Native Advertising in Online News: Tradeoffs between Clicks and Brand Recognition

61 Pages Posted: 6 Jul 2017 Last revised: 17 Sep 2018

Anocha Aribarg

University of Michigan at Ann Arbor - Stephen M. Ross School of Business

Eric M. Schwartz

University of Michigan, Stephen M. Ross School of Business

Date Written: September 4, 2018

Abstract

Native advertising is a type of online advertising matching the form and function of the platform on which it appears. The U.S. Federal Trade Commission (FTC) monitors native advertising and has established guidelines requiring advertisers to clearly mark their native ads to assure consumers do not confuse them with content. This research aims to understand how consumers respond to native ads versus display ads and different styles of native ad disclosures. The paper explores two mechanisms, confusion and attention, which potentially drive different consumer responses, through a series of randomized experiments online, in the lab, and in the field, using clickstream behavioral data, eye movement data, and survey responses. The results show that traditional display ads may be at a disadvantage when placed at the margin of a website with other materials. However, controlling for placement on a page, display ads garner more visual attention and brand recognition than native ads. Nonetheless, native ads generate higher click-through rates, as their resemblance to surrounding content confuses consumers. The findings suggest when prominently disclosing native ads, advertisers could benefit from greater brand awareness without sacrificing much in terms of click-through rates. Following the FTC guidelines closely may, therefore, be the optimal strategy for native advertising.

Keywords: native advertising, public policy, eye tracking, field experiments, digital media, advertising disclosure, sponsored content

Suggested Citation

Aribarg, Anocha and Schwartz, Eric M., Native Advertising in Online News: Tradeoffs between Clicks and Brand Recognition (September 4, 2018). Available at SSRN: https://ssrn.com/abstract=2995467 or http://dx.doi.org/10.2139/ssrn.2995467

Anocha Aribarg

University of Michigan at Ann Arbor - Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Eric M. Schwartz (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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