The FTC (Finally) Cracks Down on Native Advertising
Last week the Federal Trade Commission (FTC) released an enforcement policy that outlines which forms of native advertising it deems acceptable and which it deems deceptive. This new policy means many leading native ad platforms and publishers will need to modify their current widget labels and disclosures.
A Second Chance at First Impressions?
Will this give native advertising a second chance at a first impression? When first launched, native advertising had little-to-no regulation. Over the years there have been long public discussions around the proper approach to disclosures. Sure, a handful of transparent companies labeled their ad units as they should, but others, however, skirted around lax rules to avoid labeling their ad units altogether. Well, as of last week, that option has ended.
The release of the FTC statement regarding standardized industry disclosures means a second chance for native advertising. The few companies that have always been proponents of transparent advertising were vindicated by the decision that Native Ad Widgets should be labeled with the words “Ads” or “Advertisement” above each of the units. This is the first time the FTC has issued guidance for online native advertising outside of search advertising; for the full statement read more here.
Will Regulation Help, or Hurt?
The shame here is that native advertising is beneficial to readers, advertisers, and publishers, so the industry should have been able to regulate itself but, unfortunately, wasn’t. Native advertising requires a higher level of investment and creativity than other forms of advertising, with attempts to entertain and inform, rather than assault the reader with a hard-sell on a product or offer.
With the government now being forced to step in and regulate, there is some concern that it could possibly halt creativity. The IAB recently released a statement on the negative effects such guidelines could have.
“While guidance serves great benefit to industry, it must also be technically feasible, creatively relevant, and not stifle innovation,” Brad Weltman, vice president of public policy at the IAB, noted in a prepared statement.
While some companies have been able to innovate within self-imposed guidelines that are now coming to fruition, others have tried to skirt the disclosures, using terms such as “Sponsored by” or “Promoted Content”, which now the FTC officially deems potentially confusing to consumers. These companies may be concerned by these “now official” regulations, but other companies have flourished under the transparent disclosures and have been consistently advocating for labeling on native widgets as well as advertiser landing pages.
The guidelines make it clear that everyone who participates directly or indirectly in creating or presenting native ads is held accountable, including ad tech companies and publishers. It will be exciting to see the rest of the native advertising industry change their widget labels to include words such as “Ad” or “Advertising” and where this now takes native advertising—a tactic that has always specialized in evolution.