Native Advertising and Endorsement: Schema, Source-Based Misleadingness, and Omission of Material Facts

Technology Science. 2015121503. December 15, 2015.

23 Pages Posted: 17 Dec 2015 Last revised: 28 Dec 2016

See all articles by Chris Jay Hoofnagle

Chris Jay Hoofnagle

University of California, Berkeley - School of Information; University of California, Berkeley - School of Law

Eduard Meleshinsky

Bryan Schwartz Law

Date Written: December 15, 2015

Abstract

Native advertising is the new term for “advertorials,” advertisements disguised as editorial content. Modern native advertising started in the 1950s, but its first uses were clearly signaled to the consumer. This paper explains why consumers might be misled by advertorials — even when labeled as such — when advertising material has elements of editorial content.

Results summary: We surveyed consumers (N=598) with a realistic, labeled advertorial embedded in a blog. We found that just over one-quarter of respondents (27%) thought that the advertorial was written by a reporter or an editor. We find that labeling — even using a “sponsored content” disclosure — is insufficient to disabuse a significant minority of consumers about the provenance of the advertising material. Our findings are not generalizable, since we targeted the survey to internet users who appeared on marketing lists derived from behavioral tracking. However, our findings are compatible with those of other researchers who suggested that in addition to initial disclosures, elements in the advertorial itself must also signal to the consumer that this may be commercial material.

While the advertorial we tested was a story about the potential of abuse of diet pills, the writing made dramatic claims about the effectiveness of named products for weight loss and included a portrait replicated from a real advertisement appearing in a health magazine. We found that merely using a blue background to frame the endorser’s portrait led many respondents to think her to be a medical expert. Traditionally, the appearance of a lab coat or stethoscope has signaled a medical expert endorsement, something subject to greater regulation. Our findings point to consumers using subtle clues about context to associate an endorser with an expert profession. We conclude by discussing regulatory options for the FTC, including a ban on advertorials, enhanced disclosure requirements, and approaches that put the burden on publishers to show that advertorials are not misleading.

-- We explain why consumers might be misled by advertorials — even when labeled — when advertising material has elements of editorial content.

-- We surveyed nearly 600 consumers online with an advertorial embedded on a blog site .

-- 27% of consumers thought the advertorial was written by a reporter or editor.

-- 60% of consumers thought the spokesperson was a medical expert with a background image of blue products versus 23% with a white background.

-- We present regulatory options for the FTC, including a ban on advertorials, enhanced disclosure requirements, and putting the burden on publishers to show that advertorials are not misleading.

Keywords: advertorial, native advertising, expert endorsement, white coat rule, paid post, ASME, testimonial, diet pills, embedded advertising, self-help, fenfluramine/phentermine, behaviorally targeted email, IAB, Atlantic Monthly Magazine, fake news, news faking, clickbait, disinformation

JEL Classification: M3, M37, G18, I18

Suggested Citation

Hoofnagle, Chris Jay and Meleshinsky, Eduard, Native Advertising and Endorsement: Schema, Source-Based Misleadingness, and Omission of Material Facts (December 15, 2015). Technology Science. 2015121503. December 15, 2015.. Available at SSRN: https://ssrn.com/abstract=2703824

Chris Jay Hoofnagle (Contact Author)

University of California, Berkeley - School of Information ( email )

212 South Hall
Berkeley, CA 94720-4600
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

University of California, Berkeley - School of Law ( email )

344 Boalt Hall
Berkeley, CA 94720-7200
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

Eduard Meleshinsky

Bryan Schwartz Law ( email )

1330 Broadway, Suite 1630
Oakland, CA 94612
United States

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