Rough Draft

DOI: 10.2501/JAR-2019-007 March 2019 JOURNAL OF ADVERTISING RESEARCH 3

INTRODUCTION We all likely have heard at least a few of these “stories.” Hillary Clinton ran an underground child-trafficking ring out of a Washington, D.C., pizza restaurant. Bottles of Corona beer were tain- ted with urine. Pope Francis endorsed Donald Trump as a presidential candidate. Tommy Hilfiger told Oprah that he didn’t want African Americans or Asians wearing his clothes. Parkland shooting survivor Emma Gonzalez tore in half the Constitu- tion of the United States.

Conspiracy theories, hoaxes, urban myths, and deceptive stories are certainly nothing new. What has changed, however, is the ability to disguise these theories and stories as “news,” which then spreads virally across social and digital media with unparalleled ease and speed. Digitization allows such “fake news” to propagate more rapidly than it ever has before, first from publishers to consumers and subsequently from consumers to each other.

Commenting on a recent wave of press in the United Kingdom that misinterpreted genetic

research on the red hair allele by observing that redheads would become extinct because of global warming, geneticist Adam Rutherford summar- ized the rapid diffusion of false-news stories in our modern times: “A fiction can fly around the world before the truth has managed to pick the sleep from its eyes in the morning” (Rutherford, 2017, p. 184).

Scholars increasingly are paying attention to the fake-news phenomenon to define it and assess its explosion across traditional and digital channels. They have discovered a complex web connecting fake news with advertising, motivated by financial interests (i.e., advertising dollars) and propelled by the programmatic-advertising process.

The Fake-News Explosion Researchers have defined fake news as fabricated information that mimics news media content in form but not in organizational process or intent (Lazer, Baum, Benkler, Berinsky, et al., 2018). Fake news is false news, and as an object of study should

The Relationship between Fake News

And Advertising Brand Management in the Era

Of Programmatic Advertising and Prolific Falsehood

ADAM J. MILLS loyola University new

Orleans [email protected]

CHRISTINE PITT Royal Institute of

technology (Kth), Sweden

[email protected]

SARAH LORD FERGUSON Simon Fraser University,

Canada [email protected]

Speaker’s Box

Editor’s Note “Speaker’s Box” invites academics and practitioners to identify significant areas of research affecting advertising and marketing. The goal is to bridge the gap between the length of time it takes to produce rigorous work and the acceleration of change within practice. This edition addresses the relatively new phenomenon of “fake news” and its complicated relationship with advertising. The authors highlight that advertising and fake news appear to be locked in a growth cycle driven by financial incentives. Most concerning for brands is that, because online programmatic advertising has required advertisers to cede control over where their advertisements are displayed, many brands inevitably will find their advertisements on fake-news websites alongside controversial and inflammatory content. Beyond the ethical dilemma for brands is the potential loss of credibility. For established brands, the situation is less dire, however, and, there may be room for a higher service option that gives advertisers tighter control over the display of their advertisements.

Douglas C. West Professor of Marketing, King’s College London

Contributing Editor, Journal of Advertising Research

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not be confused with the political use of the term as a partisan, rejectionist label for press coverage that does not support a particular political interest (Vosoughi, Roy, and Aral, 2018).

Two factors are key to understanding the explosion of fake news: diffusion and generation. Researchers from the Massachusetts Institute of Technology examined the diffusion of 126,000 news stories through 4.5 million shares by 3 mil- lion Twitter users over an 11-year period (Vosoughi et al., 2018). The researchers found that false-news stories diffused significantly further, faster, deeper, and more broadly than truthful new stories. This is because, overall, fake news is more novel and more affectively engaging than truthful news.

Fake-news stories simply are more interesting to read, share, and talk about than truthful news stories (Vosoughi et al., 2018) Novelty is a strong attractor of human attention (Itti and Baldi, 2009). It is not difficult to imagine, for example, that the sexual indiscretions of a politi- cian or celebrity would be more interest- ing and attractive to the average reader than a report on employment statistics or advances in health-care technology.

Fake news, generally speaking, trig- gers more affectively charged emo- tional responses (cf. Ekman, 1992) than truthful news stories. Fake news elicits high-arousal emotional responses, such as fear, disgust, and surprise, whereas truth- ful news stories lead to lower arousal emo- tional responses, such as sadness, joy, and anticipation (Vosoughi et al., 2018). Because both novelty and emotional arousal drive interest, which drives clicks, it follows that the more outrageous the story is, the better that piece of news performs as a market- place artifact.

