Abstract: Native advertising is a type of online advertising that matches the form and function of the platform on which it appears. The U.S. Federal Trade Commission (FTC) monitors this form of advertising and has established guidelines requiring advertisers to clearly mark their native ads to assure that consumers do not confuse them with content. Our research aims to understand how consumers respond to native ads compared to traditional display ads and different styles of native ad disclosures. We explore the process that drives different consumer responses through a series of randomized experiments in the lab and the field. To examine the role of attention, we use eye-tracking data to show that native ads are more effective than display ads because consumers have a harder time avoiding native ads. In addition, we show that even if consumers do not click on the native ads, they better recognize the advertised brands when more prominent disclosures appear. Our results suggest that complying with the FTC guidelines, advertisers can benefit from generating brand awareness through prominently disclosed native advertising.
Keywords:
- Native advertising
- Public policy
- Eye tracking
- Field experiments
- Digital media
