Un-blurring The Lines of The FTC and Native Advertising

February 18th, 2014 by Will Scott

To those of us in SEO and other forms of web marketing, native advertisements may seem like a God-send, the perfect combination of advertising power and positive user experience. The content-driven marketing platform is under a great deal of scrutiny, however, as it becomes more and more commonplace on the web.

While advertorials have been used for the greater part of the last century, native advertising is a more recent development that has capitalized on user experience in the digital age. In 2013, more than 70% of websites offered native advertising, and that number is likely to increase by around 10% this year (Mondaq). Due to their editorial nature, regulators—as well as members of the general public—are worried that native ads blend too seamlessly with unsponsored web content, and many are eager for the issue to be formally addressed.

The SEO value of native advertising is obvious. It’s an excellent tool that not only allows for optimization, but also provides great content to the user. And as we all know, content is king. Native ad campaigns can be more successful than traditional online ads, and as marketers, we like to believe that’s because users enjoy the content we’re putting out.

Critics, on the other hand, argue that the ad serves as a sneak attack, tricking users into clicking through. As Federal Trade Commission Chairwoman Edith Ramirez told Reuters, “By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source.” The drama around native advertising recently culminated in an FTC workshop focused on the method. This idea of hiding advertising in content inspired the FTC workshop’s name, “Blurred Lines: Advertising or Content?”

Un-blurring the Lines

The workshop’s panelists questioned standardization and responsibility, trying to keep all three parties—buyers, sellers, and consumers—in mind, with perhaps a little more favor to the consumers, who have the least agency in the situation. While everyone agreed that transparency is necessary, some argued that it wasn’t enough. Chris Jay Hoofnagle of Berkeley’s Law and Technology Center, for example, presented results from his research, showing that as many as 35% of consumers didn’t identify a native ad as an advertisement although it was marked. On the other hand, Chris Pedigo of the Online Publishers Association reported that more than 70% of websites that offer native advertising had not received complaints from users.

These statistics are just two examples of the myriad of arguments that seem to complicate the issue rather than clarifying. If there was one thing everyone could agree upon at the end of the workshop, it was that more work still needs to be done before any definite regulation can be imposed. Even Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, stated that native advertising may be too complex an issue for one-size-fits-all standardization.

In the meantime, the responsibility remains on the publisher to use discretion and focus on un-blurring the lines with clear indications of sponsorship on native ads. That may not be an attractive idea to advertisers hoping to fool users, but those producing strong content know better. If a company is actually creating the content users want, it shouldn’t matter that it’s marked with their logo and a big “Sponsored” label.

Publishers can look at the situation one of two ways: embrace the responsibility or abuse it. With freedom from regulation, publishers are free to respect users and clearly label native ads or take deals with eager corporations to disguise the content. We advertisers share in the opportunity, as we can always choose which publications we partner with.

Running a Clean Campaign

While partnering with a publication that sneaks in sponsored content may seem like a good tactic from a purely bottom-line-driven approach, some innovative companies have already proven to us that it’s really not necessary in the end. Several publications are working to show their dedication to corporate responsibility when it comes to native advertising, and it turns out native ads are successful no matter their labeling.

BuzzFeed is a truly great example. The site rejects display ads entirely, relying on only native ads for advertising revenue. And it’s working out pretty well, according to Peter Kafka at All Things D, Buzzfeed planned to earn somewhere around $40 million in 2013, but the end number ended up being closer to $60 million. This sales boom comes in spite of the fact that advertisers’ contributions on the site are marked “Sponsored.” Buzzfeed’s pioneering efforts have obviously benefited the company greatly, and their sponsored content often drives more web traffic than traditional posts.

Buzzfeed isn’t alone in their honest tactics. Many other companies acknowledge their native ads, including The New York Times, which announced in December that it would mark sponsored content with colored bars and “Paid Post.” According to the Times, publisher Arthur Sulzberger Jr. sent a letter to all employees emphasizing the “strict separation between the newsroom and the job of creating content for the new native ads.” The Times even published an article on their attitude toward native advertising, turning a policy into a great PR moment.

IAB Playbook

While no formal regulations are in place, the Interactive Advertising Bureau has set out to clarify the practice and set standards in the industry with the Native Advertising Playbook. By publishing the playbook, the IAB is acknowledging both the importance of native advertising and the danger it poses to unsuspecting consumers. Patrick Albano, the vice president of Social, Mobile and Innovation Sales at Yahoo and co-chair of the IAB Native Advertising Task Force explained that the organization set out with the goal of providing “guidance based on the state of the industry today while at the same time leaving room for flexibility to inspire innovation and growth.”

The playbook goes over six different “core interactive ad formats” that are currently being used in native advertising: in-feed units, paid search units, recommendation widgets, promoted listings, IAB standard ads with native elements and custom ads. It also gives broader ethical principles advertisers can use to protect the consumer. With all native ads, the playbook suggests advertisers consider form, function, integration, buying & targeting, measurement and disclosure to “ensure that a unit will meet their brand objectives.”

What This Means For Marketers

To be completely honest, things are just as uncertain as before the FTC held its workshop. The workshop raised just as many questions as it answered and proved that no one has thought of a fair way to regulate native advertising. What the workshop really did is formally alert the industry to the FTC’s ever-growing interest into this marketing technique. As an industry I’m sure we’d hoped to avoid regulation altogether. We will now need to wait and see, and the good news is it’s not imminent given industry professionals and federal regulators still can’t seem to figure out what, in particular, should be regulated, much less in what way.

In the meantime, Bureau Director Jessica Rich suggests that advertisers continue to rely on the FTC’s Dotcom Disclosure Guidelines when in doubt, while discussions continue. The IAB seems to be leading the discourse, with a series of native advertising workshops beginning in March 2014. Until then all we can do is focus on our own marketing efforts, working to keep consumers informed and clients successful. And native advertising is sure to be part of that process. In fact, with the advent of Penguin, native advertising seems to be our best hope. With each update, Google pushes even further back against search marketers, emphasizing the importance of well-thought-out and informative content. While I have always maintained that SEO is built on content, Google is regulating marketers in its own way by devaluing anchor text and deep links in favor of solid branding. So basically, if your native ads are giving users what they want, then Google’s happy, too.

Has all of the recent hubbub around native advertising had an impact on your strategies? What do you see on the horizon? I’d love to hear your thoughts on the subject and on my theories. Please share below!