Going Native: Can Consumers Recognize Native Advertising? Does it Matter?

33 Pages Posted: 2 Aug 2016 Last revised: 18 May 2017

David A. Hyman

Georgetown University

David J. Franklyn

University of San Francisco School of Law

Calla E. Yee

Independent

Mohammad Hossein Rahmati

Sharif University of Technology

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2016

Abstract

Native advertising, which matches the look and feel of unpaid news and editorials, has exploded online. The Federal Trade Commission has long required advertising to be clearly and conspicuously labeled, and it recently reiterated that these requirements apply to native advertising. We explore whether respondents can distinguish native advertising and “regular” ads from unpaid content, using 16 native ads, 5 “regular” ads, and 8 examples of news/editorial content, drawn from multiple sources and platforms. Overall, only 37% of respondents thought that the tested examples of native advertising were paid content, compared to 81% for “regular” advertising, with substantial variation by platform, advertiser, and labeling. Modest labeling changes materially increased the number of respondents that correctly recognized that native ads are paid content – but even these improved results fell well short of those for “regular” advertising. We also explored labeling preferences and self-reported concern about native advertising. Our findings indicate that native advertising involves a significant risk of deception which self-regulation has not addressed.

Keywords: native advertising, FTC, deception, advertorial

JEL Classification: M38, K20, K30

Suggested Citation

Hyman, David A. and Franklyn, David J. and Yee, Calla E. and Rahmati, Mohammad Hossein, Going Native: Can Consumers Recognize Native Advertising? Does it Matter? (August 31, 2016). University of Illinois College of Law Legal Studies Research Paper No. 16-32. Available at SSRN: https://ssrn.com/abstract=2816655

David A. Hyman (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

David J. Franklyn

University of San Francisco School of Law ( email )

2130 Fulton Street
San Francisco, CA 94117
United States
(415) 422-6229 (Phone)
(415) 422-6433 (Fax)

HOME PAGE: http://www.usfca.edu/law/faculty/fulltime/DavidJFranklyn.html

Calla E. Yee

Independent ( email )

No Address Available

Mohammad Hossein Rahmati

Sharif University of Technology ( email )

Graduate School of Business and Economics
Sharif University of Technology
Tehran
Iran
+98-21-6604-9195 (Phone)

HOME PAGE: http://gsme.sharif.edu/~rahmati/

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