The FTC Says Some Native Ads Are Unlawful. How Should Brand Publishers React?

By Thursday Bram December 5th, 2013

Native advertising has rapidly proven itself as a useful content marketing technique; by using both the style of and placement on a particular publisher’s platform, content marketers can connect with existing audiences and provide them with original and engaging content. But the advertising tactic — or rather the way sponsored content is executed on many sites — has drawn scrutiny, leading to the Federal Trade Commission’s interest in how native ads are differentiated from other content.

“The FTC is grappling with the issue of what type of disclosure is necessary to ensure that consumers can distinguish advertisements from independent content online,” said Bonnie Patten, the executive director of TruthInAdvertising.org.

To tackle that problem, the FTC held a workshop this week to review how publishers, marketers, and readers see native advertising. The workshop primarily focused on whether consumers can tell the content they read is sponsored or not. The FTC has concluded that, while native advertising can be useful, any native advertising that isn’t properly labeled as such is unlawful.

Tony Vlismas, the senior director of marketing at Polar, expects that many of the FTC’s concerns will be covered by self-regulation: “Native advertising is a great format that both publishers and marketers are embracing… I don’t think either party wants to spoil this great format and instead will self-regulate or self-govern themselves. The IAB has already published their Native Ads Playbook (within their task force),” explained Vlismas. “Everyone benefits so I think it will be a while until the FTC feels they will have to intercept with specific regulations, though they may want to formalize some best practices.”

I think the onus here is with not only the marketer, but also the publisher running the content.”

The Interactive Advertising Bureau’s native advertising task force released a twenty-page handbook just prior to the FTC’s workshop. It defines native advertising and sets out a framework for what sort of native ads marketers should expect to have access to. The IAB also recommended specific guidelines for disclosure and transparency.

While native advertising best practices are not yet carved in stone, there are certain strategies that content marketers can, and should, employ to avoid any future problems with the FTC. Those are:

– Include clear branding with each piece of native advertising.

– Add a short introductory explanation to each piece of native advertising.

– Differentiate the color schemes, including the backgrounds behind native ads, on websites.

– Use specific bylines for native ads.

– And, of course, label native advertising or sponsored content as such.

These strategies, taken as a whole, can also make native advertising more effective: If a piece of sponsored content isn’t clearly branded as such, how will readers know how to interact with it? And shouldn’t brands want to associate themselves with the quality content they’re creating?

These are not all steps that marketers can take alone, said Vlismas. Publishers control factors like what labeling appears on their own sites. “I think the onus here is with not only the marketer, but also the publisher running the content,” he explained. He added that marketers work closely with publishers to not only make sure that sponsored content will interest readers, but that it is appropriately displayed.

Edith Ramirez, the chairwoman of the FTC, noted during the workshop that the FTC does not currently plan to create specific regulations for native ads, in part because current regulations cover the need for publishers to identify advertising as such. But the discussion is not nearly over. Patten points to confusion among consumers between what is considered paid or unpaid content.

“The discussions revealed that labeling something as ‘sponsored’ does not adequately disclosure the nature of paid content, as over 50 percent of consumers do not understand what the term means,” she said.

The workshop serves as a notice that the FTC is paying close attention to native advertising. While content marketers who make sure that their sponsored content is appropriately designated have little to worry about, those publishers that don’t distinguish between content on their platforms (and the marketers who work with them), may face some tough discussions with the FTC.

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