Effects of online behaviorally targeted native advertising on persuasion A test of two competing mechanisms

Online native advertising is increasingly targeted based on people's online behavior. This study examines the effects of online behaviorally targeted native advertising on ad and brand responses. In addition, it tests two competing explanatory mechanisms that are suggested in the literature on online behavioral advertising that may result in opposing persuasion outcomes: perceived personal relevance of the advertisement and understanding of online behavioral advertising as a persuasive tactic. An experiment showed that behaviorally targeted native advertising resulted in higher perceived personal relevance than native advertising, which consequently had a positive effect on persuasion (i.e., ad and brand responses). Although behaviorally targeted native advertising (versus native advertising) induced persuasion knowledge of online behavioral advertising as a persuasion tactic, this did not negatively affect persuasion. This study provides new insights into the theoretical mechanisms that explain behaviorally targeted native advertising effects and has implications for the advertising practice.