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Native advertising and sponsored content: Research on audience, ethics, effectiveness

Tags: , , | Last updated: August 19, 2015

Last updated: August 19, 2015

Google-NYTimes native adGoogle-NYTimes native adGoogle-NYTimes native ad
Google-NYTimes native ad

Consumers’ attention is the currency that sellers have been haggling over since human beings began trading products on markets. Moving from the physical to the digital marketplace has only intensified the competition for eyeballs and precious seconds. In 1997 Michael Goldhaber predicted the rise of the “attention economy,” where the scarce resource would become the driving force behind activity on the Internet, and the “attention web” remains a persistent concern.

As this vision becomes reality and people’s attention is ever more valuable, brands and advertisers have seen their currency turn more and more slippery. Consumers overwhelmed with texts, images, audio and video podcasts on their smartphones and tablets are increasingly turning a blind eye on advertising. The 2015 Digital News Report prepared by the Reuters Institute at the University of Oxford found that “around three in ten respondents in both the USA (29%) and UK (31%) say they find traditional banner advertising distracting and will actively avoid sites where they interfere with the content too much.” Now, the increasing use of ad blocking technology on browsers makes commercial displays of any kind more difficult; Apple’s new version of Safari will reportedly enable ad blocking on iPhones and iPads.

Native advertising is the latest push in corporations’ quest for consumers’ attention. And its move into the news-media arena has caused some controversy. Often called sponsored, branded or custom content, native advertising is a form of converged media that is intentionally designed to blur the boundaries between a journalism organization’s editorial and advertising operations. The content is sometimes directly created by brands and marketers themselves; however, writers and editors working in news departments are sometimes involved in crafting it. Native advertising attempts to blend in with the editorial work of the host medium in terms of style and layout.

Proponents of native advertising hail it as a win-win-win situation for advertisers, publishers and consumers. For advertisers, native advertising is attractive because it allows them to take advantage of the credibility and authority of journalistic outlets. By making ads appear to be editorial content, advertisers are able to catch consumers off guard. Publishers, on the other hand, can hope to gain a constant income stream in times of shrinking advertising revenues and subscription numbers. The 2014 Pew State of the Media Report quotes the research firm BIA/Kelseay, which estimates that native advertising will account for $4.6 billion in revenue by 2017. By comparison, “banner advertising — typically seen as static graphics accompanying text — is the biggest single category within the display-ad market. There, total revenue across all content, including news, grew 12% to $9.61 billion in 2013.” Proponents argue that consumers also benefit from a shift toward native advertising because the sponsored content they consume will be better made and more tailored to their tastes.

Critics of native advertising, including comedian John Oliver, have contended that it infringes on the barrier that should separate the editorial and business sides — a deliberate division meant to protect and maintain journalistic independence. Critics also assert that a lack of clear regulations regarding the labeling of native advertising (the Federal Trade Commission has looked into the issue) as well as the attempt to make advertising blend in perfectly with editorial content is threatening the media’s credibility.

News outlets such as BuzzFeed, Gawker, Hearst and the Washington Post each have built teams ranging from five people to 40 that produce their native-ad content, according to the American Press Institute. Publishers’ experiences have been mixed, however. Highly respected outlets such as the New York Times and Wired have run native advertising campaigns for the streaming service Netflix, which were deemed successful by some observers. There have been scandals, however, such as The Atlantic publishing native advertising by the Church of Scientology (which the publisher later apologized for and retracted).

The widespread adoption of native advertising seems all but certain at this point. The following reports and studies attempt to understand the ethical and legal consequences of the trend, and its effectiveness and challenges for publishers and advertisers.

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“Understanding the Rise of Sponsored Content”
Sonderman, Jeff; Tran, Millie. American Press Institute report, November 2013.

Excerpt: “Looking ahead, we expect to see more news publishers attempt versions of sponsored content. Innovative leaders run at what is growing, and sponsored content is certainly a growing and promising new revenue stream. In an otherwise challenging business environment for news media, experimenting with a new thing that’s working is hard to resist. This is not simple, however. The “native” nature of native advertising requires each publisher to think through a unique strategy appropriate to their audience and their values. Publishers also have to invest money in hiring new staff, or vendors that specialize in sponsored content production. The best advice for publishers is to proceed thoughtfully — with careful consideration for your credibility and with a close ear to your advertisers’ needs and your audience’s feedback. This means setting high standards and being willing to say ‘no’ in some cases. And it means constantly re-evaluating what’s working and what is not.”

