Effect of Youtube on Spending Habits in Relation to Credibility

Examining the credibility of the YouTube beauty community in relation to product endorsement

Literature Review and Research on the effect the YouTube beauty community has on people’s spending habits

Introduction

YouTube is a fast growing user-generated content platform. What was once a YouTube cult phenomenon and is now becoming an absolute mainstream (Neary, 2006; Jones, 2010). Due to its rapid growth, YouTube community quickly broke down into subgroups, one of which is a beauty community. It was quickly noted, by both small and large beauty related companies, and today beauty gurus on YouTube collaborate with different make-up manufactures and promote their products. .

Due to the fact that YouTube is so fast growing and trends change daily, especially in the beauty community, it comes as a great obstacle for brands to stay relevant. Hence, it is crucial to face the occurrences that happen in the beauty world on this platform and for brands to become more long-term involved by using limited financial resources.

Problem and Purpose of study

Nowadays people use YouTube as a legitimate source of information, for example when it comes to baking a cake, learning a new language or mastering a dance move, but in most cases, viewers go on YouTube in hopes to be entertained. YouTubers are using that to their advantage by monetizing their content and making a living off of that. Given that, are YouTubers sharing their honest, unbiased opinions through their content, or are there financial motives that affect their actions once their channel starts to expand and gain a larger number of subscribers and loyal viewers? 

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The argument here is that on one hand, brand deals and endorsements on top of a high view count per video is a proof of success on YouTube since businesses find them influential enough to invest in them to promote their products, but on the other hand, the more atheistical viewer may deem to be a biased opinion which would lead to a drop in trustworthiness.

The problem here is that a lot of research has been done to determine how much YouTube affects the brand, but not enough on how the brands affects the YouTuber. It’s a fast growing platform that can make or break a business and I am curious as to how the beauty community on YouTube can influence the potential customer’s perspective. In order to find this out I will expand my knowledge on the topic via literature review, and then undertake a data research project developing a survey on 10 subjects on a topic of how the beauty community has influences their purchases and their experience

 This study aims to analyze how brand deals and promotional statements affect the image and trustworthiness of YouTubers.

Literature Review

YouTube has developed a high influence amongst social media platforms. In comparison to Facebook and Twitter, user-generated content from YouTube creators seem to be much more successful in promoting and branding products, especially within the beauty community. (Fischer, Smith, & Yongjian, 2012).

Consumer-Generated Advertising

Social media marketing has become a staple in business branding worldwide. Companies such as Estée Lauder, MAC cosmetics, Clinique, L’Oreal, Maybelline, and CoverGirl use social media, especially YouTube, as a means of engaging with or interacting with their current and potential consumers. (Shen and Bissell, 2013; Faulds & Mangold, 2009).

Consumer-generated advertising, or as it is also referred to consumer-created brand messaging has become an incredible phenomenon that in the business world is known to help reach the consumer directly and establish a trusted and loyal relationship. (Ertimur & Gilly, 2011). Although it has proven to be successful on YouTube, it has ups and downs due to it’s authentic nature. According to Thomaselli (2010), the more involved the company is in the way the YouTube creators present their content, the less credible and trustworthy the creator’s opinion is perceived. Therefore, in order to maximize the trustworthiness of the creator’s opinion on the product the author should be given freedom to speak their true and honest opinion, weather it may portray the brand in good or in bad light.

A good example of this is Tati, a famous beauty guru within the YouTube community currently has over 2,500,000 subscribers and her videos reach up to 1,000,000 views each. Although Tati does not get directly paid to make a video about company’s product, she does receive multiple promotional packages and free product samples to talk about. It is well known that Tati always gives an honest opinion on her product reviews on the “First Impressions” and “OMG!!!” videos, and you can see a good balance of the positive and negative reviews on her YouTube channel. (YouTube, 2017)

 “People are using YouTube not only for entertainment, but also as an alternative source of instruction. Consequently, YouTubers are blurring the lines between ordinary people and media people, and are being sought after as brand endorsers, similar to how celebrities are treated” (Tolson, 2010, p. 278) Similarly to the traditional celebrities, social media content creators seem to have similar effects on the product marketing: increasing consumer attention towards the marketed product, heightened brand recognition and generation of more positive word-of-mouth response (Carrillat, 2013). In spite of the customer being sceptical when it comes to purchasing a product without initially testing it out for themselves (Calfee & Ringold, 1994), they are still more likely to look for a familiar product, or the product they have previously heard of, in the store rather than, for something they do not instantly recognize.

