Product placement is regarded as a covert advertising strategy because viewers are often unaware of the persuasion attempt when they are exposed to product placement due to the high integration of the commercial content into the media content. In order to guarantee fair communication and prevent viewers from being influenced without their awareness, regulations prescribing proper disclosure of product placement have been issued in many countries. However, there are no consistent findings of the effectiveness of disclosures in prior studies. This study first combined eye‐tracking and electroencephalography (EEG) technologies with self‐reported measures to better understand the effects of disclosures on viewers' brand responses. The results show that (a) disclosure is an effective method to increase viewers' awareness of the embedded persuasive message and brand recognition, while also causing a decrease in brand attitude; (b) viewers exposed to a product placement disclosure tend to show longer fixation time on the placed product and evoke decreased frontal alpha band and increased frontal and right‐hemisphere gamma band compared with those who are exposed to non‐disclosed product placement; and (c) the positive effects of disclosures on the awareness of the embedded persuasive message and brand recognition are mediated by fixation time, and the negative effect of disclosures on brand attitude is mediated by fixation time and right‐hemisphere gamma band. These findings indicate that such eye movement indices and EEG bands can be viewed as reference measures reflecting viewers' cognitive and emotional processing of product placement and disclosures.
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