With respect to the generation of fake news, there are three possible drivers for the creation of disinformation:

• Inadvertent disinformation is when “citizen journalism” leads to the creation of newslike content that is accidentally false or misleading because of a lack of rigor in reporting. The Internet effect- ively has removed barriers to entry for content creation and publishing and, consequently, the traditional safeguards of journalistic integrity (Tandoc, Lim, and Ling, 2018).

• Ideological disinformation, what we might refer to as propaganda, is when fake news is created by individuals and organizations to promote particular ideas, advance certain agendas, stoke conspiracy, or discredit others (Allcott and Gentzkow, 2017).

• Exploitative disinformation, in contrast, is motivated solely financially. The cre- ation and distribution of false news for mercenary purposes is worthy of deeper discussion here given its relationship to advertising.

How Advertising Supports Fake News Fake news supports and is supported by advertising dollars. Opportunistic indi- viduals and organizations are able to cre- ate professional-looking websites easily and cheaply. They populate those websites with novel, albeit bogus, news stories and then fill their pages with advertisements. Because online advertising is a numbers game, the more traffic these individuals can drive to their website, the more poten- tial clicks they receive.

Fake-news stories are the perfect “click- bait” to drive website traffic, because the emotional responses inspired by their headlines (surprise, fear, anger, anxi- ety, etc.) are exactly those that we find irresistible as information consumers (Gardiner, 2015). The more clickbait these owners can create, therefore, the more revenue they can earn from advertise- ment placement (Timberg, Dwoskin, and Ba Tran, 2018).

Consider the small town of Veles, Mace- donia, home to dozens of individuals operating more than 100 fake-news web- sites in the period leading up to the 2016 U.S. presidential election (Soares and Davey-Attlee, 2017; Subramanian, 2017). Most of these fake-news websites looked and sounded unassuming: PoliticsPaper. com, NewYorkTimesPolitics.com, USA- Politics.com, and PoliticsHall.com, to name a few. Each of these fake-news websites generated up to $2,500 per day in advert- ising revenue—impressive by any means, particularly when one considers that the average monthly income in Macedonia is $426 (Soares and Davey-Attlee, 2017).

FAKE NEWS, BRANDS, AND PROGRAMMATIC ADVERTISING Although fake news may or may not ori- ginate with ideology, the primary driver behind the recent explosion of fake news online is advertising income. Taken together with the effects digitalization has had on the news industry, this has created the perfect storm for brands and advert- ising. What kinds of problems might this create for brands and advertising?

Fake News and Advertising Encourage Each Other The first problem we must consider in the relationship between fake news and advertising is that they encourage each other. Fake news and advertising follow a cyclical pattern (cf. Berthon and Pitt, 2018) that snowballs as programmatic algorithms take hold.

The pattern begins with the ease with which fake news is created. Just about anyone with an Internet connection can create and publish “news,” given the ease of publishing through microsites and low barriers to entry for citizen journalism.

Brands need to advertise on the web. Manual targeting does not work online as it does offline, so advertisers rely on

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intermediaries and affiliate networks (e.g., Google Ads) for automated advertising distribution and placement, called “pro- grammatic advertising.” Programmatic algorithms encourage chasing of traffic between online advertisements and web- sites, including fake-news sites. Here’s how the pattern evolves:

• These intermediaries rely on algorithms that place advertisements on web pages in real time. Programmatic-advertising placement can work in one or both of two ways: prospecting and retargeting (Busch, 2015): ��With prospecting, the advertisements follow the clicks; intermediaries place advertisements on screen on the basis of text and keywords on the web- sites with the hope of generating new interest. ��With retargeting, the advertisements follow the users; intermediaries place advertisements on screen on the basis of the particular website viewer, essentially following a specific user from site to site.

• Programmatic advertising means that ultimately the advertisements chase the traffic. It thus is financially rewarding for website owners to drive as much traffic as possible to as many pages as possible. Fake-news websites are incentivized by this model to create greater volumes of more novel content, which drives more traffic.

Exclusive of the influence of social media, this brings us back to the beginning of the cycle. That said, however, there are several additional factors to consider:

• Fake-news website owners seed con- tent links through social platforms such as Facebook and Twitter to drive traffic back to their own sites. Content is seeded either into existing groups or

through promoted or sponsored place- ment to ensure visibility.

