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Investors’ reactions to company advertisements: the persuasive effect of product-featuring ads

Author

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  • Aspara, Jaakko
  • Chakravarti, Amitav

Abstract

Purpose – This article aims to focus on product-featuring advertising targeted to stock investors – that is, ads that provide investors with impressions about the company’s products, over and above financial information. The purpose is to explicate and test the psychological mechanisms by which such ads may exert influence on investors. Design/methodology/approach – An experiment is conducted with a representative sample of real investors, to test the effect and explore the underlying mechanisms. Two additional laboratory experiments reveal moderating factors of this effect. Findings – The results show that highlighting the company’s product features in an investor ad increases investors’ interest in investing in the company’s stock, by enhancing investors’ subjective evaluations of the company’s products. This effect emerges independent of factors related to preexisting brand perceptions (e.g. brand recognizability and likeability) and is mediated by dual causal channels: by increasing expectations about the company’s financial returns and by increasing affective attachment with the company’s products. Research limitations/implications – The findings identify and confirm different mechanisms of the effect of investor ads, but the relative magnitude of the effects is not generalizable. Practical implications – The results provide corporate marketing, corporate communications and investor relations professionals insights into how investors may be attracted by product-featuring advertisements. Originality/value – The study is the first to explicate the different channels of influence through which product-featuring ads may affect investors’ willingness to invest in companies.

Suggested Citation

  • Aspara, Jaakko & Chakravarti, Amitav, 2015. "Investors’ reactions to company advertisements: the persuasive effect of product-featuring ads," LSE Research Online Documents on Economics 64130, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:64130
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    File URL: http://eprints.lse.ac.uk/64130/
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    References listed on IDEAS

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    Cited by:

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    4. Jie Jiao & Yanyang Wang & An Yan, 2024. "Corporate social responsibility and investor relationship management," The Financial Review, Eastern Finance Association, vol. 59(3), pages 657-685, August.

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    More about this item

    Keywords

    Brands; Advertisements; Investments; Brand image; Product image;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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