Native Advertising in Online News: Tradeoffs between Clicks and Brand Recognition
61 Pages Posted: 6 Jul 2017 Last revised: 17 Sep 2018
Date Written: September 4, 2018
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: Suggested Citation