Going Native : Investigating the Drivers of Native Advertising Effectiveness

As the use of the Internet has evolved over the past few decades, digital advertising has become an increasingly important part of how firms reach their consumers. Since 1996, digital advertising spending has increased from $30 million to over $35 billion in 2019 (PwC & IAB, 2020). While digital advertising – as a whole – has become an omnipresent source of advertising, there have been recent shifts in the different types of digital ads that firms utilize. Perhaps most notable is the rise of native advertising – which is a new form of digital display advertising that has been popularized by major social networking sites such as Facebook, Twitter, and Snapchat. As a disguised form of advertising, much of the research on native advertising has centered around the nature of advertising disclosures. However, as publishers are increasingly adopting stricter disclosure standards, it is important to also explore how advertisers can effectively utilize native advertising. Thus, the goal of my dissertation is to examine how firms can better utilize this new form of digital advertising to make their advertising campaigns more effective.For the first essay of my dissertation, I explore how native advertising effectiveness is influenced by the interplay between advertising content and the context in which it is presented. In the first study, I leverage a unique dataset from one of the largest programmatic buy-side agencies in the United States to examine how native ad placement (in-feed versus in-ad) interacts with different ad appeals (promotion-related versus solution-related) to influence click-through rates. Then for study two, I conduct a field experiment to explore how native ad placements affect consumers post-click behaviors. I find that while more disguised placements (in-feed) may produce higher click-through rates, consumers that click on these more disguised ads will exhibit diminished post-click performance. However, I assess if these negative behaviors can be attenuated by developing congruent landing pages. As the literature has largely focused on the negative aspects of native advertising (Saenger & Song, 2019), this research provides timely and unique insight into how managers can better develop their native advertising campaigns. The second essay of my dissertation focuses on how different sources of congruity affect native advertising effectiveness. While the concept of congruity has a long history in advertising research, native advertising is a particularly interesting context to study congruity. Because native ads are already designed to look congruent with the publisher’s content, it is important to explore how other forms of congruity affect advertising effectiveness. Using data from an iconic retailer’s native advertising campaigns, I test how these different sources of congruity affect objective measures of native advertising effectiveness. More specifically, I measure congruity between the publishing domain and the brand (i.e., contextual congruity), as well as congruity between the audience and the brand (i.e., targeting variables such as gender and interest category). Consistent with the banner advertising literature, the results suggest that incongruity can be beneficial for ads delivered in traditional advertising space. However, I find that for fully embedded native ads, presenting ads alongside similar editorial content improves click-through rates. Furthermore, I find that targeting can enhance the effectiveness of contextually congruent advertisements not only from a click-based perspective but enhances post-click engagement as well.