33 Pages Posted: 2 Aug 2016 Last revised: 18 May 2017
Date Written: August 31, 2016
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: 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