FTC: Sponsored content must be obvious

With 41% of brands incorporating sponsored content into their strategies, the Federal Trade Commission said Wednesday that marketers must not mislead consumers with their messages.

WASHINGTON: With 41% of brands incorporating sponsored content into their strategies, the Federal Trade Commission said Wednesday that marketers must not mislead consumers with their messages.

At a workshop on native advertising called “Blurred Lines: Advertising or Content?” FTC chairwoman Edith Ramirez said sponsored content is proliferating because the Internet offers brands, publishers, and marketers the opportunity to partner to reach large audiences.

She added that 73% of online publishers offer sponsored content on their sites, according to The Online Publishers Association's “Premium Content Brands Are Native Naturals” study released this summer. 

Also, 34% of advertising agencies work with clients on native advertising efforts, said Ramirez. 

Brands believe that native advertising, or ads that imitate the style of editorial content or news, make messages more relevant, engage consumers, and generate buzz about products or offerings. Yet Ramirez added that there is concern that the ads “improperly exploit consumers' trust in a publisher” or deceive them outright to influence purchasing decisions.

To remain trustworthy, brands need to make sure the way they deliver messages is lawful and that they have proper disclosures so consumers know they are reading sponsored content, rather than news.

Lesley Fair, staff attorney for the Bureau of Consumer Protection at the FTC, said that while the use of native advertising is growing, it dates back to nearly 100 years ago in the US with paid endorsements, advertorials, infomercials, and door-to-door sales.

She noted that a law on the books for many years says a connection between an endorser and a seller must be disclosed to the public. The FTC has also challenged a PR firm for having employees pose as consumers to post positive iTunes reviews about an app the agency was representing.

In August 2010, the FTC said that Reverb Communications staffers were behind fake iTunes accounts that endorsed clients' apps. Fair explained that the commission did not challenge the value of the apps, but said the reviews were actually fake ads made by employees helping to sell the product.

The FTC is also concerned about whether paid search results are clearly distinguished from organic results. The commission stated that even if a search result is partially paid for, it should be marked as such, while natural results should be listed in terms of relevance.

Fair added that the FTC realizes technology is evolving, so it is advising companies to make necessary adjustments to ensure advertising is clearly disclosed to consumers.

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