consumers are influenced by media.

Technology acceptance model: This is an information system theory that models how users come to accept and use technology. This will be interesting to look at to see if we have come to accept companies using our information to retarget products through the use of social media.

Research Methodologies

The research conducted will be mainly secondary qualitative data, in order to gain existing and up to date knowledge on how many 18- 25 year olds use Instagram and how they use it. It will also look at research already carried out about the ethical guidelines set for companies using retargeting, as well as looking at new GDPR regulations and guidelines set out for organisations on the use of cookies online. Primary research will also be conducted to ensure up to date information. Firstly, using primary qualitative collection, in the form of questionnaires, the research will gain an understanding of how 18 to 25-year olds feel about retargeting on social media in general and more specifically on Instagram. It will also look at whether they find it invasive or if it helps them to decide, therefore influencing their consumer purchase decision. However, in order to help explain why people have answered a certain way, focus groups will be undertaken, which will allow for more investigative questions to see if there is a difference in responses when put into a group situation, rather than answering alone.

The use of case studies will help to gain a greater understanding of how retargeting has worked in the past, especially on other social media platforms, because although retargeting has only just become a part of the Instagram feed, other social media platforms, such as Facebook, have been subject to retargeting for many years. Case studies are essential as they capture the complexities of real life situations. This method integrates qualitative and quantitative data, which allows for complete and synergistic data analysis. Although, a case study does have its limitations, as it often makes it difficult to reach any generalizations or conclusions, it will give a good indication to how retargeting has affected the consumer purchase decision on another platform and allow for comparison.

Review of literature

Armstrong, G. & Kotler, P. (2007). Marketing: An Introduction.

This book suggests that consumers are becoming increasingly concerned with the way in which organisations are using their personal data online to help aid marketing efforts, therefore influencing the consumer purchase decision. However, it also looks at and contradicts this research by exploring the way in which companies use the information they attain, and how this could result in a mutually beneficial relationship for both the consumer and the company. Armstrong raises the question, are consumers are aware of how their information is being used?

Smith, C. (2016). The Conversion Code: Capture Internet Leads, Create Quality Appointments, Close More Sales.

In the Conversion Code looks at how companies can best utilize retargeting, as well as expresses concerns over overwhelming consumers with too many advertisements on social media. It states that retargeting is essential to an organisation, as it is the glue between marketing and advertising. This book realises the new sales environment and explores the reasons behind traditional medias downward spiral, and why it is so important for marketers to start advertising online. It also gives insight in how marketers can find, reach, engage consumers and position itself as the ideal solution to the consumer’s needs.

Blanchard, O. (2011). Social Media ROI.

Blanchard looks at return on investment organisations and markets get from traditional forms of media verses the return on investment they get from advertising on social media platforms. Traditional media has the mentality of ‘spend and reach’, however it Is clear this does not always work. Blanchard suggests that social media connects people in a valuable, meaningful, convenient way that is on their own terms; meaning that after thousands of daily marketing messages, social media is a place to go to stop the mass marketing messages. This book argues that social media marketing strategies need to have the consumer at the heart of it, and rather than influence the consumer purchase decision, create a deeper connection with customers in order to develop them into outspokenly loyal, repeat customers.

Chauhan, S. and Rathore, S. (2014). Ethics in Behavioural Targeting: Mapping Consumers Perceptions.

Marketing is diverting from traditional media as online marketing earnings are growing. However, with the rise of online advertising, retargeting is becoming a growing trend among businesses, accounting for the majority of advertising revenues. Chauhan explains that retargeting allows websites to discriminate advertainments according the consumer surfing patterns. However, this article understands that this can raise privacy issues and can have adverse responses from consumers. This study focuses on the ethical practices of retargeting when it is carried out without the consumers knowledge. It also looks at whether or not consumers are aware of what retargeting is.

Stephen, A. (2016). The role of digital and social media marketing in consumer behaviour.

Stephen notes the importance of consumer issues regarding consumer privacy and how it is under researched. This is especially true when looking at certain age groups, as it is unclear who, if anyone, understands the implications of giving up personal information online and how it is then used. The article recognises the shift of consumer habits, and how markets have responded by moving a lot of their marketing efforts online. However, the study looks at the effects of these new digital environments on consumer behaviour. It also considers how consumers react to retargeting in particular, as this book found personalised ads can have negative consumer responses.

Zarouali, B. , Ponnet, K. , Walrave, M. and Poels, K. (2017). “Do you like cookies?” Adolescents' skeptical processing of retargeted Facebook-ads and the moderating role of privacy concern and a textual debriefing.

This article raises concern that retargeting leads to higher scepticism among young adults, and that this leads to lower purchase intentions. They conducted a study, which comprised of 363 adolescents aged 16-18, and the results showed that retargeted Facebook ads lead to higher purchase intentions compared to non-retargeted ads. However, when the subjects were provided with the knowledge of how retargeted ads work, they found that for people with high privacy concerns, a sceptical attitude was adopted, and the purchase intention decreased. This research contrasts beliefs among marketers and businesses, who believe retargeting helps to push sales.

Taylor, G. (2018). 57% Of Shoppers Say Retargeting Has No Influence On Online Buying Decisions.

This blog looks at retargeting through the eyes of both the consumer and an organisation. It shares the consumer opinion on whether or not retargeting is effective in changing or influencing the consumer purchase decision, and how much retargeting is too much. It also identifies that there is a problem with how retargeting efforts are measured by organisations, as people who already have the intention to buy might click on the retargeted ad, and therefore it is seen as retargeting being effective. However, 83% of e-commerce marketers believe that some of the sales they see as being successful retargeting ads would have occurred regardless of advertising, but only 28% of these have a way to prove it.

Steingold, L. (2018). Advertising in the age of mobile, social and AI.

This blog explores how the rise of mobile phones and social media has changed the way in which marketers will advertise to consumers. Not only do they need to advertise to the consumer though; with the evolution of social media algorithms, marketers now need to advertise to the algorithms themselves before they can be then seen by the consumers.