How many ads do you see on social media? It might be more than you realize. Scientists studying how ads work on Instagram-style social media have found that people are not as good at spotting them as they think. If people recognized ads, they usually ignored them – but some, designed to blend in with your friends’ posts, flew under the radar.

“We wanted to understand how ads are really experienced in daily scrolling — beyond what people say they notice, to what they actually process,” said Maike Hübner, PhD candidate at the University of Twente, corresponding author of the article in Frontiers in Psychology. “It’s not that people are worse at spotting ads. It’s that platforms have made ads better at blending in. We scroll on autopilot, and that’s when ads slip through. We may even engage with ads on purpose, because they’re designed to reflect the trends or products our friends are talking about and of course we want to keep up. That’s what makes them especially hard to resist.”

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The scientists wanted to test how much time people spent looking at sponsored versus organic posts, how they looked at different areas of these different posts, and how they behaved after realizing they were looking at sponsored content. They randomly assigned 152 participants, all of whom were regular Instagram users, to one of three mocked-up social media feeds, each of which was made up of 29 posts — eight ads and 21 organic posts. 

They were asked to imagine that the feed was their own and to scroll through it as they would normally. Using eye-tracking software, the scientists measured fixations — the number of times a participant’s gaze stopped on different features of a post — and dwell time, how long the fixations last. A low dwell time suggests that someone just noticed the feature, while a high dwell time might indicate they were paying attention. After each session, the scientists interviewed the participants about their experience.

Although people did notice disclosures when they were visible, the eye-tracking data suggested that participants paid more attention to calls to action — like a link to sign up for something — which could indicate that this is how they recognize ads. Participants were also quick to recognize an ad by the profile name or verification badge of a brand’s official account, or glossy visuals, which caused participants to express distrust. 

“People picked up on design details like logos, polished images, or ‘shop now’ buttons before they noticed an actual disclosure,” said Hübner. “On brand posts, that label is right under the username at the top, while on influencer content or reels, it might be hidden in a hashtag or buried in the ‘read more’ section.”

Although the scientists found that the ads often went unnoticed, if people realized that the content wasn’t organic, many of them stopped engaging with the post. Dwell time dropped immediately.

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This was less likely to happen to ads that blended in better, with less polished visuals and a tone and format more typical of organic content. If ad cues like disclosures or call-to-action buttons weren’t noticed right away, they got similar levels of engagement to organic posts. 

“Many participants were shocked to learn how many ads they had missed. Some felt tricked, others didn’t mind — and that last group might be the most worrying,” said Hübner. “When we stop noticing or caring that something is an ad, the boundary between persuasion and information becomes very thin.”

The scientists say these findings show that transparency goes well beyond just labelling ads. Understanding how people really process ads should lead to a rethink of platform design and regulation to make sure that people know when they’re looking at advertising. 

However, this was a lab-based study with simulated feeds, and it’s possible that studies on different cultures, age groups, or types of social media might get different results. It’s also possible that ads are even harder to recognize under real-life conditions.

“Even in a neutral, non-personalized feed, participants struggled to tell ads apart from regular content,” Hübner pointed out. “In their own feeds which are shaped around their interests, habits, and social circles it might be even harder to spot ads, because they feel more familiar and trustworthy.”

As intimidating and complex artificial intelligence (AI) tools may be, micro, small, and medium enterprises (MSMEs) should take gradual but steady steps towards exploring how these could make operations more efficient and scalable, according to Converge ICT Solutions Inc. CEO and 51st Philippine Business Conference and Expo (PBC&E) Chairman Dennis Anthony Uy. 

Speaking before the North Luzon Area Business Conference of the Philippine Chamber of Commerce and Industry (PCCI) held in Bataan province, Uy championed technology adoption, especially in the face of widespread use of new technologies such as generative AI. 

“Companies all over the world are trying to adapt to AI. Here in the Philippines, we’re barely scratching the surface. And the smaller businesses, which are just starting to embrace digitalization, have to learn new ways of doing business with the growing pervasiveness of these new technologies,” said Uy.

“AI is not just for medium to large companies. Micro and small businesses can also find a foothold in the use of the game-changing technology,” he added. “With AI adoption, MSMEs can potentially increase efficiency, reduce costs, and drive competitive edge.”

Coming from a trip to Taiwan which is known as the global hub for the semiconductor industry, Uy noted that artificial intelligence is making its way through the manufacturing value chains of most technology sectors.

