Native Marketing

Consumer Response to Native Advertising: Acceptance, Attitudes and Brand Effects INTRODUCTION Attracting consumer attention in today’s cluttered online media environment is constantly becoming more difficult. Consumers consciously avoid advertising, click-through-rates of banner advertisements and other traditional online advertising formats are decreasing to minimal values, and ad blockers are downloaded by more consumers than ever. As a result, advertisers are forced to find more creative ways to reach potential customers and to build their brand. A popular trend in recent years has been for brands to start producing content such as articles and blog posts to catch the attention of people who already are in the mood for searching information. Such strategy of building advertising messages on content that is valuable, relevant and useful for the customer has even been presented as the next generation of branding as it creates opportunities for building and reinforcing brand awareness, transforming the company’s brand positioning and eventually even developing the status of a trusted expert brand. In a survey conducted among a set of Nordic companies in the summer of 2017, already a total of 58% of the companies participated expressed an intention to dedicate a larger share of their marketing budget to this so-called content marketing by the next summer. NATIVE ADVERTISING AND CONSUMER RESPONSE The aim of this chapter is to provide an overview to native advertising by first discussing its definition and its role in the online media environment and marketing strategy, and then discussing its potential implications to consumer response. The latter discussion will be based on existing theories about consumer response to advertisements as well as research on native advertising, content marketing and online advertising in general. The chapter is concluded with a summary of the key findings from the literature and construction of hypotheses and a conceptual model to be tested. What is native advertising?  In a growing extent, advertising manifests itself in hybrid forms, where multiple elements from a promotion mix are integrated with each other. Native advertising is a hybrid form of online advertising that integrates elements of paid advertising, editorials, and content marketing in a brand’s own media. Consequently, in order to understand what native advertising is and what it role is in the online media environment, it is necessary to begin by shortly discussing the concept of content marketing.                              The strategy of reaching and affecting consumers directly on their online purchase path by publishing content that matches their information needs is the essence of what is called content marketing or content-based marketing programs. Most often consumers are exposed to content marketing from the brands when they seek out specific information online and their search results lead them to relevant content on the brand’s website or social media sites. Accordingly, content marketing is considered to be an inbound marketing approach, which means that rather than interrupting consumers with the marketing message in inapt situations, as is the case with traditional advertising approaches, the marketing message is delivered to consumers “on demand” when they actively look for it argues that this implies a paradigm shift from brand-centric approach to customer-centric approach, meaning that the marketing messages should be created with the focus on delivering value to consumers, rather than attempting to persuade consumers through aggressive sales messages. Native advertising in turn is essentially a tactic for driving more traffic towards the content marketing by advertising or publishing the brand-created content as an integrated part of editorial media. In other words, it works like an advertisement for an advertisement. As the term native suggests, the advertising format is based on the idea of making ad content so seamlessly integrated into a media context that it feels like the content originates from the platform. So, while pure content marketing is based on reducing intrusiveness by being based on invitation, native advertising attempts to counter intrusiveness by blending into the media stream so seamlessly that the exposure to or engagement with the advertisements does not disturb the user - or reading - experience. In other words, the aim of native advertising is to make the commercial content perceived as a non-disruptive part of the media experience. This is achieved by transforming traditional advertising messages in into a form that mimics the formal style and visual looks of editorial content. This means that essentially native advertising is a hybrid form of advertising, content marketing and editorial content, which is illustrated in Figure. Figure: The interplay of brand, media and consumer and different forms of content in the online media environment. Consumer response to native advertising and native advertisements  Studying audience reactions to advertisements can reveal the effectiveness of the ads in persuading the audiences to act according to the expectations of the marketer. Hence, the purpose of this subchapter is to map out the different constructs that relate to how consumers evaluate native advertisements and how they form reactions towards them. These constructs are derived from what previous research has found on native advertising, content marketing, or