Unpacking The FTC’s New Native Advertising Guidelines

The FTC (Federal Trade Commission) shook the ad world from its holiday slumber to release an Enforcement Policy Statement on Deceptively Formatted Advertisements and a corresponding guidance document directly addressing native advertising.

Many were blindsided by the sudden announcement, released on December 22, but possibly more shocking was how quickly the IAB responded, issuing a press release just two days later – on Christmas Eve.

So now that we’ve shaken off the holidays…what’s all the fuss about?

The enforcement policy essentially lays out three requirements for an advertisement to be deemed non-deceptive. In the FTC’s own words:

  1. An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad;
  2. Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure. In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising;
  3. If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent.

The first point we can all agree on: an ad shouldn’t pretend to be something other than an ad – but the whole point of native advertising is to look like the surroundings, which is where the second and third points become relevant, and where the IAB took issue.

Where is the line drawn between native ads that need disclosure messages and ones that are “so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure?”

In order to dispel the confusion, the IAB convened a meeting of its Native Advertising/Content Committee and Public Policy Council on January 5th at its New York HQ. It still remains unclear whether the FTC will hold ad servers, networks, agencies, or publishers responsible for adhering to these guidelines, and as such, it’s no surprise that many publishers were in attendance, from Forbes to BuzzFeed to Business Insider, as well as a myriad of ad-serving platforms.

Led by Susan Borst, Director of Industry Initiatives at the IAB, much of the discussion focused on the 17 specific examples laid out by the FTC as examples of instances when a disclosure message would be necessary, most of which focus on ad products currently in the market.

Widely used display advertising copy, such as “From Around the Web” and “More Content for You”, was specifically highlighted in one of the FTC examples as being likely to deceive consumers, and that’s not surprising given the data.

Unruly has found that only 3% of internet audiences have complete trust in advertising and less than half have any trust in advertising. So it’s no wonder consumers’ trust in advertising is at an all-time low, and use of ad blockers is at an all-time high and growing!

The focal point of this meeting was around the FTC’s declaration that “disclosures must be understandable”, and as such terms as ‘sponsored and ‘promotedshould be avoided as they “are at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site”.

Instead, the FTC recommends using the terms ‘Ad’, ‘Advertisement’, ‘Paid Advertisement’ or ‘Sponsored Advertising Content’.

Is the FTC going to crack down on advertisers and publishers who don’t use these disclosure messages?

Probably not, at least for the time being. Though Brad Weltman, VP of Public Policy at the IAB, couldn’t say with certainty whether these guidelines will translate to legally-binding regulations, it’s clear that the FTC wants the industry to meet certain standards, and they do have the legal jurisdiction to step in if enough isn’t being done to address their concerns.

Throughout 10 years operating in the native ad space (of course, it hasn’t always been called that!), with varying standards for advertising disclosure messages in place across markets, Unruly has consistently utilized a data-driven and best practices approach to labeling our ads in a manner that is clear to consumers. Marketers and publishers often ask us how to effectively label their advertisements, and we feel strongly that clear and consistent messaging plays a huge role in making your brand more transparent and trustworthy, while simultaneously making the digital advertising landscape less ambiguous as a whole.

The IAB will reconvene the Native Advertising/Content Committee and the Public Policy and Legal Affairs Councils in 3-4 months to discuss how companies can address the FTC’s concerns, and we’re excited to bring new ideas to the table on how to make ads stand out for the right reasons!