FTC Offers Guidance on How to Properly Use Native Advertising

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

native-advertisingFor nearly 150 years, paid advertisements have been the dominant form of funding mass media. From newspapers, radio, TV and even the internet easy-to-identify ads have been a part of the content. However, since people tend to ignore ads, marketers and advertisers have thought of new ways to get companies to learn about their products. Like the advertorial sections in newspapers, some websites have begun offering native advertising, where there’s a soft sale in the form of content that is favorable to the brand.

The FTC has become increasing concerned about native ads, because they blur the line between content and paid advertising. Native ads come in several styles, such as links to articles that look like they are part of the website, but are actually ads.

And then there are more subtle tactics, where the entire article is written for the benefit of the sponsor, but with very little mention of them. Alternatively, bloggers and internet celebrities are given expensive products with the hope they will review them favorably (because people are more likely to be give a positive review to a $600 item that was given to them than they are if they had paid for the item themselves).

The FTC has recently released new guidelines on how they will determine which native ads are in compliance with the FTC regulations on disclosure. This update may be the last step before increased enforcement. Websites and brands can both face heavy penalties for violating FTC rules, so it’s good to take the time to review their recommendations.

“With the emergence of digital media and changes in the way publishers monetize content, online advertising known as “native advertising” or “sponsored content,” which is often indistinguishable from news, feature articles, product reviews, editorial, entertainment, and other regular content, has become more prevalent,” the FTC writes in the guide. “In digital media, a publisher, or an authorized third party, can easily and inexpensively format an ad so it matches the style and layout of the content into which it is integrated in ways not previously available in traditional media. The effect is to mask the signals consumers customarily have relied upon to recognize an advertising or promotional message.”

For all the hoopla over these regulations, the simple rule of thumb is that ads must be clearly labeled as commercial or ad content. This may sound easy to do in itself, but there are many cases where this label is forgotten entirely or it’s not clear.

“From the FTC’s perspective, the watchword is transparency,” the document continues. “An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.”

“Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure.  In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising.”

The FTC also recommends that if a disclosure is necessary to prevent deception, the disclosure must be clear and prominent. This is where many native ads fail to comply with FTC rules, because their disclosures are hard to see or recognize.

The following example from the FTC is helpful:

Newsby is an online magazine featuring stories about health, technology, science, and business.  A headline published in Newsby’s feed reads “Making Cleaning Fun: How Technology Has Changed Housekeeping” with the subheading, “Vacuum Cleaners are as popular today as when first introduced in the 1800s.”  The text and an accompanying image are formatted like those of the other articles in Newsby’s feed and, if tapped, lead to an infographic with facts about vacuum cleaners, including a list of the “coolest innovations.”  One of the listed innovations is “Dirt Pulverizer” technology, which purportedly not only picks up dirt, but also cleans the air.  Appliance company Machine-Clean Vacuums, which is the exclusive seller of “Dirt Pulverizer” vacuums, paid Newsby to create and publish the article on its site.  When viewed in the feed of Newsby’s site, consumers are likely to interpret the Machine-Clean Vacuums ad as an independent story impartially reporting on information relating to vacuum cleaners, and not an ad developed and published on behalf of a sponsoring advertiser.  Thus, effective disclosures informing consumers of the ad’s commercial nature – both in the site’s feed and on the click-into infographic – are necessary to prevent deception.

Making sure your website or marketing campaign is in compliance with FTC regulations is important. Not only will it allow you to avoid fines, it can prevent embarrassing SNAFUs. Customers are weary of stealth advertising, and take a harsh view of sites that present paid content as if weren’t.

For more advice on marketing regulations, read this article on changes to telephone and text marketing from the FTC.


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