related fields, and the processes that may affect evaluations and reactions to these kind of ad formats. The focus will be on ad characteristics that make native advertising unique and that are likely to affect consumers’ evaluations of the ad on a cognitive and behavioural level. The subchapter is designated to follow the research approach of the study, starting from ad-level evaluations and moving towards brand-level effects. General acceptance of native advertising  Researchers have suggested that consumers’ general evaluations of a certain advertising format affect their attitudes towards individual advertisements in that format. In native advertising, understanding consumers’ general acceptance of the ad format is particularly essential, since critics have suggested that consumer view to native advertising may not be as positive as that of advertisers. The problem, according to the critics, is that the advertiser view is likely to be based on the perceived benefits that the ad type brings for tackling the challenges that advertisers face instead of the challenges that consumers face. This means for example that the subtle and novel nature of native advertising is more likely to help advertisers to counter consumers’ habitual ad avoidance than to improve consumers’ media experience per se. That is because native advertising does not actually remove the ad clutter but just changes its form – and research suggests that consumers are most satisfied with their overall website experience when advertising content is not present at all because then they do not have to expend cognitive efforts to evaluate its motivations.  Acceptance of an ad format or an ad message has been proposed to be related to the perceived appropriateness of the persuasion tactics used by marketers and the consequent choice or intent not to reject them. Lee. They have identified that if consumers perceive that the persuasion tactic used by the advertiser is nonintrusive instead of manipulative, it is more likely that they 18  accept the message. The same authors found that native advertising is indeed perceived rather more a nonintrusive than a manipulative advertising technique. In turn have found that in general, consumers are less sceptical towards native advertisements compared to banner advertisements, and also find it less irritating. These findings imply that the acceptance of native advertising may generally be at a slightly higher level than other online advertising formats, at least when comparing to banner advertisements. Attitudes towards native advertisements  Researchers have for a long time acknowledged the cognitive processes that consumers use to evaluate advertisements and develop attitudes towards them. This is because these processes and attitudes, among others, form the base for consumer evaluations of the advertiser brand. Accordingly, attitudes towards advertisements are included as a key variable in this study.  Accordingly, attitudes are often based on or derived from cognitive consumer responses that are evaluative responses consisting of the beliefs people direct towards specific attitude objects like advertising. These evaluations range from extremely positive to extremely negative, or highly favourable to highly non-favourable. In turn defines attitudes as “learned tendencies to respond towards an entity (“the attitude object”) in a consistently favourable or unfavourable way”. In the sections to come, some precursors for attitudes towards native advertising will be discussed. Brand effects of native advertising  An extensive stream of literature over several years has shown that attitude towards ad strongly and both indirectly and directly affects following evaluations of the brand. Hence, the purpose of this section is to review consumer responses to native advertising and advertisements from a brand perspective. Here, brand effects refer to the consumer responses that have a direct effect on the evaluations and behavioural intentions at the brand level. Specifically, the factors eventually affecting the ad-evoked brand awareness, brand attitudes, brand trust and brand interest are discussed.  Brand prominence, brand awareness and customer-centricity  From the practitioner perspective, increase in brand awareness is one of the most important goals of native advertising. Brand awareness refers to the level that the brand is known by the consumer and can thus be subject of further consideration. Hence, in advertising context it demonstrates the level of brand-related learning that happens in the consumers’ minds as a result of seeing the ads.  According to, native advertising offers “an ideal venue for brand opportunities". Namely, the authors suggest that even without any engagement other than exposure to the native ad unit, native ads serve large scale brand impressions that not only contribute to awareness at the top of the so-called sales funnel (the imaginative funnel that directs users from awareness towards purchase), but also create opportunities toward mid-funnel interest. Furthermore, if the consumer opens the ad and reads the content behind it, the ad is likely to create even deeper level of engagement with the brand through the associations created by the images and narratives in the content. Consequently, it could be argued that native advertising creates opportunities for brand awareness and engagement on two levels: the level of brand impression from the native advertisement and the level of brand associations from reading the associated native article. However, the brand effects of native advertising engagement are likely to be stronger when the consumer has not only viewed the native ad but also clicked the ad to read its associated article.  