FTC Says Advertorial Native Ads May Be Illegal

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

advertising-word-cloudFor internet advertisers, there is a constant game of cat and mouse with consumers. Websites depend on ad revenue but website visitors are reluctant to click on banner ads. Whenever advertisers find one method that gets people to click, consumers find a way around it and advertisers are back at square one. Advertisers have responded to these challenges with innovative solutions, but there may be trouble on the horizon. Recent comments from the Federal Trade Commission suggests that one of the more popular tactics, using native ads or advertorials, may be illegal.

In a nutshell, native ads are the advertisement that are seen on websites that try to look like news articles. They are the descendants of the infomercials on television and the advertorial sections in newspapers. Some of these ads have comically fake headlines like “16-Year-Old Slacker Makes $10 Million By Tricking Stock Market”, “See Why Big Banks Hate This Single Mother” or “Obama says [Insert Crazy Claim About Car Insurance, Home Refinance, Secret Stock Scheme]”. But the FTC isn’t laughing.

In a speech titled Blurred Lines: Advertising or Content,  FTC Chairwoman Edith Ramirez said, “Marketers have … moved past the banner ad into advertising that is more seamlessly, and inconspicuously, integrated into digital content. While native advertising may certainly bring some benefits to consumers, it has to be done lawfully. By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source.”

Though some native ads are easy to identify, some have indeed become seamlessly integrated. When reporting on the FTC’s comments, Reuters used articles on BuzzFeed as an example of better integrated advertising content. Back in December, according to Reuters, BuzzFeed featured the article “13 dogs who get an A for effort,” that was sponsored by the pet food brand Purina Pro Plan, and a similar list of “15 Creative Snowmen That Will Blow Your Mind,” that was sponsored by Columbia Sportswear.

Right now, the regulation for online advertising requires that ads be clearly and conspicuously noted as such. However, “clear and conspicuous” doesn’t necessarily mean noticeable. Many native ads have a tiny line at the bottom of the ad that says something like “Content from Sponsor” or “Advertisement”. For an ad that lists links as if they were regular articles, such lines are all but unnoticeable by viewers. While there may not be any new specific regulation, the FTC may clarify rules to define what “clear and conspicuous” means.

The FTC doesn’t have any plans to implement any new regulations to handle the issue, but the warning itself should enough for marketers. The Chairwoman’s comments, that native ads can be deceptive, mean that the FTC could already take action under the framework of existing laws. Since 73 percent of online publishers offer some form of native ads, the onus will be on these marketers to find ways to clearly identify what content is paid for and what is not.

To Dan Jaffe, of the National Association of Retailers, who attended the FTC conference, the message was clear.

“This should be a signal to everyone that this is very high on their radar screen. … The FTC is highly likely to step in forcefully in this area,” Jaffe said in a statement to Reuters.

This situation should also remind small business owners and marketers that in the end, it’s always better to err on the side of being too ethical. Trying to disguise native ads as regular content was always a shady practice, even if has been tolerated for a time. For companies that are using native ads, they should take this opportunity to make sure their ads are clearly identified. There’s nothing wrong with native ads, but the line between advertising and content needs to be clear. After all, a good ad will spur the consumer to action, even if they know it’s paid for.


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