Subscriber base and Viewership

It seems as though normally a subscriber base and viewership in the YouTube community not only determined your success, but also describes how greatly the consumer-generated advertising could reach the potential customer. (Lieber, 2014) Due to a unique YouTube algorithm, the website is designed to highlight recommended videos that include videos by the creators you view on regular basis, videos that feature similar products, or trending videos across the world. (Tubefilter, 2017). This algorithm usually leads to more popular YouTube creators becoming more popular and their influence increase.

A contradictory example of this is Jeffree Star (YouTube, 2017), who is a very controversial beauty guru who has a very large subscriber base of over 4,000,000 people (YouTube, 2017). In spite of the high following, controversial creators such as Jeffree Star, tend to have less success promoting products. As Miller (2010) correctly suggests:  number of views can be controversial in the YouTube arena, especially when it seems to be the most sought-after measure of success. (YouTube, 2017)

Although for the company, viewership and subscriber base are showing stability and active interest of the customer, it is not only the big content creators making the news. Heidi Hamoud (YouTube, 2017), having a incomparably smaller following that Jeffree Star, has better trust with her audience than he does. According to SlateScore, YouTubers with higher subscriber base and viewership are making $1,300 to $54,000 per month via YouTube’s Partner program, and that’s not including any brand endorsements the YouTube creators secure (Ives, 2015). So from the customer’s perspective the smaller YouTubers are more genuine in their videos as they are not doing this as a part of their full-time job, and rather as a hobby (Keen, 2011).

Source Credibility Theory

Originally Ohanian (1990) found that having celebrities promote the product encourages customer’s trust in the rand and product. Furthermore, Miller (1989) suggested that using spokes people closely related to the product being presents and the target audience, will help persuade the customer the trustworthiness of the brand.

The source credibility theory created by Ohanian in 1991 helps answer why us, customers tend to trust a more relatable source over the one e don’t feel a personal connection with.

The source credibility theory model presents us with criteria, which customers unconsciously consider when selecting a trustworthy brand ambassador (Ohanian, 1991). These criteria include: trustworthiness as a person and a content creator, expertise about the product presented, and physical attractiveness. The higher the customer rates the brand ambassador, in our case – YouTuber, the more likely they are to buy the product featured.

Source credibility was studied by researchers since the early 1960s, with quantifiable measures such as safety, qualification, dynamism, expertise, attractiveness, trustworthiness, likeability, objectivity and more. It was later noted by Ohanian (1990) that there were inconsistencies in the quantifiable measures of source credibility and started a study that developing source credibility theory – a reliable tri-component model that determines believability of the brand ambassador.

Trustworthiness is “the listener’s degree of confidence in, and level of acceptance of, the speaker and the message” (Ohanian, 1990, p. 41). Several studies have shown direct correlasion of trustworthiness with persuasion and the effectiveness of the message in question. Study by Miller and Baseheart (1969) proved “that the more trustworthy a communicator is, the more convincing their opinion will be to the receiver of that message.” Trustworthiness signifies transparency, honesty and integrity and a considerable part of that revolves around the likeability of the influencer.

Expertise is the “basis of credibility of a person who is perceived to be knowledgeable in an area or topic due to his or her study, training, or experience in the subject matter.” (BusinessDictionary.com, 2017). Ross argues that the more compelling an ambassador is, the more likely the receiver of the message will be to act in accordance with their belief. The theory argues that influencers are thought of as experts who are very well informed in every aspect, in this case the beauty field and how potential customers are more likely to take their word as a relevant means of information because of the fact that they trust their judgement enough, even though in many cases, highly credible sources are ineffective.

Attractiveness is the quality of being sexually alluring or visually appealing by possessing features that arouse interest. (Vocabulary.com, 2017).  On top of that, people who are perceived as attractive tend to create a more positive impact on others, therefore they are more likely to influence an audience to purchase a product they are endorsing. The beauty industry is heavily revolved around aesthetics and appearance so naturally, an attractive video producer will be deemed more credible.

Conclusion of literature review

Through the literature review, the conclusion is that YouTube, especially the beauty community on the platform, has the power to influence its viewers. The extent of the influence can vary depending on the creator’s personality, transparency and charisma.

Hypothesis based on lit review

On the basis of this research, I can predict that the YouTube beauty community has high credibility within product endorsement.