Brand attitudes and brand trust  Researchers suggest that the success of persuasive communications depends on the level to which the communications can affect consumer beliefs about the brand, i.e. their strongly held associations about attributes or outcomes related to it. However, considering that other content-based marketing such as sponsored content has been found to induce brand-focused processing rather than product-related processing, brand attitudes in this context refer more to beliefs about the characteristics or qualities of the brand rather than beliefs about some specific attributes in the products or services that the brand provides.  Brand interest  Brand interest has been conceptualised as a measurement of the non-evaluative outcomes of ad exposure that indicate a behavioural orientation, or a "curiosity" or "motivational push" type of response, that leads to elevation of the brand in the consumer's consideration set. The measurement of brand interest contains an expectation that advertising should do more than just reinforce top-of-mind brand awareness. The aim of measuring brand interest is thus to identify the consumer responses that indicate interest, action tendencies and openness towards the brand.   Brand interest is not expected to affect purchase intention, but rather contact intention, which could refer e.g. intention to try the brand or search more information about it in order to renew (or establish) contact with it. Because native advertising is neither expected nor intended to directly lead to purchase intention but rather to intermediate effects, brand interest can be considered a more suitable construct than purchase intention in measuring the behaviourally oriented consumer responses to native advertising. In other words, I argue that positive evaluation of native advertising is more likely to induce intention to look for more information about the brand or intention to try the brand than direct intention to purchase the brand. METHODOLOGY  This chapter presents the methodological choices and procedures undertaken to conduct the empirical part of this study. The chapter begins with introduction to the general research design of the study, continued by discussion of the sampling strategy and questionnaire design as well description of the stimuli used in the study. These parts are aimed at giving the reader a good understanding of the strategy for conducting the research. In the second and third part of the chapter, the data collection procedures and the chosen methods for data analysis are discussed in order to report the actual methodological procedures taken for collecting the data. The chapter will be concluded with assessment the impact of the chosen research strategy to the quality of data in terms of validity and reliability.   Research design  The purpose of this study is to understand consumer response to native advertising by studying consumers’ general acceptance and attitudes towards it and the effect that it may have on consumers’ brand awareness, brand trust, brand attitudes and interest towards the advertiser brand (i.e. the brand effect). To achieve this aim, the empirical part of the study will be cross-sectional and based on a quantitative survey strategy study. The choice of quantitative approach is supported by the fact that answering the chosen research questions requires verification of theoretical relationships among variables and the verification of the conceptual model requires testing of whether the assumed correlational structures in the model are statistically relevant. Furthermore, the survey strategy is the most common method for this type of descriptive-explanatory research of attitudes, opinions and their relationships, and it also fits the nature of a cross-sectional study well. RESULTS In this chapter, the results of the conducted data analyses will be presented. The chapter will begin by presentation of the descriptive statistics to explain the characteristics of the obtained data, followed by presentation of the results of the factor analysis to test the reliability of the scale items and to create summated scales. Results from correlational analyses are also presented to show the intercorrelations between the obtained measures. The chapter will be concluded by presenting the results of the regression analyses testing the predictive and explanatory value of the presented conceptual model, after which there is a short summary of the results on hypotheses testing. The data obtained in form of open-ended answers will also be presented shortly. Descriptive statistics  The survey was answered by 103 respondents, out of which 101 were carried over to the final analyses. In the upcoming sections, the characteristics of the obtained data will be explained both in terms of respondent profile and the data quality/basic assumptions Factor analysis  Factor analyses were conducted as principal component analysis (PCA) to reduce and summarise the individual scale items into more easily manageable composite measures and check the reliability of the scale items used. Suitability of data was checked with measure of sampling adequacy and Bartlett’s test of sphericity. To be considered suitable for the analysis, KMO