With increasing restrictions, saturated advertisement markets and advanced technology, the conditions of the communication politics have significantly changed and outdated the classical instruments. In order to bypass these developments, marketers started to strategically promote their products through appearances in movies and television than through conventional commercial spots. Additionally, social media has developed to one of the latest and most effective communication tools, especially among Generation Y, which businesses try to take advantage of. The combination of these two instruments created product placement on social media.

Extensive market research on product placement in movies and television has shown that it can be an effective marketing tool if applied correctly. However, the research on product placement on social media is limited. Therefore, this paper will investigate whether product placement on social media is as effective as in movies and television, by answering the following research question:

What is the impact of product placement on social media on the end-consumer’s brand perception and purchase intention?

To address this issue we developed an online survey based on the theoretical background and methodology. The target group was set to social media users of the Generation Y worldwide. Subsequently, within a timeframe of three weeks we collected 217 valid responses that were analyzed with SPSS in order to answer the research questions and give managerial implications.

Our analysis shows that product placement on social media can have a positive influence on consumer brand perception and purchase intention. This is particularly compounded if the celebrity is liked. However, the analysis also indicates clear signs that the Generation Y perceives product placement on social media as unethical. However, all in all, it can be said that product placement on social media is a good marketing tool if several suggestions and restrictions are taken into account.