Method

Rather than focusing on collecting statistically accurate data, this research paper emphasizes on exploratory research in order to gain ideas and insights about potential outcomes. This will help define the credibility of Youtubers by asking open-ended questions, in which case the answers will not be statistically measurable, but will provide more in depth, quality data about the topic which can later lead the discovery of new initiatives or problems that should be addressed. (Wyse, 2017) (Team, 2017)

Since most of the data collection is exploratory, the research method used primarily will be qualitative research, which is used to gain an understanding of underlying reasons, motives and motivations why YouTubers gain their credibility and how they influence their audiences.

On the other hand, quantitative research is more of a derivative of qualitative research but is mostly used to quantify the problem by turning yes/no answers into useable statistics. Furthermore it can quantify behaviours, attitudes, opinions and other defined variables and make up generalisations based on answers that target larger audiences. On top of that, quantitative research uses the yes or no type of answers as measurable data in order to discover patterns, which helps make up the structure of the paper. 

I believe that the best way to undertake this study is to create a questionnaire and have 10 people answer a range of qualitative and quantitative questions. This seems to be a realistic research method due to low funding of the research and a very limited timeline.  In addition to the above, I believe this is the best way to confirm my hypothesis.

As an alternative method, an observation technique was suggested, however I believe it is inappropriate for the suggested study. Observation, in these particular circumstances, has a no set timeline, and would cause to be inefficient and time consuming, with little data to analyse as the result of the study.

As for my study population, the perfect candidate would fit the following criteria:     

18 – 25 years old

PRO’s:

• Target research group is easily accessible within my location
  • There are no legal complications associated with this age group

CON’s:

• Some of the YouTube creator’s target audience might be outside the stated age group
  • Some of the YouTube creator’s viewers may be outside of the stated age group

High familiarity with YouTube

PRO’s:

• Some people are more familiar with social media than others, and since all the research is based around very specific questions about YouTube as a platform, there is no reason to survey people who aren’t familiar with it.

CON’s

•  Some people may be familiar with YouTube as a platform but not with actual YouTube creators, in which case they might not meet the target audience criteria.
• Some people may be familiar with a different Youtube community, such as the gaming one, but not with the beauty field, which might not meet the target audience criteria

Women

PRO’s:

• Major target audience for make up distributors and marketing agents
• Statistically, women spend a higher amount of money on make up than men

CON’s:

• May exclude some men that use make up and have a strong opinion on the researched topic
• It is discriminatory and could spark sexist remarks.

Greenwich area

PRO’s:

• More accessible to gather research within the University of Greenwich.
• Greenwich is a landmark in London which attracts visitors from all over the world that can represent a more diverse demographicTargets a niche area.

CON’s:

• May still overall limit the area covered by the questionnaire

Sampling Technique

I have decided to use stratified sampling as my sampling technique. In order to make sure that my study population meets the right categories listed above, I would need to specify a random group of people, and then choose an appropriate candidates within this random group of people.

Pros and Cons of Stratified sampling

PRO’s:

• we have certain target people we want to question, therefore it would save time to exclude the people we are not interested in questioning prior to the questioning
• Reduce bias
• Provides more precision by being more evenly spread out over the population;
• Improves the portrayal of particular groups

CON’s:

• there may be people who’s opinion could be valuable who don’t fit the set guidelines. (Dissertation.laerd.com, 2017)

DATA Collection method:

1. Randomly select a class within university
2. Select girls from that class
3. Make sure they meet the study population requirements (view above)
4. Present them with consent form – view in the appendices #1
5. Present with the questionnaire – explain your study topic and your reasons for choosing this topic and walk them through the questions.
6. Collect finished questionnaire

Analysis of the research method and conclusion

In this study 10 people have answered the questionnaire and the results are the following: (refer to next page for gathered data)

1.  Do you watch any Youtube creators, such as Pewdiepie, Nikkie Tutorials, Jenna Marbles, etc?

Out of all the people questioned, 9/10 answered “yes”. It is believed that the reason for this may lie withing the flawed research tactic. It is plausible that during the selection of subjects we have misjudged the familiarity of the subjects with YouTube.

This purpose of this question wa to determine how suitable the candidate was to undertake the survey and how valid their further answers would be. Since the subject’s answer was negative, we can determine that the candidate does not have enough knowledge of the platform, therefore none of the further answers of the subject will be considered as part of the research.

2. Did you ever buy a product they recommended in any of their videos?

Unexpectedly, all 9/9 subjects confirmed that the have previously purchased a product recommended by the content creator in the video.

This does not necessarily mean that 100% of the people who watch the beauty community’s videos buy products recommended by their influencers. Since we have quite a small percentage of the population completing our survey, the outcomes of the study may not necessarily translate to the full population.

