The FTC Has Finally Regulated Native Advertising, Now What?

Posted on February 2, 2016

What began a few years ago as an experiment by social networks and forward-thinking publishers to promote content has become an advertising standard: native advertising.

If you search for a definition of native advertising, you’ll quickly learn that no two are exactly the same. However, there are a few common threads. We reviewed more than a dozen definitions and will add ours into the mix:

Native advertising, sometimes referred to as sponsored content, is an interwoven form of marketing and paid advertising where the look and feel of the native ad mirrors the rest of the website/publication as to not disrupt the user experience.

Since day one, native advertising has blurred the lines between advertising and editorial content. Recently, the Federal Trade Commission (FTC) issued “Native Advertising: A Guide for Businesses” in an effort to regulate native advertising practices so it doesn’t deceive readers. We’ll touch more on the FTC Guidelines later in the post.

Key Takeaways from the FTC Guidelines

The FTC has long established guidelines regulating the advertising industry, including the truth-in-advertising standards, and the recent native advertising guidelines further the Commission’s principles to protect consumers in the digital marketplace.

In evaluating an ad, the FTC will consider/review the net impression the ad conveys to consumers and the overall context of the interaction with consumers. Other key guidelines:

-The message being presented shouldn’t suggest or imply it’s anything other than an ad

-In some native ads, it may be clear they are an advertisement and are presented in a way they won’t mislead consumers, even without a disclosure

-In other ads, disclosures may be necessary to ensure consumers understand the content is a native ad

The FTC provides specific disclosure guidelines, including information about proximity and placement of disclosures, prominence, and clarity of meaning. A few key points:

-Disclosures need to appear in front of or above the headline(s), not buried at the end of the ad

-Disclosures should be differentiated with a different font type and color

-Disclosures should be in clear and unambiguous language, such as “advertisement” or “sponsored advertising content”

-Words such as “promoted” could lead consumers to believe the native ad is endorsed by the publication presenting it

-Disclosures should be reposted whenever the native ad is published, on social media or elsewhere

The full guide from the FTC includes 17 examples of when businesses should disclose that content is native advertising. These examples will help marketers as they navigate these subjective guidelines.

How Business Will Adapt to This New Advertising Climate

With the release of the FTC guidelines, there’s been a mixed response. The Interactive Advertising Bureau issued a press release immediately following the FTC’s announcement and voiced their concerns over how the FTC may stifle innovation with the ruling. The IAB may continue to critique as the guide is rolled out.

Many organizations will likely try to adhere to the new guidelines and avoid a direct FTC challenge. Here’s a few trends that may arise in 2016.

Elimination of misleading phrases: Certain terms like “From Around the Web” and “More Content for You” have become synonymous with Native Advertising. These phrases were called out by the FTC as likely to deceive consumers and would be penalized. It’s safe to assume these phrases will quickly disappear in 2016.

Separation and disclosure: Some companies may create separate sections of websites or publications dedicated to native advertising as a form of disclosure to further the ads from editorial content. For others, this will mean adding appropriate disclosure information as defined by the FTC.

Content With no product mentions: The FTC noted in their ruling that native advertising that does not directly mention a company’s product or service may not need a direct disclosure at the top of the content. Look for companies to develop more non-branded content.

Automating/programming native advertising: Companies will continue to experiment with different words and images for their native ads and part of this will be automated and programmatic on the digital side, specifically with social networks. With popular social networks offering advertising, including the likely addition of Snapchat ads this year, companies will take a deeper look at native ads capabilities offered by social media to better match the audience with the content.

Mobile growth: As mentioned previously, mobile is an important part of native advertising as consumption on mobile devices continues to grow. A recent study by the Mobile Marketing Association suggests native advertising click through rates are, on average, six times higher than traditional ads. Further, native ads tested in Yahoo’s premium content streams were found to have 23 percent higher ad quality scores, and earn three times more attention than mobile banner ads.