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January 5th, 2016

The FTC Addresses Native Advertising Labeling

You might have missed it as you prepared for the holidays, but just before Christmas the U.S. Federal Trade Commission (FTC) issued updated guidance regarding native advertising. As native advertising becomes increasingly common, this is important to both the practitioners who develop it and the publishers who share it.

To recap the new guidance: The FTC has long worked to ensure that ads do not deceive, by either content or presentation. This is a valid concern; a recent study by content marketing firm Contently indicated that a majority of consumers struggle to distinguish sponsored content from editorial content — and about half of consumers (48%) report feeling “duped” when they realize that what they thought was a genuine article is actually an ad.

figure4x-2The updated guidance establishes that the FTC considers both advertisers and publishers responsible for clearly labeling native advertising: “ …advertisers are responsible for ensuring that native ads are identifiable as advertising before consumers arrive at the main advertising page. In addition, no matter how consumers arrive at advertising content, it must not mislead them about its commercial nature.”  (Emphases mine.)

Marketers have an obligation not only to clearly label their content as advertising, but also to work with publishers to ensure that the presentation of the content clearly indicates that it’s advertising. Brands and their agencies must make sure no reader could be unaware that a piece is paid placement; it is not solely the publisher’s obligation. As marketers, we need to be conscious of this responsibility as we are creating native content, even before it’s placed. (The FTC even specifies where the disclosure should appear: on the left side of the page, close to the headline.) Build clear disclosure into your content from the beginning, and talk to the publisher about how the content will appear on-site.

At the same time, some observers suggest that the updated guidance may mean that the FTC is considering more aggressively policing publishers, too. As major publishers draw larger shares of revenue from native advertising — Gawker, for example, gets one third of its revenue from native ads — and as major digital publishers like BuzzFeed and Vox Media have established in-house ad agencies to help advertisers develop native content for their sites, the FTC may be focusing a sharper eye on publishers’ activity than before.

“Everyone who participates directly or indirectly in creating or presenting native ads should make sure that ads don’t mislead consumers about their commercial nature.” — The FTC

Clearly, the FTC is more concerned than ever with native advertising and whether consumers can be expected to understand that they are viewing promotional content versus independent editorial content. In AdAge, one prominent advertising lawyer suggested that “we can expect that 2016 will be the year of the FTC bringing native advertising cases.”

Predictably, the advertising and marketing industry isn’t happy with the scrutiny. The Interactive Advertising Bureau, in its response to the FTC, said it’s “concerned” about the updated guidance. The industry, it said, may find the updated rules “overly prescriptive,” and if the guidance is unclear, it might “stifle innovation.” Of course, the IAB doesn’t oppose disclosure overall; it’s just concerned about how the FTC will determine which terms are acceptable.

“To that end, we have reservations about some elements of the Commission’s Guidance. In particular, the section on ‘clarity of meaning’ in native advertising disclosures is overly prescriptive, especially absent any compelling evidence to justify some terms over others.” — IAB statement

Certainly, the dialogue between the FTC, the advertising industry, and publishers will continue well into 2016. But the environment is shifting, and pressure is growing to make sure native content is clearly disclosed.

So how should your brand or agency react to the new guidance? A few tips for staying in the FTC’s good graces:

  1. Discuss disclosure policies with your contacts at the publishing outlet. Understand in advance how the publication indicates which content is sponsored. This will help you draft and structure it appropriately. Remember, the FTC has indicated that disclosures should be on the left-hand side of the page, close to the headline; disclosures should also be in unambiguous language, positioned very close to the native ads to which they relate, written in easy-to-read font, and stand out against the background.
  2. As you draft your content, leave ample room for your disclosure, either by including it directly in your copy or by suggesting language for the publisher’s consideration. Yes, it can feel awkward to note at the beginning of your piece that the upcoming content is advertising — just as online influencers feel awkward putting “#ad” in a tweet you’ve contracted them to post. But the FTC is clear that disclosure must be obvious; as awkward as it may feel, remember that the onus is on both advertiser and publisher to disclose. Build disclosure in from the ground up.
  3. Before you submit the copy to the publisher, ask colleagues to give it a “sniff test.” Have a few people read it over, and see if they can easily discern that the piece is native advertising. Your colleagues usually have pretty good content sense; they’ll be able to tell you whether you’ve been clear enough.
  4. Counsel and inform your clients and managers — whether they currently engage in native advertising or not — about the new FTC guidance, the FTC’s intent, and what the rules mean for content creators and publishers. It will be much easier to get approval for content that’s clearly labeled as advertising if clients and managers understand the rules from the outset.

The sea change in the media industry’s revenue model, the expansion of digital publishing, and the subsequent popularity of native advertising have given rise to something of an uncharted world right now. Content creators, publishers, and the FTC are trying to blaze a new trail without a guidebook. Patience, understanding, and a little trial and error will be required before we get to a standard everyone understands and accepts. Just keep in mind that for now, it’s better to over-disclose and be safe than to under-disclose and be sorry.

About the Author
Christopher Barger is Senior Vice President of Global Digital at Voce/Porter Novelli. You can follow him on Twitter @cbarger.

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