Native Advertising Lacks Transparency Say Industry Insiders in New Study

A new survey on the ethical implications of native advertising raises concerns. Erin Schauster, an assistant professor of advertising at CMCI, explains.
Native advertising lacks transparency

Skærmbillede 2016-12-07 16.18.33By Erin Schauster 
Assistant Professor, University of Colorado Boulder 
Colorado, US

A new survey suggest that native advertising lacks transparency, but the threat to the credibility of journalism is far from new, writes Erin Schauster. 

My first exposure to the separation of church and state in journalism occurred in college when I landed my first advertising job as a sales representative at the Daily Egyptian, an independent publication funded primarily by advertising revenue and secondarily by subscriptions.

As I was guided on a tour of the facility by the advertising manager, and we made our way into the newsroom, the tension became palpable as my guide rushed me in one and out another door with barely enough time to explain “and this is the news department.”

With two years of experience at the Daily Egyptian, I have no shortage of understanding of the division. We, the advertising department, existed to fund the paper and they, the newsroom, existed to serve the public discourse. A literal wall stood between us. A wall meant to “maintain vigilance over some of the very advertisers whose expenditures keep news organizations viable” as mentioned by Kaye and Quinn in their book, Funding journalism in the digital age: Business models, strategies, issues and trends.

Related: Guidelines on native advertising: Transparency is the key

The threat to the wall separating Church and State is not new

Yet it was a wall that could be comprised. Perhaps the more memorable experience was when a fight among college students broke out at a popular bar and restaurant in town. The paper covered the event and intended to publish the story, until concerns from the advertising department arose because the event occurred at a client’s venue, a client the advertising department had been servicing for years, which meant publishing the story could compromise substantial advertising revenue.

Whether the story ran, the point is that the wall was threatened from a traditional perspective. The threat is not new. And the threat is possibly even more prevalent today in response to financial challenges and emerging practices.

Native advertising is just one example of how the wall might be crumbling

Native advertising is just one example of how the wall might be crumbling and the social responsibility of the press compromised. Yet while new practices emerge, authors have suggested that journalist’s duty as a socially responsible existentialist must remain constant, serving as a trustworthy source of information supporting the public interest (Singer, 2006). Social responsibility theory outlines several tenets underlying journalists’ duties, such as responsibility, autonomy and service to society, according to a study by Anderson (1977), and Deuze (2005) suggested that a socially responsible press leads to credibility. However, amid the abundance of native advertising today, the potential for deception is heightened, threatening journalism’s credibility.

Native advertising: a major source of income

Native advertising is a major source of income for media owners as well as a source of information and social norms for readers, a survey by Griswold and Moore found (1989), therefore appearing under the guise of a win-win. The normative concern for the practice is rooted in its efficacy, because “an advertising message is worth more if it appears in an environment of credibility and respect,” suggestions for restoring journalism by Meyer, Couldry and Turow (2014) suggested that native advertising’s success is predicated on its ability to simulate journalistic content.

If the wall is already delicate, what happens when the emergence of new media and new media practices, influenced by financial burdens, begins to deteriorate the division? What are the ethical implications of the confluence of these practices? Native advertising presents an interesting case for exploring these questions.

In response to the ethical implications of native advertising, colleagues at University of Colorado Boulder and Baylor University and I examined the perspectives of journalists, advertising and public relations practitioners relative to social responsibility of native advertising, which was recently published in a special issue of American Behavioral Scientist.

Native advertising: a win-win that raises ethical concerns

56 one-on-one interviews were conducted to probe the ethical nature of native advertising with questions such as “How would you describe the ethical nature of native advertising?” and “Do you think consumers understand the differences between these new forms of advertising such as native advertising and news?”

Findings suggested agreement among journalists, advertising and public relations executives that native advertising raises ethical concerns. A majority of th participants suggested that native advertising lacks transparency. Journalists and strategic communication executives alike agreed; readers are easily deceived by native advertising, unaware that native advertising is paid, persuasive content and is not the editorial content it’s disguised to mimic.

