ABSTRACT: Building on the persuasion knowledge model, this study examines how audience characteristics and native advertising recognition influence the covert persuasion process. Among a nationally representative sample of U.S. adults (N = 738), we examined digital news readers’ recognition of a sponsored news article as advertising. Although fewer than 1 in 10 readers recognized the article as advertising, recognition was most likely among younger, more educated consumers who engaged with news media for informational purposes. Recognition led to greater counterarguing, and higher levels of informational motivation also led to less favorable evaluations of the content among recognizers. News consumers were most receptive to native advertising in a digital news context when publishers were more transparent about its commercial nature. Beyond theoretical insights into the covert persuasion process, this study offers practical utility to the advertisers, publishers, and policymakers who wish to better understand who is more likely to be confused by this type of advertising so that they can take steps to minimize deception.