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Home > News & Media > The NAA Blog > FTC Explores Native Advertising

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FTC explores native advertising

By Sophia Cope, Director of Public Policy; Legislative Counsel

On December 4, the Federal Trade Commission held an inaugural workshop on native advertising called “Blurred Lines: Advertising or Content?” The purpose of the workshop was to better understand the “blending of advertisements with news, entertainment, and other editorial content in digital media” and how such content is “presented to consumers online and in mobile apps; consumers’ recognition and understanding of it; the contexts in which it should be identifiable as advertising; and effective ways of differentiating it from editorial content.”

This form of digital advertising is reminiscent of the print advertorial and goes by many names, including sponsored content and content marketing. The goal is to create advertising content that is “native” in look and feel to the publishing platform and thus is more engaging to the reader. The content may promote a specific product or brand, but often it simply provides interesting information to the reader that has some relevance to the advertiser.

Native advertising is always paid, but how it is created differs. The advertiser may provide the content to the publisher; the publisher may create the content using a dedicated native advertising team or sometimes the editorial team; or the content may be the result of collaboration between the advertiser and the publisher. There are also third-party vendors that work with advertisers and publishers to create native advertising content.

The backdrop of the FTC workshop was the understanding that the commission could use its existing authority under Section 5 of the FTC Act (15 USC § 45) to bring enforcement actions against companies that participate in native advertising that is unfair or deceptive to consumers. An open question, mentioned at the workshop and critical for NAA members, is whether a newspaper or other publisher could be liable for unfair or deceptive native advertising content, particularly if the newspaper was intimately involved in the creation of the content.

With this in mind, there was consensus among workshop participants that transparency is critical to native advertising to ensure that readers can easily distinguish between independent editorial content and content that an advertiser paid for or even created. This will help maintain trust between readers and publishers in particular. Thus much of the discussion focused on what text and design elements make clear to readers that content that is not a traditional banner ad was published on behalf of an advertiser.

FTC staff asked why the term “advertisement” should not be used as a label. Some workshop participants noted that the term is jarring and disruptive for readers and that other terms are softer, thus increasing the likelihood that readers will engage with the native advertising content. This, of course, implied that there might be some intent to minimally deceive consumers about the purpose and origination of the content. Another consideration, which was not mentioned at the workshop, is that ad blockers may block native advertising content if it includes the word “advertisement.” This would undermine the goal of native advertising, which is to better engage readers.

There was a discussion about labels such as “Sponsored Content,” “Sponsored By,” “Presented By,” and “Promoted By.” FTC staff noted that readers, seeing these terms, may believe that an advertiser has simply underwritten certain content that was independently created by the publisher, but they may not understand that the advertiser actually created the content. Labels such as “Sponsor Content” and “Sponsor-Generated Content” may be clearer. Other labels, often for links found at the bottom of many publisher webpages, are even less clear, including “Around the Web,” “You May Also Enjoy” and “Top Picks.”

Many advertisers and publishers are using design elements, including text placement, color, boxing and shading to call out content as native advertising. Academics are beginning to conduct research in this area; for example, one researcher found that labels placed at the top and left of native advertising content are more often noticed by readers. Some native ads include brand logos to be even more transparent about the source of the content.

The FTC is concerned that when native advertising content is shared through social media, labels often disappear and subsequent readers do not understand that content was paid for and/or created by an advertiser. The FTC is also concerned that some disclosures come after a reader has clicked on a link; or, even if there is prior disclosure, it is not until a reader has clicked on a link that the nature of the content becomes obvious.

The FTC is interested in developing industry-wide best practices. Some workshop participants were open to specific best practices or standards regarding labels and design. Others were only open to higher-level principles such as a commitment for increased transparency, which would allow individual companies to decide how to implement the principles. NAA will engage with the commission to discourage agency actions that would unduly burden newspapers as they explore this new source of advertising revenue.

Both advertisers and publishers that engage in native advertising are increasingly writing their own internal policies with a focus on promoting transparency. Industry groups are also beginning to develop guidance. For example, the Interactive Advertising Bureau recently released a report on native advertising, which includes principles for disclosure. The IAB states that “regardless of context, a reasonable consumer should be able to distinguish between what is paid advertising vs. what is publisher editorial content.” According to the IAB, the disclosure “must use language that conveys that the advertising has been paid for, thus making it an advertising unit, even if that unit does not contain traditional promotional advertising messages.” The disclosure must also “be large and visible enough for a consumer to notice it in the context of a given page and/or relative to the device that the ad is being viewed on.”

Additionally, the American Society of Magazine Editors recently published updated editorial guidelines “governing the relationship between editorial and advertising content.” The ASME document includes high-level principles, such as “The difference between editorial content and marketing messages must be transparent.” It also includes specific best practices for print and digital media. For example, for digital media, one recommended practice is that “Collections of paid links should be visually separated from editorial content by rules or shading and should be clearly labeled as advertising.”

NAA will continue to share guidance for increased transparency as it emerges across the advertising and publishing industries. Learn more by visiting our native advertising resource center.

First Published: December 17, 2013

About the Author

Sophia Cope is director of government affairs and legislative counsel at NAA. She has a decade of experience in civil liberties and technology law and policy having previously worked at the Center for Democracy & Technology and the First Amendment Project. She is responsible for all free speech, privacy and digital media issues at NAA.

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