How to Use Native Advertising Without Getting Fined by the FTC

How to Use Native Advertising

By Kerry Gorgone, {grow} Contributing Columnist

By now, you’ve probably heard the term “native advertising,” which means “content that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it online.” (Federal Trade Commission guide, Native Advertising: A Guide for Businesses).

Now that relevant content powers marketing, it makes sense that advertisers would try to make their messaging more relevant to their audiences, as well. Enter native advertising.

If you’ve been to BuzzFeed’s site lately, you’ve definitely seen native ads on display next to actual site content.

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The power in this form of advertising is that it doesn’t disrupt the user experience. People have gotten very good at filtering out advertising messages. In many cases, people don’t even see ads anymore: that phenomenon is known as banner blindness.

Not that people necessarily need to do their own filtering: people can install ad blocking software if they choose (and many people have). Ad blocking grew 48 percent in the year leading up to June 2015.

Either way, they won’t see traditional display ads.

Native advertising works differently. It mimics actual content in terms of look, feel, and sometimes even topic, so it might offer a solution for marketers concerned about the rise of ad blocking software.

And native ads are effective: Just ask BuzzFeed. The company tripled its revenue from 2012 to 2013, then hit $100 million in 2014. And native ads yield higher clickthrough rates than traditional banner ads, especially on mobile. Studies show native-mobile ads generate clickthrough rates of more than one percent, while the average clickthrough rate of display ads is 0.06 percent.)

Native advertising and deception

But why do they work? Are advertisers tricking consumers into viewing their ads by making them look like actual content? In some cases, yes. And people don’t like it. Publishers also need to be careful not to make consumers feel duped into reading adverts. Recent research shows that 48% of readers have felt deceived when they realized that a piece of content was actually sponsored by a brand.

Therein lies the problem: native advertising is more effective because it masquerades as actual content. But it’s illegal to pass advertising messages off as editorial content. The Advertising Standards Authority in the United Kingdom, for instance, banned a native YouTube ad sponsored by Oreo that featured two well known video bloggers because the agency felt it was not clearly identified as marketing communication.

Stateside, the Federal Trade Commission (“FTC”) has long waged war on false advertising—marketing or advertising communications that tend to mislead consumers. Recently, the FTC issued an “enforcement policy statement on deceptively formatted advertisements” giving advertisers and publishers alike a heads up: deceptive native ads will not be tolerated.

So how can your brand capitalize on native advertising without breaking the law? The FTC offers some insight in their guide, “Native Advertising: A Guide for Businesses.”

Here are a few key precautions brands can take:

1) When in doubt, disclose that the content is sponsored.

Reading the guide, you’ll see that there are some instances in which the FTC thinks disclosure would be required, and others in which it might not. Why take the chance? Unless your facts clearly align with one of the examples the FTC uses, err on the side of making sure people know the content is sponsored. 

2) Distinguish your sponsored content from the publisher’s editorial content.

You might make it appear different visually, you could choose a topic that’s out of the ordinary for the publisher’s site, or you could use a call to action that’s obviously an ad (e.g. “click to view the Sylvania light bulbs sales catalog). You might even use all of these approaches.

According to the FTC, “the more a native ad is similar in format and topic to content on the publisher’s site, the more likely that a disclosure will be necessary to prevent deception. “

In other words, the same resemblance that makes native advertising so powerful also makes it potentially misleading. It’s up to you to make sure that readers / viewers know your content is sponsored.

3) Disclose in multiple ways.

You might say at the beginning of a video, for instance, that this content is sponsored. But someone might not be paying attention! You might make the statement at the end of the video. But someone might not watch all the way to the end!

If you want to effectively disclose that content is sponsored, use multiple methods: say it, show it (text on the screen) and repeat it in the description or introductory text. It’s better to over-disclose than to not disclose enough.

In the Oreo video mentioned above, for instance, the bloggers featured did make multiple statements saying things like “thanks to Oreo for making this video possible.” The governing agency in the United Kingdom, however, found those statements insufficient to ensure that viewers knew the video was really an advertisement for Oreo.

4) Make sure that your brand’s native advertising content is clearly labeled “sponsored” in search engine results.

In one example the FTC guide, a paint manufacturer’s sponsored video displays along with a text link and thumbnail image in response to a consumer’s search.  In the example, the text link to the video reads “Building a Deck: 5 Steps for Success” and doesn’t mention the paint manufacturer.

According to the FTC, the advertiser would need to ensure that any link or other visual elements like snippets or other graphics that will appear in non-paid search results effectively disclose the commercial nature of the content.

Native ad spending is increasing exponentially, and should exceed $10 billion by the year 2020. But for that massive investment to pay off, advertisers and marketers need to make sure they comply with the legal requirements and guidelines regarding disclosure and transparency.

In closing, let me say, definitively, that this post is not sponsored.

But I’m open to offers on the next one. : )

kerry gorgone

Kerry O’Shea Gorgone is a writer, lawyer, speaker and educator. She’s also Instructional Design Manager, Enterprise Training, at MarketingProfs. Kerry hosts the weekly Marketing Smarts podcast. Find Kerry on Google+ and Twitter.

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