• Social-media websites become a qua- ternary agent in the financial-incentive mix, because these platforms gener- ate revenue directly off promoted or sponsored content. In the wake of the 2016 U.S. presidential election, many social-media websites faced such wide- spread public criticism over their com- plicity in spreading and profiting from fake news that they introduced policies to ban fake news by vetting prospect- ive publishers more closely (Wingfield, Isaac, and Benner, 2016).

• Even with policies in place banning fake news from their websites, social-media platforms continue to profit indir- ectly from the spread of fake news organically through their ecosystem. Because fake news is interesting and eye-catching, it keeps users on social platforms for longer periods of time, which subsequently increases exposure and attractiveness to other advertisers.

Advertisers Have Ceded Control Of Media Placement A second problem is that advertisers, to a large extent, have relinquished certain elements of brand management with respect to online advertising channels. The trade-off comes with advertisers being able to control precisely either where their advertisement is displayed or to whom it is displayed, but not both. With traditional media channels, advert- isers manage where and how their brands

are exposed to consumers. The higher the stakes are and the more critical the placement is, the greater is the price of the advertising. A 30-second television advertisement during the 2018 Super Bowl, for example, cost roughly $5 million (Michaels, 2018).

Even with such high stakes and tightly controlled media buys, however, the recip- ient audience is largely incidental and only can be approximated. Advertisers do their best to find out where and when their tar- get customers will be, place the advertise- ment, and hope for the best.

Digital advertising, conversely, works very much in the opposite manner. It allows brands to target their viewership with extraordinary precision, quite literally down to the individual unique user. Never before have advertisers had such remark- able ability to reach consumers so mean- ingfully, but what must be exchanged is the ability to tightly control where and how the advertisements are seen.

As a result, marketers rely on interme- diates and affiliate networks that match advertisers with pages on which to display their advertisements, using extraordinar- ily efficient real-time software algorithms. Programmatic advertising is highly effi- cient, extremely cost-effective, virtually immediate, and designed almost com- pletely around reaching the individual target consumer. To target in this manner, however, prioritizing consumers over con- text, advertisers must cede almost all con- trol over advertisement placement to the intermediaries.

Never before have advertisers had such remarkable

ability to reach consumers so meaningfully, but what

must be exchanged is the ability to tightly control

where and how the advertisements are seen.

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Fake News Jeopardizes Brand Integrity The ultimate problem for brands, from a reputational-capital and brand-equity per- spective, is that fake news easily can cross the ethical line between entertainment and insidiousness. Fake-news stories and web- sites regularly contain content that most would consider inflammatory, sensational, or controversial, because these things draw traffic. The predicament for brands is that their advertisements can and will end up on pages containing controversial content. This is what critically distinguishes fake news from traditional journalism: Conven- tional news publishers report on negative stories, but their intentions in doing so— informing and educating—should not be ethically ambiguous.

For advertisers, being associated with contentious content that is at odds with brand values therefore is problematic, and this is where the highly efficient programmatic-advertising system seems callous in its rationality. Fake news can become a threat to reputational capital and brand equity when brands are associated with and seen as financially subsidizing these types of unethical websites.

A recent investigation by The Washing- ton Post found advertisements for many large brands, including Oracle, eBay, Mercedes-Benz, Jeep, Samsung, UNICEF, and Harvard Business School, on fake- news websites. Girl Scouts advertisements were embedded in articles about jihadi sex crimes, advertisements for the American Red Cross were displayed alongside a comparison of school-shooting victims with Nazi symbolism, and advertisements for Hertz rental cars appeared next to an article titled “Are Liberal Pervs Sexu- ally Obsessed with Refugees?” (Timberg et al., 2018).

Social-media platforms and advertising intermediaries have joined forces in recent years to ban from the ecosystem websites that contain such extreme content as hate

speech, bullying, harassment, or any- thing objectively dangerous or derogatory (Seetharaman, 2016; Timberg et al., 2018; Wingfield et al., 2016). As the above exam- ples highlight, however, trying to avoid these types of websites is easier said than done, because an overwhelming majority of fake news lies in the proverbial gray area just below these obvious extremes.

