FTC Takes Action on Native Advertising

In December, 2015, the Federal Trade Commission issued comprehensive guidelines on the affirmative disclosures needed when using Native Advertising. This includes illustrations of content that it considers to be advertising, as well as how to make “clear and prominent” disclosures that the content is advertising. (Native Advertising, A Guide for Business, FTC, December 2015, www.ftc.gov)

It is clear the FTC expects the ad industry to read, follow, and utilize the guidance. In fact, the Commission has just issued its first consent settlement since publishing its guidelines with Lord & Taylor for lack of transparency in its native advertising in a fashion magazine and on social media.

Lord and Taylor posted a photo of a dress from its Design Lab collection along with company edited caption on its Instagram account and ran an article about the dress collection online. However the Instagram post and article didn’t disclose they were paid advertisements. According to the FTC’s complaint Lord  & Taylor gifted its dress to 50 fashion influencers who were paid $1,000 to $4,000 to post on Instagram a photo of themselves wearing the dress. While they did mention Lord & Taylor’s Instagram account and the hashtag #DesignLab in the photo caption, they were not required to state that they had been compensated. The complaint states that the campaign reached 11.4 million users and resulted in 328,000 brand engagements. “Lord & Taylor needs to be straight with consumers in its online marketing campaigns,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “Consumers have the right to know when they’re looking at paid advertising.” (“Lord & Taylor Reaches Settlement with FTC Over Native Ad Disclosures,” by Nathalie Tadena, The Wall Street Journal, March 15, 2016, www.wsj.com)

Native Advertising, also known as sponsored content, has become one of the hottest marketing tactics with 75 percent of online publishers offering it to their advertisers. It is designed to look like the surrounding original or editorial content and therefore better attract consumer attention. However, as the FTC guidelines and the Lord & Taylor case show consumers often are misled into believing they are watching editorial content and not paid advertising. In response the Institute for Advertising Ethics Principle 3 urges: Advertisers should clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment, both online and offline.

I believe there is a win-win solution in designing these ads so that the information is related to the website’s original content, including in its design, and also insuring that the consumer understands it is advertising. The FTC in its recent guidelines, states, “Terms likely to be understood include”: “Ad,” “Advertisement,” ” Paid Advertisement,” “Sponsored Advertising Content,” or some variation thereof.

To be successful with Native Advertising will require that advertisers and their agencies and publishers be ethical and follow the law. I like the way Jon Salm of MillwardBrown puts it: ” The key for advertisers will be to partner with the best publishers, and the key for publishers will be to follow the native golden rules – confidently identify native ad content, match the site’s editorial tone, and create content that resonates with the audience.” (“Getting Native Advertising Right,” by Jon Salm, January 2015, www.millwardbrown.com)

About the Author

Wally Snyder

Wally Snyder has devoted his entire professional career to working on advertising development, regulation and ethics. He served as a trial lawyer and as Assistant Director for Advertising Practices at the Federal Trade Commission before joining the American Advertising Federation where he served as president and CEO, from 1992–2008. Currently, he serves as Executive Director for the Institute for Advertising Ethics. Wally was inducted into the Advertising Hall of Fame® in 2009.

 

 

Native Advertising: Creating a True Win-Win Media Environment

Journalist Resources published an article containing research and commentary on the increasing use and effectiveness of “native advertising,” a rapidly growing format for sponsored content. (Stefanie Knoll, August 19, 2015, journalists resource.org). The article reports the growing design of ads to look like original or editorial content because “banner” ads are not attracting consumer attention, and the increasing use of ad blocking technology allows consumers to avoid online advertising on sites they visit with their laptops, iPhones and iPads.

The report emphasizes the controversy over native advertisers with proponents seeing it “attractive because it allows them to take advantage of the credibility and authority of journalistic outlets. By making ads appear to be editorial content, the advertisers are able to catch consumers off guard.” Critics contend “that it infringes on the the barrier that should separate the editorial and business sides – a deliberate division meant to protect and maintain journalistic independence.”

