Companies inadvertently fund online misinformation despite consumer backlash

Companies inadvertently fund online misinformation despite consumer backlash

6 June 2024 | Wajeeha Ahmad, Ananya Sen, Charles Eesley, Erik Brynjolfsson
Companies inadvertently fund online misinformation despite consumer backlash. Online misinformation is largely financed by advertising, and this financing affects companies involved. Research shows that companies across various industries advertise on misinformation websites, and digital advertising platforms amplify this. An experiment found that companies advertising on misinformation websites face consumer backlash. Surveys of company decision-makers revealed that most are unaware of their companies' advertising on misinformation websites but prefer to avoid it. Those unaware of their role increase demand for platform-based solutions to reduce misinformation financing. Low-cost, scalable interventions can reduce the financial incentive for misinformation and counter its supply. Online misinformation has serious social consequences, including increased fatalities during the pandemic, climate crisis, and political discord. The financial incentive to produce misinformation is a key reason misinformation websites persist. Companies and digital platforms contribute to financially sustaining misinformation via advertising. Advertising companies either place ads directly or use digital platforms to distribute them. Most online display advertising is done via digital platforms, which may include misinformation websites. Industry estimates show that for every $2.16 in advertising revenue sent to legitimate newspapers, $1 is sent to misinformation sites. Existing efforts to counter misinformation focus on empowering consumers through fact-checking, crowd-sourced labels, and nudging users to share accurate content. However, the incentive to produce or supply misinformation remains unaddressed. Academics have proposed 'supply-side' policies to steer platforms away from revenue models that sustain harmful content. Digital platforms have attempted to reduce advertising revenue to misinformation websites, but well-known companies continue to advertise there. Generative AI is expected to increase misinformation supply. This study provides a first step in understanding how to limit the financing of online misinformation via advertising using descriptive and experimental evidence. It examines the role of different entities in the misinformation ecosystem. The study finds that misinformation websites are primarily monetized via advertising, with many companies appearing on them. Digital advertising platforms amplify this. People switch consumption away from companies whose ads appear on misinformation websites, reducing demand. This effect persists even when informed about digital platforms' role. Decision-makers are often unaware of their companies' role in financing misinformation but prefer to avoid it. Surveys show a high demand for information on whether their ads appear on misinformation websites and solutions to avoid it. The study identifies two low-cost, scalable interventions to reduce misinformation financing. First, improving transparency for advertisers about where their ads appear can reduce advertising on misinformation websites. Second, platforms could make advertising on misinformation websites more traceable to advertising companies for consumers. These interventions can shift consumer demand away from companies advertising on misinformation websites. The study uses data on misinformation websites and advertising activity over three years. It finds that 89.3% of websites in the sample were supported by advertising revenue, with 74.5% of misinformation websites monetized by advertising. Digital advertising platforms significantly increase the likelihood of companies' ads appearing on misinformation websites. The study also finds that consumers switch away from companies whose ads appear on misinformation websites, even when informed about digital platforms'Companies inadvertently fund online misinformation despite consumer backlash. Online misinformation is largely financed by advertising, and this financing affects companies involved. Research shows that companies across various industries advertise on misinformation websites, and digital advertising platforms amplify this. An experiment found that companies advertising on misinformation websites face consumer backlash. Surveys of company decision-makers revealed that most are unaware of their companies' advertising on misinformation websites but prefer to avoid it. Those unaware of their role increase demand for platform-based solutions to reduce misinformation financing. Low-cost, scalable interventions can reduce the financial incentive for misinformation and counter its supply. Online misinformation has serious social consequences, including increased fatalities during the pandemic, climate crisis, and political discord. The financial incentive to produce misinformation is a key reason misinformation websites persist. Companies and digital platforms contribute to financially sustaining misinformation via advertising. Advertising companies either place ads directly or use digital platforms to distribute them. Most online display advertising is done via digital platforms, which may include misinformation websites. Industry estimates show that for every $2.16 in advertising revenue sent to legitimate newspapers, $1 is sent to misinformation sites. Existing efforts to counter misinformation focus on empowering consumers through fact-checking, crowd-sourced labels, and nudging users to share accurate content. However, the incentive to produce or supply misinformation remains unaddressed. Academics have proposed 'supply-side' policies to steer platforms away from revenue models that sustain harmful content. Digital platforms have attempted to reduce advertising revenue to misinformation websites, but well-known companies continue to advertise there. Generative AI is expected to increase misinformation supply. This study provides a first step in understanding how to limit the financing of online misinformation via advertising using descriptive and experimental evidence. It examines the role of different entities in the misinformation ecosystem. The study finds that misinformation websites are primarily monetized via advertising, with many companies appearing on them. Digital advertising platforms amplify this. People switch consumption away from companies whose ads appear on misinformation websites, reducing demand. This effect persists even when informed about digital platforms' role. Decision-makers are often unaware of their companies' role in financing misinformation but prefer to avoid it. Surveys show a high demand for information on whether their ads appear on misinformation websites and solutions to avoid it. The study identifies two low-cost, scalable interventions to reduce misinformation financing. First, improving transparency for advertisers about where their ads appear can reduce advertising on misinformation websites. Second, platforms could make advertising on misinformation websites more traceable to advertising companies for consumers. These interventions can shift consumer demand away from companies advertising on misinformation websites. The study uses data on misinformation websites and advertising activity over three years. It finds that 89.3% of websites in the sample were supported by advertising revenue, with 74.5% of misinformation websites monetized by advertising. Digital advertising platforms significantly increase the likelihood of companies' ads appearing on misinformation websites. The study also finds that consumers switch away from companies whose ads appear on misinformation websites, even when informed about digital platforms'
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