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Of the social media tools available to brand managers, consumer-generated advertising (CGA) has attractive features combining consumer-generated content, social media advertising, and online interactive marketing campaigns. However, only a small number of customers actively participate in co-creation of CGA. Based on social presence theory and service-dominant logic conceptualization, we examined CGA observers, knowledgeable and attentive viewers of value co-creation processes who do not directly participate in value co-creation. In two studies, we examined consumer responses to company-driven CGA and found no significant differences between CGA creators, or direct participants, and CGA observers, or indirect participants in the process of involvement with CGA, its antecedents, and its outcomes. Study 1 demonstrated that CGA observers developed positive attitudes toward co-created CGA that influenced their brand loyalty and willingness to participate in the process. Study 2 revealed that both creators’ and observers’ involvement with CGA led to stronger perceptions of competitive advantage, which positively affected brand loyalty and trust. Perceptions of competitive advantage also had a mediation effect.

Branding Co-Creation with Consumer-Generated Advertising: Effect on Creators and Observers