 

“Advertising, Big Data and the Clearance of the Public Realm: Marketers’ New Approaches to the Content Subsidy”
Couldry, Nick; Turow. Joseph, International Journal of Communication, July 2014.

Abstract: “This article addresses implications for democracy of two interconnected developments involving big data and the media. One is the targeting of consumers for advertising by marketers and the new data — capture industry that supports them. The other involves the transformation of advertisers’ approach to subsidizing media content production. We describe these developments and consider their consequences for democratic life, drawing on classical and recent democratic theory…. We conclude that big data’s embedding in personalized marketing and content production threatens the ecology of connections that link citizens and groups via information, argumentation, empathy, and celebration as members of a shared social and civic space. Unless challenged, these developments risk eliminating the connective media necessary for an effective democracy.”

 

“Effects of Online Advertising Format and Persuasion Knowledge on Audience Reactions”
Tutaj, Karolina; van Reijmersdal, Eva A. Journal of Marketing Communications, January 2012. doi: 10.1080/13527266.2011.620765.

Abstract: “In an experiment (N = 99), effects of subtle and prominent online advertising formats, respectively sponsored content and banner ads, on audience reactions toward the advertisement are tested. In addition, the role of several persuasion knowledge elements such as understanding of persuasive intent and ad skepticism in processing online advertising formats is investigated. Results show that participants find the sponsored content more informative, more amusing, and less irritating than the banner ad. With respect to persuasion knowledge, recognition of the advertising format, understanding of persuasive intent, and ad skepticism are higher for banner ads than for sponsored content. Furthermore, ad skepticism seems to be strongly related to perceived advertising value. These new findings show that persuasion knowledge plays a role in the appreciation of subtle and prominent online advertising formats.”

 

“When News Sites Go Native: Redefining the Advertising-Editorial Divide in Response to Native Advertising”
Carlson, Matt. Journalism, August 2014. doi: 10.1177/1464884914545441.

Abstract: “Professional journalism’s normative commitment to autonomy has long dictated the separation of editorial functions from advertising. However, the emergent practice of online native advertising complicates this division, resulting in conflicting visions of how journalistic authority should be established for digital news. This study examines reactions to a controversial Church of Scientology native advertisement on The Atlantic web site to assess how competing processes of norm-making and boundary work shape normative understandings of online journalism. Emergent understandings of content comprising both editorial and advertising components require new models for critical inquiry sufficiently sensitive to the online news environment.”

 

“Audience Response to Brand Journalism: The Effect of Frame, Source, and Involvement”
Cole, James T.; Greer, Jennifer D., Journalism and Mass Communication Quarterly, December 2013. doi: 10.1177/1077699013503160.

Abstract: “This study examined reactions to brand journalism in light of frame, source, and product involvement. Participants in an experimental study viewed a custom magazine with either a commercial (branded) or editorial (nonbranded) frame and read a story quoting either a peer or a corporate source. Readers rated the nonbranded magazine higher in credibility, but source cues had no direct effects on credibility ratings. Source did matter when combined with consumer product involvement. Highly involved consumers had stronger brand attitudes and purchase intent after reading advice from a peer source; low-involved consumers responded more favorably to a corporate source.”

 

“Effects of Sponsorship Disclosure Timing on the Processing of Sponsored Content: A Study on the Effectiveness of European Disclosure Regulations”
Boerman, Sophie C.; van Reijmersdal, Eva A.; Neijens, Peter C. Psychology and Marketing, March 2014. doi:10.1002/mar.20688.

