Social Media Marketing and Compliance Challenges in Insurance Advertising under Financial Advertising Laws: A PLS-SEM Based Empirical Study in the Digital Age

Abstract

The rapid proliferation of social media platforms has fundamentally transformed insurance advertising by enabling highly targeted, interactive, and data-driven marketing practices. While these developments have enhanced market reach and consumer engagement, they have simultaneously intensified compliance challenges under existing financial advertising laws. Grounded in Institutional Theory and Trust Formation Theory, this study empirically examines how social media marketing practices and regulatory awareness influence compliance challenges, advertising compliance, advertising transparency, and ultimately consumer trust in digital insurance advertising. Using a survey-based research design, data were collected from consumers exposed to insurance advertisements on social media platforms and analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM). The proposed model conceptualizes compliance challenges, advertising compliance, and advertising transparency as sequential mediating mechanisms linking social media marketing practices and regulatory awareness to consumer trust. The findings reveal that higher regulatory awareness significantly reduces compliance challenges, while unresolved compliance issues negatively affect advertising compliance. Furthermore, advertising compliance positively enhances transparency, which plays a critical role in building consumer trust in insurance promotions on social media. The study also identifies enforcement limitations and disclosure inadequacies arising from the dynamic and platform-driven nature of digital advertising. By integrating legal compliance and marketing perspectives, this research contributes to the literature on digital financial advertising and offers actionable policy implications for regulators, insurers, and platform intermediaries. The study recommends strengthening disclosure standards, enhancing regulatory awareness initiatives, and developing platform-specific compliance frameworks to promote responsible and transparent insurance advertising in the digital age.