• by Tobi Elkin , Staff Writer @tobielkin, May 18, 2016

Last week Native Insider discussed an academic study on the impact of native advertising on media outlets and companies. This week, the Insider interviewed the researchers involved with the study to gain more insight into their findings, along with other relevant issues for native.

Researchers on the study included Pennsylvania State University Ph.D. students Mu Wu, Yan Huang, Ruobing Li, Fan Yang, Anli Xiao, Ruoxu Wang and Denise Bortree, director of the Arthur W. Page Center for Integrity in Public Communication and associate professor of communications at Pennsylvania State University. The Insider spoke with Wu and Bortree.

Native Insider: What do you make of the Federal Trade Commission's guidance issued in late December 2015 on native advertising?

Mu Wu: As native advertising is still relatively new, the FTC’s policy is also relatively primitive. For example, adding disclosure statements does not guarantee ad recognition; moreover, they can be run differently, which could significantly influence readers’ recognition. A more comprehensive understanding of native advertising is needed to develop a more specific and systematic policy.

Denise Bortree: The FTC has offered guidelines, not rules, so there is room for interpretation. It appears that the FTC is still trying to get its arms around all the different types of native advertising.

Native Insider: Part of the challenge with "native" is that each organization has a different understanding of what it is. For the purposes of the research, what is your definition of native advertising?

Wu: In our study, we defined native advertising as sponsored content, which features content that is similar and consistent with publishers’ content and is often consumed by readers like non-sponsored content. I agree that there are also other types of native advertising, such as sponsored social media posts or sponsored hyperlinks. We focused on sponsored content because it is widely adopted by many news organizations, including very reputable ones like The New York Times. 

Native Insider: Your research found that when content was identified as native advertising, readers expressed a lower opinion of the media outlet it was published in. However, the reputation of the company being promoted was not affected. Can you elaborate on this finding?

Wu: I think this was one of the most interesting findings in our study. We originally expected that both companies and media outlets would be negatively influenced. However, the media outlet was the only source that was affected. On one hand, this indicates that readers are not surprised by the sponsored content from a company, since similar covert marketing techniques have been utilized before, such as video news releases.

On the other hand, this also indicates that readers do not expect news media to be associated with this type of marketing operation because we perceive news media to be unbiased information sources. Native advertising tends to severely violate this perception and expectation, therefore it causes reputation damage to media outlets.

In addition to thinking about short-term reputation damage for a particular media outlet, native advertising could also lead to distrust toward overall news and journalistic integrity.

Bortree: I think the results expose the reasons why native advertising works in the first place. Readers trust editorial content, and they expect that it will be unbiased. So, when they encounter native advertising that looks like editorial content, they transfer the credibility of the media source to the content. However, advertising content dressed up to look like editorial content violates expectations and readers feel the media source has compromised its integrity. In the long run, native advertising is chipping away at the reputation of the media, causing audiences to be more skeptical of content.

Native Insider: As your research points out, publishers have looked to "native" and "sponsored content" as saving their business because money is pouring in from brand advertisers for this type of content. Plus, in-feed native advertising is the lifeblood of Facebook and others. What do you think the future holds for "native"? Will standards evolve? Some argue that readers are actually more engaged with native than regular editorial content.

Wu: First of all, it is possible that readers might be more engaged with native advertising content before they recognize it; however, once they find out that it's native, as our study suggested, they tend to evaluate the content negatively—for example, they consider it less credible.

Please note, the content of the article that was used in our study was exactly the same across conditions, which means everyone read the same article. But by just knowing that the content might be an advertisement, those readers’ evaluations changed.

This is probably also the case for most sponsored social-media posts. However, if we consider some sponsored posts that are identified as being recommended by certain friends, for example, your friend John liked ‘X’ company, readers might have a different perception. Because in this case, readers' friends become the endorsers of the content, which could change how they engage and evaluate the content. 

However, overall, as readers gain more knowledge about this type of marketing technique, I think that the effectiveness of native advertising will be significantly reduced. 

Native Insider: What was the one thing that most surprised you in the research findings? 

Wu: In our study, we did not directly tell our participants that they were reading a native advertisement. Instead, we only subtly mentioned what a native advertisement is in an irrelevant task.

What I mean is, participants were primed about native advertising by having them accomplish a task that was separate from the main study. So, they were introduced to the concept of native advertising by accomplishing the task before moving on to the main study's tasks.

However, even with such a short and unconscious process, readers were able to recognize the nature of the content and its persuasive intent. This shows that media consumers are, in fact, very vigilant and rational, which should really make news outlets and media companies carefully consider using such covert marketing techniques. 

Bortree: I suspected that more reputable corporations would experience a drop in reputation when readers realized they were reading the sponsor’s advertisement. But, this didn’t happen. Only the media outlets experienced a reputation hit. I can only assume that readers assume companies would try creative ways to advertise, but they’re not pleased that media outlets would publish it.