How to Make Sense of the FTC’s New Guidelines for Native Advertising

Written on
Jan 15, 2016 
Adotas  |

A Q&A with Claudia Page, VP, Head of Creator Partnerships at Crowdtap.

Q: How does the FTC define native advertising?

Page: Native advertising has always been a nebulous term for marketers to grasp. The FTC broadly defines “native advertising” as content that bears resemblance to the design, style, and functionality of the digital media in which it was disseminated. Native placements span a range of formats, including sponsored articles (long-form, written content on publisher or news aggregator sites), social media posts, user-generated content, videos, images/animations, infographics, email and embedded content within video games.

Further, the FTC expressly states that its native advertising policies do not apply to publishers alone. Any advertiser, agency or partner collaborating on the creation of such content shall be held to the same standards as the sites and platforms on which native advertising appears. In short, we’re all in this together.

Q: What do brands, agencies and technologies need to know about when and how to provide proper disclosure around their native advertisements?

Page: Per the FTC, an “advertisement or promotional message should not suggest or imply to consumers that it’s anything other than an ad.” By itself, this statement might cause some concern in the marketing world, since contextualized experiences are the very essence of native advertising. In this case, however, it’s important to make a distinction between contextualization with deception. Within these guidelines, marketers can still deliver native experiences while providing disclosures that allow consumers to form reasonable opinions.

The full FTC statement lists more than a dozen examples of cases in which disclosure may or may not be needed, depending on the type of ad, messaging, format and the overall circumstances of the placement. In cases where disclosure is necessary, the FTC establishes formal policies regarding how such disclosure should be communicated to consumers.

The general parameters are as follows:

Disclosures should be unambiguous. Wording should avoid industry jargon and should be immediately discernible to a reasonable consumer. For example, “paid advertisement” is favored over “partner content” or “promoted story.”

Disclosures should be visibly evident (e.g. not masked behind light font or diminutive type size) and prominently placed near the content’s headline and/or focal point.

For multimedia content (such as audio and video), the disclosure should take place before the main content plays.

The FTC notes that publishers and platforms have “flexibility” when it comes to how they approach disclosure; however, some industry bodies – such as the Interactive Advertising Bureau (IAB) – have expressed concern regarding the prescriptiveness of the guidelines. In a formal statement, the IAB praised the FTC for putting effort into better understanding native advertising, but argues that the guidance should be “technically feasible, creatively relevant and not stifle innovation.”

Up until now, publishers have optimized disclosure messaging to reflect the types of language that works best with their audiences. For example, per a recent TripleLift study, readers were more likely to be receptive to native ads using terms like “promoted ad” than they were to terms like “paid advertisement.” This particular section of the FTC terms will be one to watch in the coming months.

Q: How does the FTC’s stance on native advertising compare with other “truth-in-advertising” principles?

Page: While the media formats covered by the guidelines are new, the FTC is applying the same “truth-in-advertising” principles as has it has been for decades. For example, the FTC has brought cases on telemarketers who deceptively suggest that they are calling on behalf of a credit card company or other third-party to engage a consumer in conversation. Referred to as an “deceptive door opener,” the same standard applies to a publisher who posts a sponsored article in which the headline is written in an editorial style, devoid of proper disclosure, to increase clicks and/or read-through rates.

However, what has evolved is that when it comes to native advertisements, both what the ad says and the format it uses to convey the message are relevant. A sponsored video that does not explicitly indicate that the media is non-editorial is just as deceptive as a grocery store that misleadingly promises free product to get shoppers inside.

Q: When all’s said and done, are the new guidelines a net-positive or net-negative for marketers?

Page: In its statement, the FTC praises native advertising as an “innovative” practice but one that runs the risk of being marred by deceptive practices. The purpose of native advertising should never be to trick people into consuming branded content. Rather, the goal is to provide a seamless, valuable experience that feels native to the media property or platform in which that content appears. That is, after all, the essence of native advertising.

Deceptive ads, no matter what format, are bad for marketing. Today’s consumers (especially Millennials and the generations that follow) are media-makers in their own right: They build and curate their own personal brands via social media and know the game marketers play because they play that same game themselves. They are seeking a new type of relationship with brands – one that is built on choice. The FTC’s intent is to provide a better consumer experience, which ultimately builds trust between advertisers and consumers through an established code of transparency.


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