Modern advertising platforms, such as those on social media, often place restrictions on the size of adverts and the length of messages. These restrictions can pose difficulties for financial products which are required to be advertised in a "standalone compliant" way. Standalone compliance means that the advert must be balanced, for example including risk warnings, or information about unusual features, alongside positive information about the product. We ran a series of behavioural experiments in simulated social media environments which examine the design and timing of risk warnings and other balancing information. The results show that, for character-limited social media, standalone compliance reduces consumers’ information search and understanding of risks, ultimately leading to them choosing less suitable products.
Unsurprisingly, products advertised through standalone compliant tweets are less attractive to potential customers. They are then less likely to be clicked on and have their webpages explored relative to non-compliant tweets. Even when viewing a social media feed where all tweets are compliant, participants are less likely to shop around compared with a feed where all tweets are non-compliant.
In the final two experiments, participants were given a scenario in which they needed to meet specific needs and levels of risk, while avoiding certain outcomes. Only one product type from a range of options was suitable for the consumer in each scenario, because of product features which were stated in the risk warning. In these experiments, standalone compliance reduced the likelihood that participants chose the most suitable product by 7-14%. This is best explained by reduced search activity; because standalone compliant products were less likely to be explored, participants had a reduced understanding of the products and were less able to make a good decision.
The results also demonstrate an important role for well-placed risk warnings in educating consumers. More detailed risk warnings on product webpages were found to be most effective at increasing understanding, and they were significantly more effective when designed using insights from behavioural science.
A behavioural study was performed using adult internet users in the UK. Subjects answered questions about Contract For Difference products that tested their understanding of the risks associated with these products, and also their personal perceptions of the products. Subjects answered these questions before and after seeing and rating a fictional CFD product. This CFD product was presented in the form of a social media style advert, followed by a web page. The risk warnings presented with the tweet and the web page were either representative of the existing risk warnings, or were new, proposed versions. It was found that on 2 out of 3 measures of risk understanding the proposed web page warning significantly improved individuals’ accuracy, whilst on the third there was no difference between the effect of the existing and proposed risk warnings. For tweet risk warnings, there was no significant difference between the existing and proposed warnings on 2 out of 3 measures. On the third, the proposed warning increased accuracy, but the results suggest that it provides no benefit over only changing the webpage risk warning, with either the proposed tweet or proposed webpage warning being sufficient to provide increased understanding.