3.         Did the product meet your expectations?

5/9  people have been satisfied with purchase of the product recommended by the beauty guru. Since it is over 50% of the test subjects who are satisfied with the purchase we can suggest the trustworthiness of the beauty influencers on Youtube is mostly positive.

4.         Did you ever use a discount code that a Youtuber promoted in one of their videos to get money off a purchase?

The subjects who answered “yes” for the previous question:

4/5 were satisfied, out of which 3 seemed very familiar with the products purchased and the beauty gurus themselves, whilst the 4^th one was not keen. There was a single person not satisfied with the purchase recommended by a highly-rated Youtuber. Overall the people who purchased the products are overwhelmingly content with their goods. There were 2 people who did not buy anything recommended by influencers for different reasons, for example subject number 6 had a dissatisfactory experience with customer service.

In order to come to a scientific conclusion, more data is required.

5.         Do you find yourself  more likely to purchase a product your favourite creator uses or supports?

3/5  people answered “no” whilst the rest of the subjects decided the question was non-applicable. In contradiction to the literature review that suggest the fact that people are more likely to purchase goods they have heard of on social media, we can state that our subjects believe that Youtube beauty community does not affect their spending habits. More information is required to draw a scientific conclusion.

6.         Do you find it unreliable if a Youtuber promotes a product by a brand they are sponsored by?

8/9 people agree with the statement above, confirming our theory that the more involved the company is in the way the YouTube creators present their content, the less credible and trustworthy the creator’s opinion is perceived.

7.         Do you trust your favourite Youtubers’ opinion on products they like or dislike?

6/9 do not trust the recommendation of the beauty community. As mentioned in the literature review, people are skeptical and traditional in their purchase choices and they want to test out the quality of the product for themselves.

8.         Do you think Youtubers being sponsored by different brands is acceptable as long as they disclose their relationship with that brand?

8/9 people believe it is perfectly fine for companies to sponsor beauty gurus as long as it is disclosed. Therefore we can conclude based on the presented data that subjects are happy to receive sponsored content as long as they are warned about the potential bias in the content.

9.         Do you think YouTubers being sponsored by different brands is not acceptable when they don’t disclose their relationship with that brand?

6/9 believe it Is not acceptable, some mentioned it is considered to be “lying by omission”. In contradiction to the literature review, trustworthiness means transparency, however 3/9 of the subject believe that it is not necessarily true.

10.       Do you think the ad revenue from advertisements placed before and during a youtube video goes to the video producer or youtube?

5/9 state that the revenue goes to the video producer, confirming the extended knowledge of the Youtube algorithm. The rest either answered “both” or “Youtube”, undermining their knowledge of Youtube algorithm and potentially sabotaging the validity of the answers given by the subjects in the questionnaire.

Conclusion of data analysis

From the data analysis we can draw the conclusion that our initial hypothesis was correct and that the Youtube beauty community has high credibility within product endorsement and can to an extent influence its viewers spending habits, depending on the creator’s personality, transparency and charisma.

