FTC Issues Guidelines To Prevent Native Ads From Crossing Into “Deception” Territory

As so-called “native ads” have become increasingly popular critics have argued they’re effective because consumers can’t tell them apart from actual “content.” Proponents say, by contrast, that they provide a better user experience and don’t disrupt enjoyment of content.

The FTC has now stepped into the fray and issued guidelines for publishers and marketers to prevent native ad formats and their presentation from running afoul of federal rules surrounding truth in advertising. Specifically the agency has published Native Advertising: A Guide for Business to enable publishers to understand what will and won’t be considered “deceptive” when it comes to native ads:

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. 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.

The FTC looks at the totality of the presentation of the ad in context to determine deceptiveness. A finding of consumer deception will essentially be case by case.

The FTC has said that it “will find an advertisement deceptive if the ad misleads reasonable consumers as to its nature or source, including that a party other than the sponsoring advertiser is its source.” A safe rule of thumb is that ads must be clearly labeled as commercial or ad content:

1. From the FTC’s perspective, the watchword is transparency.  An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.
2. 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.
3. If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent.

According to multiple studies, native ads have been shown to be effective. Other data indicate, however, that consumers are often confused and don’t distinguish between native ads and articles or content. Indeed, some publishers have been self-consciously trying to blur the line between content and native ads without technically crossing over into “deceptiveness.”

The new FTC publication and guidelines are putting the industry on notice that it may be ready undertake enforcement actions against native advertising that appears too close to content.