The Federal Trade Commission released its long-anticipated enforcement policy on deceptively formatted native advertisements just before Christmas. The standards were originally discussed in a 2013 workshop on native ads.
In short, the wonky 16-page document highlighted what brands should and should not do with native advertising, reinforcing the federal agency’s long-held standards for other mediums such as print and TV.
The FTC says its message is clear.
"Consumers should know that it’s an ad before they interact with it, and knowing if the source of content is advertising is important to consumers’ decision-making and the weight they give product claims," says Laura Sullivan, attorney for the FTC’s Bureau of Consumer Protection.
The FTC disseminated the policy just before the New Year began to set the tone for 2016.
"We studied the issue and we realized that native advertising was simply the latest, and not likely to be the last, advertising channel that raises deceptive format concerns," adds Sullivan. "I think it’s more driven by the new opportunity digital offers advertisers and the greater proliferation. It’s the ability to inexpensively format and integrate native ads or ads that match the style and the layout of the content that they are integrated into."
Most agencies say they welcome the standards because they encourage more valuable content. Some claim the guidelines did not come as a surprise and will not change how they craft digital materials.
"Theoretically, this shouldn't change how agencies or brands approach native advertising," says Andrew Meyer, senior SEO manager at search marketing firm Seer Interactive. "For the brands we promote via native advertising, we require quite a bit of effort and investment prior to promotion including intensive research, content creation, graphic design, and interactive elements."
In other words, he adds, there should be more to native advertising than just blurring the church-state lines for consumers.
"[That process] ensures that what we're promoting has value," says Meyer. "If the content you’re pushing is just for page views or to dupe users, than you're approaching native advertising incorrectly."
Jay Friedman, COO of programmatic media planning and buying shop Goodway Group, agrees that at first glance, the guidelines seem "reasonable" and aimed more at weeding out the bad than restricting responsible advertisers.
"The new guidelines are clear, fair, and help us keep advertising clean and respectable," he says. "It won’t change how we do business — we believe in transparency with the consumer because there is a net positive in the end for the industry."
John Davies, CEO and chairman of Davies Public Affairs, believes most firms are in line with the letter of the law already.
"It’s always frustrating that legitimate players have to do all sorts of things to deal with a bunch of bad apples that try to take advantage of rules and regulations in order to do their one-time fraudulent activities," he says. "I think the people that are legitimate are following it already and make the line between editorial and advertising clear."
Some are even looking at the guidelines as a positive for marketing, saying they will boost the reputation of native ads among both the industry and consumers.
"The hope is that by weeding out the more deceptive practices and making native more transparent, consumers will feel better about interacting with this content," says Suzy Hill, VP of media at Racepoint Global. "I would even argue that these interactions are more valuable now that the consumer has a better understanding of the brand’s relationship with that content."
However, other industry observers are arguing the possibility for the reader to be deceived still exists when a native article is posted to social media or aggregated by another website or Google News.
However, the amount of spending on native advertising indicates it is not going away anytime soon. Business Insider’s Intelligence Unit predicts spending on native advertising will hit $21 billion by 2018, up by more than double from the $7.9 billion estimated for 2015.
Some marketers predict that as spending increases on native advertising and the practice becomes more common, consumers will demand higher-quality content.
"As more deceptive practices go away and consumers become more comfortable with native, there could be a higher demand for quality partnerships, which will of course drive up costs but will also mean that brands will have to raise the bar in the quality of content they are providing," says Hill.
She and others anticipate that content distribution outlets and recommendation widgets will be most affected by the new FTC policies.
"I don’t think they will change their business model, but they will need to be clearer with the labeling," Hill explains. "This new labeling should not affect results for quality content, but for less reputable content, it may drive up the cost per click that those advertisers pay as they compete harder for that same click. In the long run, it would be great if it forced higher quality content across the board."
Yet even if the layout and formatting of native advertising changes on some websites to ensure compliance and that consumers know it’s not editorial content, that doesn’t mean users will actually read the ads. That depends on whether the topic is specific and the message is tailored to the right viewer.
"Even if some of the best examples of native advertising were more clearly labeled as advertisements, it shouldn't hinder performance, as people still want to consume the content," notes Meyer. "It's all about quality, and as an agency, regardless of how people find branded content on the Web, we want to ensure they find it valuable even if it’s sponsored."
What does the future of native advertising look like?
Marketing and PR pros say success using native advertising will depend on improved quality, targeting, and transparency, Meyer adds.
"Coming up with more creative content will be integral to winning for brands via native advertising," he adds.
Tracy Shea, chief digital officer at Lippe Taylor, says transparency will be essential.
"Our industry isn’t in the practice of deception, so this new policy will drive agencies to make content and information that matters to humans, not just data-driven targets," he notes. "It’s now going to be cultural relevancy in content that makes a difference to someone."
Shea notes that today’s consumers don’t want to marketed to; rather, they crave quality content that provides value.
"We are going to have to do what we keep promising to do: tell relevant, valuable stories to interested audiences to garner positive support for a brand or an initiative," he adds. "Public relations just became the driver in the marketing world."