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FTC’s Native Advertising Workshop Postscript: Regulatory Forecast Still Unclear

Posted by Fernando Bohorquez Jr. on December 16th, 2013 at 10:00 am

This post is co-authored by Alan M. Pate

FTC’s Native Advertising Workshop Postscript: Regulatory Forecast Still Unclear

On December 4th, the FTC held its eagerly anticipated workshop on native advertising—“Blurred Lines: Advertising or Content”. To underscore how seriously the regulator is taking the advertising practice, the chairwoman Edith Ramirez kicked off the conference. She was followed by other heavyweights at the agency, including Jessica Rich, Director of the FTC Bureau of Consumer Protection and Mary K. Engle, Associate Director of Division of Advertising Practices. The ambitious day-long agenda began with a historical overview of the FTC’s regulation of sponsored content and expanded to consumer ad perception research, native ad critiques, and a spirited panel discussion on what constitutes “best practices”. In addition to the FTC’s speakers, panelists included many of the major players in the online advertising industry, such as Buzzfeed, the Interactive Advertising Bureau (IAB), the Huffington Post, and National Advertising Division of the Council of Better Business Bureaus (NAD).

Ultimately, presenters and panelists arrived at anything but a consistent answer on how native advertising should be policed. As the FTC’s Mary K. Engle noted during the last panel discussion, the workshop likely raised more questions for regulators than it answered.

Several speakers highlighted the benefits native advertising offers brands. By capitalizing on the collection of consumer data, native allows advertisers to better target and engage with consumers better than they ever could thru print and TV. The web allows quick leveraging of data about how consumers interact with native content and allows advertisers to better craft their ads to a relevant audience. However, it is this very consumer targeting issue – “infomercials on steroids” – that drives one of the FTC’s principle concerns with the practice and why it held the workshop.

One frequent point of contention at the workshop was what an adequate native advertising disclosure should say. Some panelists were skeptical that placing the word “Sponsored” next to a native advertisement really conveyed the message to consumers that the content was paid advertising. In television, as one panelist pointed out, when someone says a show is “Sponsored” by a brand, consumers don’t think that the program was created by an advertiser.

Further debate surrounded so-called “recommendation engines”. These services often place native content on websites’ homepages under the label “From Around the Web”, “You May Like”, or “Suggested Articles”. (For example check out the bottom of a Huffington Post article). While some at the workshop debated whether these recommended/sponsored articles were native advertising at all, others questioned if recommendation engines were providing adequate disclosures. For instance, do recommendation engines need to disclose each recommended articles as advertising content by placing disclosures next to each hyperlink?

Another common question raised was how publishers should visually distinguish native content from editorial content. Should there be different colored shading? Borders? Is a text label enough? Other discussion centered on social media and native advertising—for instance, is native content still advertising when a consumer tweets it out to his friend?

In conjunction with the workshop, IAB released its Native Advertising Playbook. The playbook defines six “core interactive ad formats” that are being used in native advertising and lays out overarching principles to ensure consumers can distinguish paid advertising content versus editorial content.

For those who missed the workshop, you can check out the FTC’s slide-deck here. You can also check out the full video of the workshop at the FTC’s website. We’ll be sure to follow up with any further guidance that comes out of last Wednesday’s workshop. As mentioned in their closing remarks, the FTC is considering if additional guidance specific to native is needed. In the meantime, check out our Guide to Native Advertising’s Legal Issues, discussing some native advertising best practices under the existing laws and regulations out there today.

DISCLAIMER: This article does not constitute legal advice and because of its general nature the information provided may not be applicable in many situations and should not be acted upon without specific legal advice based on particular facts and circumstances.

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