Related: In labelling visual cues – not specific words – that matter most

Yet, participants also suggested that native advertising has economic benefits difficult to overlook. Native advertising generates revenue not only for the publisher but also for an agency and its client, an advertiser. An advertising executive stated, “So obviously, it’s great that it’s kind of a win-win, because it’s usually got a very prominent placement, so the brand is happy and—that they’re getting their content out there—and the publisher is happy.”

The diminishing credibility of journalism

Some marcom executives suggested native advertising was a beneficial, storytelling tool, and provided examples of good native advertising. An example, by The New York Times, was given by a public relations executive,

“… when Orange is the New Black did a big one. And no one knew that it was native advertising. You couldn’t even tell. I think when you can’t tell, that’s when it’s done right. If it’s done just as good as or better than the content in the non-branded content on a site or the platform, that’s when the native advertising and branded content’s done right.”

It’s an income generator based around the idea of hoodwinking our audience

Efficacy has consequences, however. Journalists broached the subject of native advertising impacting the diminishing credibility of journalism, which also negatively impacts marketing communications. A journalist elaborated on diminished credibility as a consequence affecting the multiple industries involved:

“Native advertising, um, it’s a double-edged knife, or sword. On one hand, with advertising revenue down, it’s bring[ing] back some of that. More revenue can only help people like me. The more revenue, the more I assume there will be resources for good reporting, and the less layoffs we’ll have. But there’s the other side to that coin, of course. It’s an income generator based around the idea of hoodwinking our audience. If the fake or native stories aren’t real, the whole thing doesn’t work. But if they look too real, the audience thinks we’re giving them real news when it’s really about selling something or other. That can lead to real problems for everyone. It could upset readers to the point they avoid products. And more likely, it could really hurt journalism’s credibility. I don’t know who wins with native advertising, you know?”

Publishers should not put native advertising on the front page

Journalism is at an economic and ethical crossroads. Journalists and strategic communicators must work together to propose new and effective streams of revenue. Yet for these tactics to work, and uphold socially responsibly of the press, the platform must be vigilantly protected to ensure credibility or the very effectiveness of the platform and the practices it supports such as native advertising will be comprised.

To maintain credibility, at a minimum, publishers must follow the FTC’s native advertising guide. The guide provides numerous examples of when native advertising should be disclosed and several suggestions of how to make “clear and prominent disclosures.”

In addition to following the FTC’s guidelines, publishers along with their advertisers must have an agreement concerning the benefit of native advertising to its readers juxtaposed to the editorial content. Native advertising is only as effective as the publication in which it appears, therefore, advertisers must be willing and agreeable to upholding the credibility of the publication by adhering to an agreement of terms relative to clearly and prominently disclosing native advertising as paid content.

Finally, publishers should consider the placement of native advertising within the publication’s layout and confining this content to predetermined pages. By appearing on the first page or opening screen of the news, publishers are implicitly suggesting that paid content is just as important as editorial content. In addition, the consistent placement of content over time supports clear and prominent disclosure. Just as readers flip to the back pages to find the classifies, native advertising should have a distinguished placement.

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Anderson, H. A. (1977). An empirical investigation of what social responsibility theory means. Journalism & Mass Communication Quarterly, 54, 33-39.
Couldry, N., & Turow, J. (2014). Advertising, big data and the clearance of the public realm: Marketers’ new approaches to the content subsidy. International Journal of Communication, 8, 1710-1726.
Deuze, M. (2005). What is journalism? Professional identity and ideology of journalists reconsidered. Journalism, 6, 442-464.
Griswold, W. F., & Moore, R. L. (1989). Factors affecting readership of news and advertising in
a small daily newspaper. Newspaper Research Journal, 10(2), 55.
Kaye, J., & Quinn, S. (2010). Funding journalism in the digital age: Business models, strategies, issues and trends. New York, NY: Peter Lang.
Meyer, P. (2004). Saving journalism: How to nurse the good stuff until it pays. Columbia Journalism Review, November/December, 55-57.
Singer, J. B. (2006). The socially responsible existentialist. Journalism Studies, 7, 2-18.

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