FTC’s Native Advertising Guidance Proves Controversial

Late last month, the Federal Trade Commission spoke up on one of the most controversial issues in the publishing world: the rise of native advertising. The guidelines went too far for a prominent online-advertising group, while a consumer watchdog organization ripped the rules for ignoring privacy implications.

The Federal Trade Commission’s stocking stuffer for the ad industry, which could shake up a major trend in publishing, wasn’t particularly appreciated by advertisers.

Just before Christmas, the FTC released new disclosure guidelines for native advertising, recommending that publishers use clear, unambiguous language to disclose a native ad and place it directly above a headline or on an image within the article so a reader can see it clearly. And the agency is not so keen on usage of the term “promoted,” by the way.

“Advertisers should not use terms such as ‘promoted’ or ‘promoted stories,’ which in this context are at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site,” the FTC stated in its guidance for businesses.

The commission said it prefers language such as “ad,” “advertisement,” “paid advertisement,” or “sponsored advertising content.”

The commission also released a separate enforcement policy statement warning against use of “deceptively formatted advertising.”

“Although digital media has expanded and changed the way marketers reach consumers, all advertisers, including digital advertisers, must comply with the same legal principles regarding deceptive conduct the commission has long enforced,” the FTC stated in the document [PDF].

The guidelines came as the publishing industry continued to show increasing willingness to blur the line between advertising and editorial. Last year, the American Society of Magazine Editors allowed for a looser approach with its new standards.

Advertiser concerns

Within days of the guidelines’ release, the Interactive Advertising Bureau said it was “concerned” with the terms the FTC recommended for labeling native ads.

“While guidance serves great benefit to industry, it must also be technically feasible, creatively relevant, and not stifle innovation,” IAB Vice President of Public Policy Brad Weltman said in a news release. “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 asked for clarification on the guidelines, noting that the FTC’s language rules “could impinge on commercial speech protections and longstanding advertising conventions familiar in other media.”

Should Tracking Be Considered?

A watchdog group on the other side of the issue, however, says the rules don’t go far enough. Jeffrey Chester, executive director of the Center for Digital Democracy, has  strongly encouraged the FTC to craft rules for native advertising, but he suggested that the agency needs to do more to stop the profiling that leads to targeted online ads.

“Given the growing data-driven capability of native ads to be formatted to reflect a person’s interests and online behavior, as well as how it’s designed to work well on mobile devices and other screens, there are questions about the effectiveness of disclosure,” Chester told Consumer Affairs. “What’s needed is a 21st-century set of safeguards that enable consumers to control the data used to deliver them ads, especially formats like native that are specially designed to be disguised as content.”

Chester, in comments to The New York Times, added that clear disclosure on its own may not be enough to prevent misleading behavior by publishers. “Native advertising is product placement on digital steroids,” he said. “There’s no way that saying, ‘This is an ad,’ means anything.”

For now, publishers with active native advertising businesses, including The Huffington Post and Mashable, seem to be taking the disclosure rules in stride.

“We’ve reviewed the guidelines and will be following them appropriately,” a spokesman for Mashable told AdAge last week.

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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