Abstract: “This study investigates whether the timing of sponsorship disclosure affects viewers’ processing of sponsored content, and whether a disclosure influences the persuasive effect of the sponsored content. A model is proposed in which sponsorship disclosure enhances the recognition of sponsored television content as advertising, which leads to critical processing of the sponsored content. Ultimately, this negatively affects the attitude toward the brand in the sponsored content. This model was supported, but only when the disclosure was displayed prior to or concurrent with the sponsored content. These effects were not found for a sponsorship disclosure shown at the end of the program after the sponsored content. Theoretically, the findings emphasize the importance of disclosure timing. A disclosure displayed prior to or concurrent with the sponsored content, primes the sponsored content and provides sufficient processing time, so viewers recognize the content as advertising and can process it critically. In addition, the findings show that persuasion knowledge and critical processing are important underlying mechanisms for the effect of sponsorship disclosure on brand attitude. Regarding the practical implications for legislators and advertisers, this research demonstrates that sponsorship disclosure can make viewers aware of the sponsored content in television programs. Furthermore, this changes the processing of sponsored content and can also ultimately lead to resistance against persuasion.”

 

“Creative Strategies in Social Media Marketing: An Exploratory Study of Branded Social Content and Consumer Engagement”
Ashley, Christy; Tuten, Tracy. Psychology & Marketing, December 2014, doi: 10.1002/mar.20761.

Abstract: “This study employed a content analysis of the creative strategies present in the social media content shared by a sample of top brands. The results reveal which social media channels are being used, which creative strategies/appeals are being used, and how these channels and strategies relate to consumer engagement in branded social media. Past research has suggested that brands should focus on maintaining a social presence across social channels with content that is fresh and frequent and includes incentives for consumer participation…. This study confirmed the importance of frequent updates and incentives for participation. In addition, several creative strategies were associated with customer engagement, specifically experiential, image, and exclusivity messages. Despite the value of these creative approaches, most branded social content can be categorized as functional.”

 

“Mixing Advertising and Editorial Content in Radio Programmes”
van Reijmersdal, Eva A., International Journal of Advertising, Volume 3 2011, doi:10.2501/IJA-30-3-425-446.

Abstract: “Although the literature on brand placement is rapidly evolving, no studies thus far have focused on radio brand placement or on the effects of the combination of brand placement and commercials. Therefore, the present experiment (N = 153) focused on the effects of radio brand placement on liking, credibility and brand recall. In addition, the effects of the combination of brand placement and a commercial were studied. As predicted based on source credibility and intentional exposure theory, the results showed that brand placement is more liked and perceived as more credible than commercials, and that exposure to brand placement has a stronger effect on brand recall. A combination of brand placement and a commercial evokes higher brand recall than exposure to a commercial alone. However, there were no synergy effects for the combination of brand placement and a commercial. Underlying mechanisms were tested, showing the importance of format credibility in brand placement effects.”

 

“Persuasion and the Online Consumers: Investigating Copywriting Strategies in Native Advertisements”
Zulaikha, Hani Zulkifly and Firdaus, Norsham, International Journal of Social Science and Humanity, November 2014, Vol. 4, No. 6. doi: 10.7763/ijssh.2014.v4.393.

Abstract: “This study aims at analyzing the copywriting strategies of slimming product advertisements in determining consumers’ information seeking action. The study was conducted qualitatively via a focus group. Women who actively seek for slimming products in Facebook were selected through the purposive sampling technique. The findings indicated that most of the informants were attracted to read the body copy of the advertisements because of the unique headlines as well as the use of striking, contrasting colors for fonts and the background. Testimonials, the word ‘repeat order’ and language usage, on the other hand, were elements that enhanced the informants’ interest towards the native advertisements. Most importantly, the desire to own the advertised products came after the informants saw the believable comparative pictures and weight reduced text which then stimulates them to click on the advertisements’ Facebook pages to look for more details about the products. Nevertheless, some of the informants ignored some of the advertisements shown to them because they doubted the product’s unique selling proposition (USP). Provocation statements in the advertisements, on the other hand were perceived as unfavorable among the informants, thus led them not to click on its Facebook page.”

 

Keywords: research roundup, technology, advertising, consumer affairs


    Writer: | August 19, 2015

    2 comments

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    Lana Sep 1, 2015 13:25

    If you’d like to cite a new study on native ad effectiveness, please send me your email and I’ll send it to you for inclusion or linking.

    Regards,
    Lana

    lana@blastpr.com
    512.970.8310

    Denise-Marie Ordway Sep 3, 2015 8:25

    Hi there, Lana. And thanks for the suggestion. Please send information about new studies to Denise-Marie_Ordway@hks.harvard.edu.

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