Referencing

• Bexcellence.org. (2017). Process Improvement and KPOVs. [online] Available at: http://www.bexcellence.org/Process-Improvement.html [Accessed 4 Apr. 2017].
• BusinessDictionary.com. (2017). What is expertise? definition and meaning. [online] Available at: http://www.businessdictionary.com/definition/expertise.html [Accessed 5 Apr. 2017].
• Calfee, J. E. & Ringold, D. J. (1994). The 70% majority: Enduring consumer beliefs about advertising. Journal of Public Policy and Marketing, 19(2), 228-38.
• Carrillat, F.A., D’Astous, A., & Lazure, J. (2013). For better, for worse?: What to do when celebrity endorsements go bad. Journal of Advertising Research, 53(1), 15-30. Doi: 10.2501
• Discourse Studies, 7(4), 277-289. DOI: 10.1080/17405904.2010.511834
• Dissertation.laerd.com. (2017). Stratified random sampling | Lærd Dissertation. [online] Available at: http://dissertation.laerd.com/stratified-random-sampling.php [Accessed 4 Apr. 2017].
• Ertimur, Burcak, & Mary C. Gilly. (2011). So whaddya think? Consumers create ads and other consumers critique them. Journal of Interactive Marketing, 26 (3), 115–30.
• Faulds, D. J. & Mangold, W. G. (2009). Social media: The new hybrid element of the promotion mix. Business Horizons, 52(4), 357-65.
• Fred, S., 2015. Examining Endorsement and Viewership Effects on the Source Credibility of YouTubers.
• Jones, J. M. (2010). The me in media: A functionalist approach to examining motives to produce within the public space of YouTube. (Order No. 3398314, University of Minnesota). ProQuest Dissertations and Theses, 237. Retrieved from http://search.proquest.com/docview/219921526?accountid=14745. (219921526).
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• Lieber, C. (2014, May 22). Clicks, likes, cash: How YouTube beauty stars threw the industry for  a loop. Retrieved from http://racked.com/archives/2014/05/22/youtube-beauty-stars.php
• Miller, G. P. & Baseheart, J. (1969). Source trustworthiness, opinion statements, and response to persuasive communication. Speech Monographs, 36(1), 1-7.
• Miller, L.S. (2010, Oct. 29). What should matter more on YouTube: Subscribers or Views? Retrieved from https://gigaom.com/2010/10/29/what-should-matter-more-on-youtube- subscribers-or-views/
• Ohanian, R. (1990). Construction and validation of a scale to measure celebrity endorsers’ perceived expertise, trustworthiness, and attractiveness. Journal of Advertising, 19(3), 39- 52.
• Shen, B. and Bissell, K. (2013). Social Media, Social Me: A Content Analysis of Beauty Companies’ Use of Facebook in Marketing and Branding. Journal of Promotion Management, 19(5), pp.629-651.
• Team, F. (2017). 3 Types of Survey Research, When to Use Them, and How they Can Benefit Your Organization! – FluidSurveys. [online] FluidSurveys. Available at: http://fluidsurveys.com/university/3-types-survey-research-use-can-benefit-organization/ [Accessed 5 Apr. 2017].
• Thomaselli, R. (2010). If consumer is your agency, it’s time for a review. Advertising Age.
• Tolson, A. (2010). A new authenticity? Communicative practices on YouTube. Critical
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• Wyse, S. (2017). Difference between Qualitative Research vs. Quantitative Research. [online] Snap Surveys Blog. Available at: https://www.snapsurveys.com/blog/what-is-the-difference-between-qualitative-research-and-quantitative-research/ [Accessed 5 Apr. 2017].
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Appendices

Appendices 1 – Questionnaire example

QUESTIONNAIRE

1. Do you watch any Youtube creators, such as Pewdiepie, Nikkie Tutorials, Jenna Marbles, etc?
2. Did you ever buy a product they recommended in any of their videos?
3. Did the product meet your expectations?
4. Did you ever use a discount code that a Youtuber promoted in one of their videos to get money off a purchase?
5. Do you find yourself more likely to purchase a product your favourite creator uses or supports?
6. Do you find it unreliable if a Youtuber promotes a product by a brand they are sponsored by?
7. Do you trust your favourite Youtubers’ opinion on products they like or dislike?
8. Do you think Youtubers being sponsored by different brands is acceptable as long as they disclose their relationship with that brand?
9. Do you think YouTubers being sponsored by different brands is not acceptable when they don’t disclose their relationship with that brand?
10. Do you think the ad revenue from advertisements placed before and during a youtube video goes to the video producer or youtube?

Appendices 2 – Information and consent form

Examining the credibility of the YouTube beauty community in relation to product endorsement

STUDY INFORMATION

Dear Participant

I am carrying out a research study for my coursework.  The purpose of the study is to analyse “Credibility of beauty gurus on YouTube”.  Your participation will consist of:

• Individual interview, lasting approximately 10 minutes, which will be recorded for analysis. All the information will be confidential and will be deleted after analysis. All references and quotes used in the coursework will be anonymous. 

If you want further information about the coursework, you can contact the module organiser.

Yours faithfully,

Examining the credibility of the YouTube beauty community in relation to product endorsement

INFORMED CONSENT FORM

The purpose and details of this study have been explained to me.  I understand that this study is designed to further scientific knowledge and that all procedures have been approved by the University, Ethical Approvals (Human Participants) Sub-Committee.

I have read and understood the information sheet and this consent form.

I have had an opportunity to ask questions about my participation.

I understand that I am under no obligation to take part in the study.

I understand that I have the right to withdraw from this study at any stage for any reason, and that I will not be required to explain my reasons for withdrawing.

I understand that all the information I provide will be treated in strict confidence and will be kept anonymous and confidential to the researchers unless (under the statutory obligations of the agencies which the researchers are working with), it is judged that confidentiality will have to be breached for the safety of the participant or others.

I agree to participate in this study.

                    Your name

              Your signature

Signature of investigator

                               Date