This is the debate that frames the ethical dilemma concerning native advertising. There are those who argue consumers do not need to know the content they are viewing is advertising/paid content. However, in my view, if consumers are unaware that the content they are viewing or reading is paid for advertising, they are being misled and treated unethically. Consumers could attach more credibility to the content if they believe it to be original/editorial content. Consumers know that advertising’s purpose is to provide information to “persuade” them to buy a product or service. That is not unethical, unless the ads are disguised to look like editorial content.

This is the position taken by the Institute for Advertising Ethics’ Principle 3: “Advertisers should clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment, both online and offline.”

I do believe there is a win-win for consumers and marketers when native advertising is conducted in a truthful and ethical manner. Advertising content should be “attractive” and “blend” with the the media environment in which they are run. But, the consumer needs to know it is paid content.  This is the position taken by the Internet Advertising Bureau (IAB): “Regardless of native advertising unit type, the IAB advocates that, for paid native ad units, clarity and prominence is paramount.”  Here are ad disclosure tags being used today to disclose advertising and the advertiser for particular native ads: Sponsored By; Sponsored Post; Presented By; Paid Post; Promoted By; Ad; and Advertisement.

Taking into consideration that ad blocking is now a reality, treating the consumer ethical is critical. Consumers can install an app that will block all advertisements or one that will allow them to “whitelist” sites where they want to keep the advertisements they find attractive and useful. The answer is not to disguise the ad content because consumers will eventually learn and react negatively.

Rather, we should follow the advice of industry professionals that understand the strength of ethically produced native advertising. As an illustration, Jon Salm of MillwardBrown urges, “The key for advertisers will be to partner with the best publishers, and the key for publishers will be to follow the golden rules – confidently identify native ads as sponsored content, match the editorial tone, and create content that resonates with the audience.” “Getting Native Advertising Right”, January 15, 2015, www.millwardbrown.com.

About the Author

Wally Snyder

Wally Snyder has devoted his entire professional career to working on advertising development, regulation and ethics. He served as a trial lawyer and as Assistant Director for Advertising Practices at the Federal Trade Commission before joining the American Advertising Federation where he served as president and CEO, from 1992–2008. Currently, he serves as Executive Director for the Institute for Advertising Ethics. Wally was inducted into the Advertising Hall of Fame® in 2009.

Advertising Ethics: Contradiction in Terms? NO!

Gene Ahner in his book on Business Ethics states, “Six Services are considered critical in a global economy: accounting, advertising, banking, insurance, law and management consulting.” For me the business and societal purpose of advertising is to provide consumers with the information needed, including competitive performance and pricing, to make our purchase decisions.  Advertising does provide the basis for product and service improvement.  After all, if you could not inform consumers about your product why would you want to improve it?

To achieve its critical role in the economy advertising must be conducted in an ethical manner.  My ethical standard is “Do the Right Thing for Consumers.”  Specifically, claims must be truthful with clear and conspicuous disclosures so they are not overstated; treat consumers “fairly” depending on the nature of the audience, e.g. children, and nature of the product, e.g. alcoholic beverages; and not contain content that stereotypes people, or contains violence, including against women.

Today’s advertising requiring ethical diligence include not blurring the line between paid ad content and editorial/news (“Native Advertising”), being transparent as to the conditions, e.g. payment, affecting consumer endorsements on blogs; protecting consumer privacy and providing choice regarding information collected online; and assuring that children understand that the messages directed to them are advertisements.

Consumers care about ethics and will reward and punish companies for how it is practiced.  Their ability to do so has been enhanced by online consumer information power.  Recent research shows that 95% of consumers have shared a negative experience; the good news is that 87% have shared a favorable one.

Perhaps, the greatest incentive for the practice of enhanced advertising ethics rests on the shoulders of our industry professionals.  Gene Ahner, who I quoted earlier, terms their ethical decisions “Ethics by Achievement,” ruled by their feelings, and hearts, not their brains.

When you know how important your profession is you should want to do your best ethically and professionally.

About the Author

Wally Snyder

Wally Snyder, Institute for
Advertising Ethics, AAF

Wally Snyder has devoted his entire professional career to working on advertising development, regulation and ethics. He served as a trial lawyer and as Assistant Director for Advertising Practices at the Federal Trade Commission before joining the American Advertising Federation where he served as president and CEO, from 1992–2008. Currently, he serves as Executive Director for the Institute for Advertising Ethics. Wally was inducted into the Advertising Hall of Fame® in 2009.