“If the Philippines can find a niche spot in this value chain, the multiplier to employment, skills and knowledge upgrading, and the effect on downstream industries is massive,” he said. “While micro and small businesses may not yet be able to participate in these larger value chains, where they can benefit from is by taking small steps in adapting AI tools,” noted Uy. 

From the part of the local government, Bataan Governor Jose Enrique “Joet” Garcia III pledged his support to make his province “future-ready” by hosting start-ups and supporting digitally-enabled businesses.

“We want to express the support of the provincial government of Bataan, of course together with all the local government units for the creative and innovative industry. We know this sector is the key to accelerate more productivity and growth, especially for the youth who were born adept to digital devices,” noted Garcia. 

The possibilities of AI use were experienced first-hand by micro and small businesses in the Byte Forward Hackathon jointly organized by Converge, PCCI, the Department of Trade and Industry, and Converge subsidiary Rev21 Labs. 

Converge and the participating small businesses came up with problem statements stemming from actual pain points experienced in the course of business. Ten teams of third and fourth year college students from Bataan came up with solutions aided by AI tools. 

Artificial intelligence will come into bigger focus in the 51st Philippine Business Conference and Expo organized by the PCCI. As Chairman of the Conference, Uy deliberately made the move to make the event ‘technology-forward’ and bring modern, digital solutions to MSMEs. The Conference will be held on October 20-12 at the SMX Convention Center. 

If you’ve ever seen a steep increase in the fare for an Uber to the airport on a Friday, or you’ve checked an item’s cost on Amazon, only to see it has changed hours later, you might have experienced algorithmic pricing.

That’s the practice of using algorithms to automatically adjust the price of goods or services based on factors such as demand, competitor pricing, inventory levels, or data about the customer.

While such pricing practices can squeeze out extra profit, they can also carry a marketing risk if not carefully implemented, according to Gizem Yalcin Williams, assistant professor of marketing at Texas McCombs. In 2012, Uber was widely criticized for raising ride prices during Hurricane Sandy. More recently, customers have expressed outrage over concert ticket surge pricing.

In a paper, co-written with an interdisciplinary group of 12 other researchers, Williams examines algorithmic pricing and the challenges companies can face when integrating it with their other objectives. The researchers offer some preliminary dos and don’ts for aligning pricing with marketing strategy, regulations, and avoiding customer backlash.

One potential factor in customer backlash, Williams says, is driven by feelings of unfairness.

“Let’s say that I just got myself something from Amazon, for my dorm, and then a couple of days later, I saw that the price changed,” she says. “I now feel like I overpaid for it, regardless of how good the product is.”

By the same token, seeing a price increase later might trigger elation, she says. “If I feel like I bought it at a lower price, I feel like I was smart.”

When Prices Get Personal

If pricing sometimes feels a bit more personal when algorithms are involved, Williams says, that’s because it is.

In addition to taking supply or production costs into account, companies increasingly use customer-level data to make pricing decisions, often with the help of artificial intelligence.

The exact data that go into the algorithm might not be always known, Williams says. “But what if the price I receive is different than others because of my own data, such as my shopping history, demographics, or location? Shoppers might react to the same price differently, depending on which data they think affected the price set by the company’s algorithm.”

Besides eroding customer loyalty, companies can face regulatory or legal attention when dynamic or surge pricing goes awry. Last year, the grocery chain Kroger was scrutinized by members of Congress over its plans to introduce algorithmic pricing at its stores.

Practical advice on pricing

As part of its research, Williams’ team surveyed pricing managers and conducted in-depth interviews with five strategic-pricing experts. They offered several pieces of advice.

• Companies should be aware of how accepting their customers are — or are not — of dynamic pricing to avoid potential reputational damages.
• Opening the “black box” and increasing transparency about how algorithms work can help managers and employees adopt and oversee them effectively.
• Companies need guardrails to make sure they can effectively and carefully navigate the competitive and regulatory environment.

For Williams, one takeaway, she notes, is clear: Many companies slap the AI label on their operations, to cut costs or boost efficiency, without comprehensive planning for its design, integration, and monitoring.

 “Managers need to be deliberate about when, where, and whether to integrate AI into their operations,” she says. “And even when decisions are automated, it’s critical to have mechanisms that keep humans in the loop.”

Algorithmic Pricing: Implications for Marketing Strategy and Regulation” is published in International Journal of Research in Marketing.