should have a minimum value of 0,6 and Bartlett’s test should be significant. Moreover, the correlation matrix should have at least some correlations over r=0,3. The obtained correlation matrices included many coefficients over 0,3 and KMO values in each analysis were over 0,8 (0,877 in factor analysis on independent variables, 0,887 in factor analysis on native ad evaluations and brand awareness, 0,932 in factor analysis on brand trust, 0,839 in factor analysis on brand attitudes and 0,814 in factor analysis on brand interest). Bartlett’s tests were all significant at p=0,000. This indicated that the data was suitable for further analysis of the results. The factor analyses were done with Kaisers’s criterion and Oblivion rotation method, because these are some of the most common methods to begin with to determine the number of factors in the final solution. In addition, the use of oblique techniques (Oblivion rotation method) makes sense in the beginning, as it reveals the correlations between the factors. The chapter will also include discussion of why two cases were removed from the sample. Because the conceptual model of this study consists of multiple stages with different dependence relations, the factor analyses were conducted in a stepwise manner. The analyses were begun with analysis of the 45 items measuring the ten independent native ad characteristic variables on left hand side of the conceptual model. The Oblivion method rotation with Kaiser’s criterion of eigenvalues over 1 suggested first a 10-factor solution explaining 79,45% of the variance, with most variance explained (42,1%) by the first component and 8,4%- 2,35% by the rest. DISCUSSION The purpose of this fifth and final chapter is to discuss the key findings of the study and their relation to previous literature, research questions and the study aim. The chapter will also include a discussion of the theoretical and managerial implications of these findings. In the end, the limitations of the study as well as some suggestions for further research are presented. Key findings on consumer response to native advertising The aim of this study was to examine consumer responses to native advertising by studying consumers’ general acceptance and attitudes towards it and the effect that it may have on the brand. More specifically, this study sought to find what affects consumers’ acceptance of and attitude towards native advertising and what the factors are that influence brand awareness evoked by native advertising. Moreover, this study sought to understand how consumers’ acceptance and attitude towards native advertising influences their trust, attitudes and interest towards the advertiser brand.  In the upcoming subchapters, the findings of this study are discussed with relation to these goals and other emergent key findings. First, the findings related to general consumer response to native advertising are discussed, followed by discussion of factors affecting favourability of native ad evaluations. After that the discussion shifts to the found brand effects of native advertising. This part includes a discussion of findings on brand awareness, and a collective discussion of the found relations between native ad evaluations, brand trust, brand attitudes and brand interest.  Consumers’ general evaluations of native advertising  Regarding native ad acceptance, the results of this study revealed that consumers do not seem to have a radical opinion on whether to accept or reject marketing communications in form of native advertising. In effect, it was found that consumers’ acceptance of native advertising, measured as the level of perceived appropriateness of the persuasion tactic used, is at a neutral, or at a very slightly more accepting than rejecting level with M=4,10 on a scale from 1 to 7. Brand effects of native advertising  This study sought to find the factors affecting ad-evoked brand awareness in native advertising context and found that the relative prominence of the brand in the ad is a key precedent for this matter as brand prominence was found to positively affect ad-evoked brand awareness. Although this sort of a finding might seem self-evident in many other advertising research contexts, in this very context, the finding underlines the special nature of native advertising and the challenges it brings about. The problem is that clear prominence of the brand is not something that can be taken for granted in native advertising context considering the subtle nature of the ad format.  Conclusions  Generally, this study has generated insights about consumer attitude formation processes in native advertising context, especially regarding consumers’ cognitive evaluation process of the ad type. Additionally, the study revealed the aspects that could and should be emphasised or strived for when producing content marketing for content recommendation -style native advertising. From a broader perspective, this study offers insights into how to streamline the processes from content marketing production to brand interest generation by focusing on the key aspect of building trust. In conclusion, this study serves as a base for broader understanding of why native advertising is or is not effective. Yet more research, especially in form of qualitative inquiry, is needed to understand the deeper meanings that consumers create when evaluating and responding to informational content recommendation -style native advertising.  Best Regards, Mian Mukarram