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With ad blockers here to stay, publishers and advertisers have rushed to develop new ways of reaching consumers online.

One of the fastest-growing alternatives to traditional digital advertising is native advertising.

Some publishers now earn significant percentages of their revenue from native ads, and there's no evidence that interest in and adoption of native ads will wane any time soon.

If anything, growth in the use of native ads will only accelerate in 2016.

But native advertising has presented a number of challenges. Some of the biggest relate to concern over disclosure and transparency.

And these concerns aren't purely theoretical. In the United States, the Federal Trade Commission (FTC) has warned about native ads that could potentially confuse consumers.

This week, the FTC issued an enforcement policy statement and a business guidance document designed to help advertisers better understand what they can and can't do.

These could also pave the way for enforcement actions next year, so here's what advertisers need to know...

Ads need to be recognizable as ads

Native advertising might be relatively new, but the FTC will evaluate it using the "bedrock tenet" that it uses to evaluate all advertising.

That tenet: "an ad shouldn’t convey that it’s anything other than an ad."

Specifically, there should be no "implied or express representation that [a native ad] comes from a party other than the sponsoring advertiser."

Adequate disclosure is contextual

How can publishers and advertisers ensure that native ads don't appear to be anything other than ads?

Prominent, explicit disclosure that screams "This is an ad!" is an obvious option, but it's a bit more complicated than that.

As the FTC's guidelines explain, disclosure can come in a variety of forms, and there are many factors the FTC looks at when determining whether or not disclosure is adequate.

These include the language used, fonts and colors, and proximity to the ad content.

Fortunately, the FTC has provided more than a dozen examples describing a realistic scenario and how it would evaluate where and what kind of disclosure would be appropriate.

For example, the FTC notes that on a video-centric site, "consumers might pay little attention to written descriptions and instead look at thumbnail images of the videos."

Therefore, "a disclosure placed directly on the thumbnail image itself is most likely to be effective."

Mobile and tablet matters

According to the FTC, "Disclosures must be clear and prominent on all devices and platforms that consumers may use to view native ads."

In other words, an ad that is compliant with the FTC's disclosure requirements at one resolution but not another is not compliant.

Native ads must be compliant even when syndicated

Some of the largest users of native advertising are blog and content destinations, and the FTC makes it clear that native ads published on these sites must also adhere to disclosure requirements when the content from those ads are syndicated elsewhere. 

"The same principles of transparency and disclosure apply" to news feeds and content recommendation widgets, as well as email and social media:

Advertisers should maintain disclosures when native ads are republished by others in non-paid search results, social media, email, or other media.

In non-paid search results, consumers are more likely to notice a disclosure if it’s placed at the beginning of the title tag for a native ad’s search listing. Similarly, URL links for posting or sharing in social media or email should include a disclosure at the beginning of the native ad’s URL.

In some circumstances, native ads for republishing in other media may include other distracting elements such as webpage snippets, images, or graphics. In placing disclosures, advertisers also should consider how these additional visual elements might influence where consumers look before they click on native ads.

Publishers, agencies and ad networks could also be on the hook

Advertisers are obviously responsible for the ads promoting their wares, but the FTC warns that publishers, agencies and ad networks could also find themselves sharing responsibility for non-compliant native ads.

"Everyone who participates directly or indirectly in creating or presenting native ads should make sure that ads don’t mislead consumers about their commercial nature," the FTC advises.

Patricio Robles

Published 4 January, 2016 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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