Sponsored product reviews have emerged as an important tool in influencer marketing. In particular, non-monetary sponsorships, where brands give influencers a product as a gift for a free trial, are widely used in influencer marketing. Yet, there is little understanding of i) the impact of non-monetary sponsorship on consumers’ downstream behaviors, such as social media engagement, ii) the moderating effect of influencer type, and iii) the underlying mechanisms through consumer perceptions of the brand (i.e., brand trust) and product (i.e., perceived product quality). To fill this gap, we first empirically examined the impact of non-monetary sponsorship on customer engagement using an Instagram dataset through regression analyses. In this analysis, the propensity score matching (PSM) method was employed to match non-monetary sponsored posts with other similar posts, which controls unobserved confounding variables and resolves the endogeneity problem. The empirical analysis shows that non-monetary sponsorship increases social media engagement, and the positive impact is stronger when a micro-influencer generates a non-monetary sponsored post. Next, using a lab experiment, we provide evidence for a causal link between non-monetary sponsorship and consumers’ downstream behavior (i.e., social media engagement, purchase intention, and brand attitude) and support the mediation through higher perceived product quality and brand trust. We contribute to the literature on influencer marketing by documenting the positive impact of non-monetary sponsorship on social media engagement, examining the moderating role of influencer type, and providing novel mechanisms underlying the effect of non-monetary sponsorship. The findings also highlight the changes in consumer perception of sponsorship and offer insights into the design of influencer marketing campaigns for marketing practitioners.

• Xinlong Li(Nanyang Business School, Nanyang Technological University, Singapore)
• Eunsoo Kim(Nanyang Business School, Nanyang Technological University, Singapore)
• Ruoding Wang(Nanyang Business School, Nanyang Technological University, Singapore)