5 Shades of Grey: Native Advertising and the FTC

Let me preface by saying the title doesn’t include a typo (my apologies for the title-bait). I don’t know how to compare an erotic romance novel featuring BDSM that’s written by a fellow Brit to the ongoing relationship between the FTC (Federal Trade Commission) and publishers in regard to Native Ads. That’s probably because I’ve never read the book. But if and when I do, I will write a sequel to this post.

So let’s dive right into what this article is really about. If you’re no stranger to digital content then you’ll know that since 1914 the FTC protects consumers from false advertising. There’s always been sponsored content, but the term Native Advertising has emerged and is putting the FTC’s knickers in a twist.

The Shades of Grey:

  1. If information is valuable does it really matter who provides it or their motives?
  2. Do publishers need to disclose that the content was also created by or for the advertiser?
  3. Will government regulation on labels go so far as to undercut the benefit marketers see?
  4. What is the best label language to use for sponsored content?
  5. How much graphic separation should there be between native ads and editorial?

Here are a couple of examples of brands that currently deal with paid content:

BuzzFeed

Partner content is authored by the paying brand and that brand is referred to as a “Buzzfeed Partner.”  It also contains a link back to the brand site and is accompanied by the social pages of the paying brand.

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Huffington Post

Sponsored content on The Huffington Post is differentiated by a top rail introducing the content’s sponsor, but no reporter identification. There is a blatant plug for Netflix in this example.

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Slate.com

Slate puts such content in a box entitled “Sponsored Content” with the brand’s logo and also labels their content “Sponsored Content Presented by” in huge letters.

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General Concerns

The FTC’s main concerns with native advertising is the labeling of paid content. Native advertising critics believe that publishers don’t take their labels far enough to distinguish sponsored content from organic, editorial content. FTC Chairwoman Edith Ramirez said that this form of marketing material is being “seamlessly and inconspicuously integrated into digital content.”

With that being said, publishers are having concerns with the FTC stance on Native Advertising. Their concerns are two-fold:

  1. Restrictions stifle the income of publishers. Total advertising revenues for U.S. newspapers have dropped 55 percent since their peak in 2005. Branded content is a promising revenue stream but if government restrictions make it too difficult for marketers, then brands will spend their money elsewhere.
  2. Readers vote with their eyeballs according to the SVP and CRO for Hearst Digital Media, Todd Haskell. Brands can afford to invest in research and production elements that yield high quality content. Content that publishers themselves cannot always create, content that gets their site social attention and publicity. Again, constricting government regulations threaten this benefit to publishers.

Recent Developments

Earlier this month the FTC hosted a Native Ads Workshop that included executive members of the FTC and publishing heavy weights such as the Huffington Post, Mashable, BuzzFeed, and The WSJ. The purpose of this workshop was to discuss the blending of organic content with sponsored content and FTC regulations.

The result: the FTC needs some time to think about their next move. The FTC’s Director of the Bureau of Consumer Protection Jessica Rich said, “We’re going to think about our next steps and determine if additional guidance from us will be useful.”

The Conclusion

Everyone needs to calm down and be patient for the FTC to make their next move. Publishers, best of luck. Hopefully in the coming months you’ll have clarity.

About the author

Lizzie Seedhouse