Native Advertising: The Black Sheep of the Marketing Family

Driven in part by pressures caused by lower advertising revenue and declining circulation, recent years have seen “native advertising” become part of a new revenue model for print media and become widely used in other media, especially online media (Matteo and Da Zotto 2015). The practice of native advertising has received considerable attention over the past few years, and many forecast its growth going forward, with some even proclaiming it as the “next big trend” (Wu et al. 2016, p. 1492). In the absence of stricter regulation than currently risks, I view this as a very negative thing for the marketing field, as it raises the specter of intentional deception aimed at fooling consumers. As such, native advertising can be viewed as a “black sheep” of the family in the sense of often not conforming to typical ethical boundaries of the field.

In terms of advertising's role in society, on balance, research suggests that adults, and even older children are able to filter out the persuasive intent of advertising. Friestad and Wright's (1994) persuasion knowledge model is, indeed, one of the most important in our field and it is has justifiably been widely applied in a variety of advertising contexts. The basic idea is that consumers consider the source of a message in decoding it and when the sender is an entity selling something, the consumer factors this in while assessing the content of the message. Hence, the consumer's persuasion knowledge prevents them from being easily fooled by advertising. In the face of viewer skepticism and resistance to advertising, persuasion knowledge is an important counter to attempt by companies to get consumers to buy things they don't need (Fransen et al., 2015)

The fundamental problem with native advertising is that, in the absence of a clear disclosure indicating that the message is an ad, the media outlet and advertiser are, in effect, blocking the advertiser's persuasion knowledge. I am pretty certain I am not the only viewer who has tired of seeing a strange story on Yahoo labeled sponsored and titled something like “You won't believe what actress X looks like now” that is really designed to lead the consumer to an ad. Worse yet, magazine and newspaper “stories” that appear in the format of the publication with no discernible distinction. Television programming in the form of an infomercial is little different. In these types of cases there can be little doubt that part of the motivation for the “native” format is to lower the viewer's defenses/ persuasion knowledge.

Of course, the idea is that in a cluttered advertising environment it is important for the advertiser to do something to stand out. And native formats look like media content itself, which is why the consumer is consuming to begin with. However, intentional efforts to lower persuasion knowledge reek of deception and should not be accepted by the marketing community. While there has been considerable discussion of the risk to journalism of blurring the line between content and advertising (Macnamara 2016), those of us in the advertising field should be at least as concerned about it. Consumers in general are intelligent and can appropriately police against puffery and exaggerations in normal advertising settings. So the idea that marketers can attempt to fool the customer by concealing the persuasive intent of the source at least to some extent, is highly problematic and reflects badly on the field. Indeed, it recalls a time before the FTC Act of 1914 in the United States when deception was all too common, and advertising's reputation was worse than tarnished. Practices that are deceptive or tend to deceive give advertising a bad name and can lead consumer to avoid, distrust, or negatively perceive ads (Verlegh, Fransen and Kirmani 2015).

Before discussing possible regulatory responses I should make clear that in discussing native advertising here, I am not referring to product placement or branded content within programming or a story. As defined by Wojdynski and Evans (2016, p.157), native advertising is a term to describe “any paid advertising that takes the specific form and appearance of editorial content of the publisher itself.” This definition could easily be extended to television to describe paid advertising that resembles programming, but does not have other entertainment value. Hence, product placement, which involves inserting brands into a story designed to entertained is something quite different than native advertising in that the viewer is consuming a product (e.g., a movie or television program) designed to entertain in which the placement is part of the story — and does not take “the specific form and appearance of editorial content of the publisher itself.” While some do believe that product placement should be disclosed and it is, in fact, a legal requirement in some countries, the potential damage to consumers being able to process a message is not nearly as large.

As observed by Wojdynski and Evans (2016), the U.S. Federal Trade Commissiion is currently interested In the degree to which labels of visual cues can reduce or eliminate consumers being misled or deceived. It has been observed that disclosures (Hoy and Andrews 2004) and especially “sound disclosures” explicitly aimed at providing consumer relevant factual information (Kozup et al. 2011) can help consumers make informed decisions and avoid being deceived. Clearly, there is the potential for disclosures such as the appearance of a term such as “SPONSORED CONTENT” prominently featured in a native ad in print, online, or on television to preserve the consumer's persuasion knowledge. While there has been only limited research on this topic, in two experiments, Wojdynski and Evans (2016) found that a large majority of consumers could not recognize an online native ad as being sponsored. Additonally, these authors found that disclosures concluded in native advertising were more effective if they appeared in the middle or bottom of the ad and used the specific words “advertising” or “sponsored.” In these cases, the authors found a more negative attitude toward the ad, suggestive of incentive for advertisers focused only on selling to not include such disclosures. It is in the interest of the public at large for such avoidance to be allowable.

Historically, the FTC as well as industry self-regulatory code has recommended labelling or disclosure on native advertising. While at a broad level, this approach is laudable, Wojdynski (2016) has observed that too little is known about how individual readers interpret and respond to labels. In another experimental study, Wojdynski (2016) found that that some disclosure characteristics (proximity, visual prominence, clarity of wording, and logo presence) were more effective than others in increasing recognition of a native ad as an advertisement. However, he also found overall low levels of recognition, and that logo presence can lead to more consumers seeing the log as a stand alone ad. The author also found that when consumers do pick up on persuasive intent of the ad, attitudes toward the sponsor decline. This is, again, indicative of the impact of lowered persuasion knowledge. Another notable finding is that of Lee, Kim, and Ham (2016), who found that in a social media context, consumers who found native advertising to be less intrusive had more positive attitudes toward the ad.

So what should regulators do? In my opinion, the key is requiring disclosures of a format that research shows that the vast majority of consumers recognize a native ad as advertising. As found in a study by van Reijmersdal et al. (2016), prominent disclosures do activate persuasion knowledge in consumers. Clearly, however, just what disclosure is “sound” and reaches the threshold of the “vast majority” of consumers recognizing the persuasive intent of a native ad are topics that are in need of future research. Such research submissions are welcomed by the International Journal of Advertising, and hopefully can help native advertising “the black sheep of marketing” reform itself. Submissions including appropriate measures of persuasion knowledge (see Ham and Nelson 2015) within the context of native advertising studies are especially encouraged.