A Look at New and Emerging Ad Formats

Presented by:
buzzfeedtl

By Andy Wiedlin, Chief Revenue Officer, BuzzFeed

Today, as we consider new formats for digital advertising, I’m reminded of the famous Einstein quote on the definition of insanity: “Doing the same thing over and over again and expecting different results”.

From the origin of the consumer Internet, banners have been the primary advertising vehicle. They’ve been ignored, maligned and largely ineffective. In a mobile/broadband world, we have virtually unlimited supply and decreasing demand. This is an economic prescription for disaster.

An Einstein companion quote is “We cannot solve our problems with the same thinking we used when we created them”. Social, mobile and video make the world of banners obsolete and dead.
Yet some advertisers and publishers insist on doing the same thing and expect better results. The newest savior is “Big Data”: if we just use more data we’ll get this broken down jalopy to run.

Many advertisers and publishers continue to support the Banner Industrial Complex because of inertia and apathy. “It’s easy”, “there is a marketplace” and “it is standard”. We’ve known for years that the emperor has no clothes, yet we continue to invest in a broken system. It’s as if advertisers and publishers joined hands at the top of the John Hancock building, jumped over the side and, as they plummet toward the inescapable end, they murmur to each other “ok so far…ok so far…”. Continue Reading →

Native Advertising Isn’t New, But It’s The Future

By Jonathan Perelman, VP, Agency Strategy and Development, BuzzFeed

Media consumption and consumer habits are rapidly changing. Look no further than your own behavior. Do you sleep with your phone by your bed? Sure, it’s your alarm clock, but do you check it before you go to sleep, or when you first wake up? Let’s be honest. The challenge for marketers today is to reach consumers in a way that invites them in, not distracts them from what they are doing.

Native advertising is a hot topic in marketing today and for good reason. Unlike intrusive banner ads, native advertising does not distract consumers from what they are doing, but adds to the overall experience.  With all the attention recently given to native, we should remember that native advertising isn’t new in digital. The most well known is search, as the ads are native to the environment of the search results. However, the convergence of content marketing and native advertising provides an organic way for brands to enter the conversation with consumers.

Throughout the history of advertising, we have taken the type of ads that have worked on one platform, and tried to make them work for the new technology. The first radio ads simply were the audio of a print spot. The next evolution were TV ads, which were radio spots with an image. Today, standard banner ads are the most prevalent ads, but that doesn’t make them good.  Ask yourself, what’s the last great banner ad you’ve seen?

As the digital advertising ecosystem has evolved from Portal -> Search -> Social, online ads need to evolve as well. As mentioned earlier, native advertising isn’t new, but can be broken into two categories, 1. Utility 2. Content. If you’re in a new city and need to find a coffee shop, you’re likely to search for one. Maybe you launch the maps function to search for directions to your desired location. But, what happens after you find that shop, and you’re the 15th person in line for that latte? Most likely you take out your phone to snack on content until the milk is steamed and your caffeine is ready. Increasingly, the type of content that people are consuming is branding, as it is as equally captivating as editorial.

The challenge for advertisers today is to be seen and stand out in an environment where social is the new starting point online. Creating social, shareable content to be served in a native environment allows the advertiser to tell a story, and to engage the consumer in the natural environment of content.

Native ads are even more important when we talk about mobile. The promise of mobile appears to be unfulfilled from an advertising perspective. Simply repurposing ads from desktop onto a smaller screen doesn’t work. A recent study* found that 40% of clicks on mobile banner ads are a result of fat-finger clicks, or mistakes. At BuzzFeed, we see more sharing of content (including ads) from the mobile device than we do on desktop. We don’t consider mobile as a separate platform, we think mobile web first.

Native advertising isn’t new, but the convergence of factors leads to native being the perfect type of advertising for this stage of the web. Combining the elements of social, brands as publishers and the importance of the mobile web are all factors that lead to the prominence and opportunity of native advertising.

This article appeared as part of the AAF’s 2013 Digital Resource Guide, which can be downloaded here.

* http://gigaom.com/2012/08/31/report-40-percent-of-mobile-clicks-are-fraud-or-accidents/