Mobile advertisements in disguise and their effect on trust propensity and intention to use

Advertisements (ads) are prevalent in almost anyone’s life. In exchange for consuming ads, the user gets free access to online and mobile platforms, thus constituting a fragile symbiosis between platform, user and marketer. We shed light on a critical factor that affects this fragility: advertisements in disguise, also called covert advertisements. By varying the discernibility of ads with visual indications and intrusiveness, we measure the perceived trust propensity and the perceived intention to use. The concerning application is a novel, location-based iPhone app – Local FAQ-that allows to ask and to answer questions about nearby places. Our methodology is threefold: first, two focus group discussions each with 6 smartphone users influenced the design and functionality of the Local FAQ app, and raised concern in privacy and trust propensity in mobile, location-based apps. Second, an exploratory survey with 46 respondents aimed at substantiating some focus group claims. Third, a systematic survey with 114 respondents manipulates ad discernibility and measures variations of trust propensity and intention to use. Regression analysis shows that trust and intention to use fall the more intrusive the ads are. Further, results indicate that covert ads may not lead to loss of trust if they are informative. After detection that they were actually ads, they however still lead to loss of trust.