Brands should care about exposure on fake-news websites for a host of ethi- cal reasons, but the problem is more than just a moral one. “Advertismement–con- text congruity” is the degree to which an advertisement is thematically similar to the informational focus or editorial content of the website on which that advertisement is displayed (Moore, Stammerjohan, and Coulter, 2005; Zanjani, Diamond, and Chan, 2011). Incongruity between an advertisement and its context draws atten- tion and creates novelty (Belanche, Fla- vián, and Pérez-Rueda, 2017). This can be problematic when it comes to fake-news websites because advertisements that are seen as contextually incongruent generate less-favorable responses and are evaluated less favorably than contextually relevant advertisements (Jeong and King, 2010; Moore et al., 2005; Segev, Wang, and Fer- nandes, 2014).

Because most brands prefer to occupy relatively noncontroversial and posi- tive positions, the more controversial the fake-news website is, the less favorably the brand’s advertising on that site will be received. This effect is magnified when viewers have high levels of involvement with the website content (Segev et al., 2014), as is the case with most fake news.

Even more unfortunate for brands is that incongruent advertisements are more memorable than those that are contextu- ally congruent (Jeong and King, 2010; Moore et al., 2005).

The net result is that consumers more likely will evaluate brand advertising on fake-news websites negatively and more likely will have those negative evalua- tions stay in memory. In a confluence of unfortunate effects, what is additionally troubling is that website credibility does not appear to have a significant influence on consumers’ attitude toward the brands being advertised (Choi and Rifon, 2002). In other words, consumers do not give brands a “pass” for being found on less- than-credible fake-news websites.

FAKE NEWS AND THE FUTURE FOR BRANDS One of the silver linings is that our current programmatic-advertising system is both effective and incredibly efficient. Most websites are well intentioned, and the out- liers are relatively few in number, despite the hype. We spend more time talking about fake-news sites for the same reasons we click on fake-news headlines: They are novel, interesting, and perplexing, and we want to know more.

What’s more, customers are custom- ers, regardless of what they read or click. We cannot fault the algorithms for being efficient, nor can we fault individual cus- tomers or website viewers for having par- ticular worldviews or interests in certain types of content. Whether or not someone believes that vaccines work, that person still needs clothing and groceries. Whether

Advertisements that are seen as contextually incongruent

generate less-favorable responses and are evaluated

less favorably than contextually relevant advertisements.

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or not someone is worried that redheads will become extinct, he or she still needs car insurance and a vacation. The discus- sion of fake news, however, highlights that brand advertisers have a need for subjectivity in online advertising place- ment and distribution that our current pro- grammatic system does not accommodate sufficiently.

There may be room, in fact, for a new category of “intelligent” intermedi- ary to enter into the digital advertising space. In the online advertising business, there appears to be an unmet need for a higher service option for advertisers to have a tighter control over when, where, how, and to whom their advertisements are displayed.

In the meantime, encouraging for larger organizations is that the more established the brand is, the less the advertiser needs to worry about critical reputational damage due to advertisement–context incongru- ity. Research suggests that the credibility of the brand being advertised can override, to some extent, the lack of credibility of the website on which it is displayed (Choi and Rifon, 2002). For smaller, newer brands still building equity, however, it is even more critical that the websites on which they advertise be seen as credible.

Although it likely is impossible to bring brand control back to the levels of tradi- tional media advertising, more bespoke digital-campaign management very well could move in this direction. JPMorgan Chase in 2017 overhauled its online advert- ising approach in response to fake-news brand risk by shifting its strategy to whitelist only. The company manually preapproved 5,000 on-brand websites, down from a previous 400,000 (Mahesh- wari, 2017). Similar efforts going forward will involve more manual placement and human endeavor, but the returns would be worthwhile to brands concerned about reputational capital.

ABOUt thE AUthORS:

Adam J. Mills is an assistant professor of marketing

at Loyola university New Orleans. His research focuses

on brand-experience engineering and brand storytelling.

Mills’s research has appeared in Marketing Theory,

Journal of Business Research, Business Horizons,

Service Industries Journal, Journal of Marketing

Education, and other publications. prior to entering

academia, Mills worked in corporate marketing and

brand and operations management for the hospitality

industry.

Christine Pitt is a doctoral candidate at Sweden’s

Royal Institute of Technology (KTH). Her research

specialization is in automated text analysis. Her work

can be found in Psychology & Marketing, Journal of

Business Research, and Journal of Public Affairs.

Sarah lord Ferguson is a doctoral student at

Canada’s Simon Fraser university specialized in

research on health care marketing. Her research is

published in Academy of Marketing Science Review,

Business Horizons, and Journal of Business-to-Business

Marketing.

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