The FTC's latest native regulations: A recap on the debate that followed

Feb 18, 2016
Photocredit: baranco1 via Visualhunt.com / CC BY

So, late december 2015 The Federal Trade Commission laid down the hammer on native advertising. Or, well, "laid down the hammer" might sound a tad more aggressive than it actually was, but The FTC told publishers and advertisers, in no uncertain terms, how native advertising should be done and perhaps more importantly, how it shouldn't be done. Specifically, the act of labelling is in focus.

'Native Advertising: A Guide for Businesses' is somewhat long-winded and legalish, but if you want the gist of it, I would emphasise this:

What do businesses need to know to ensure that the format of native advertising is not deceptive?  The Enforcement Policy Statement explains the law in detail, but it boils down to this:

1. From the FTC’s perspective, the watchword is TRANSPARENCY.  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.

And this:

The FTC staff business guidance document .com Disclosures:  How to Make Effective Disclosures in Digital Advertising explains what advertisers should do to ensure disclosures in digital advertising are clear and prominent.   In general, disclosures should be:

  • in clear and unambiguous language;
  • as close as possible to the native ads to which they relate;
  • in a font and color that’s easy to read;
  • in a shade that stands out against the background;
  • for video ads, on the screen long enough to be noticed, read, and understood; and
  • for audio disclosures, read at a cadence that’s easy for consumers to follow and in words consumers will understand

From our perspective, there is nothing here to disagree with, and most people in the industry would probably agree with us. Still, The FTC's guidelines have sparked a storm of reactions and opinions. In this entry, we try to recap handful of the most interesting.

Let's begin with the Interactive Advertising Bureau. One of the major advertising trade organizations wasted no time expressing its concern with the FTC's guidelines. Here's in The Wall Street Journal:

“While guidance serves great benefit to industry, it must also be technically feasible, creatively relevant, and not stifle innovation,” said Brad Weltman, IAB’s vice president of public policy, in a statement. “To that end, we have reservations about some elements of the Commission’s guidance.”

Recap: We greatly appreciate your input, FTC, up until the point where they hinder us from advertising the way we want to. Don't ruin a good thing with your regulations.

Then there is advertising lawyer Linda Goldstein for Manatt, Phelps & Phillips. She tells Ad Age:

The FTC has historically been reluctant to act against media companies, instead going after advertisers, but that could be changing as publishers increasingly create ads through in-house content studios, Ms. Goldstein said.

"I think we can expect 2016 to be the year of the FTC bringing native advertising cases," she said.

Recap: 2016 might be the year where the FTC goes head-to-head with some of the most wellknown US publishers, including The New York Times, BuzzFeed and The Atlantic, and their in-house content studios. That is, of course, if the publishers have done something wrong.

Mark Howard, chief revenue officer of Native Advertising pioneer(for better or worse) Forbes, doesn't like regulations. What a surprise. He tells the New York Times:

Marketers and publishers, however, worry that the guidelines could stifle further advancements in an area that they both have come to increasingly rely on.

“As soon as you start to standardize things and put guidelines around things, you limit the level of creativity and innovation that is able to occur,” said Mark Howard, the chief revenue officer of Forbes Media. “If you put out stringent guidelines, are you going to put people back in the box?”

Recap: FTC, don't ruin a good(and profitable) thing, man. We don't have much left.

Fastcocreate's got some interesting takes. In this article, they've asked top ad agencies what they think of the guidelines.

"We've always adhered to the quote from Howard Gossage, 'People read what interests them, and sometimes it's an ad,’" says Grayson. "[The new rules] will only raise the bar for bad advertisers to make things that people will actually care about and want to engage with. It’s bad news for garbage ads and good news for creative agencies."

"Our experience with branded content has taught us that today’s consumers care less about where the content comes from, and more about the quality of the content," says Herrmann. "We welcome and applaud these attempts for clarity because we’re confident that the quality of our branded content, native advertising and otherwise, will grab people's attention regardless of whether they know it’s sponsored."

Recap: We are confident ad agencies and confident ad agencies are creative ad agencies and creative ad agencies can make quality content regardless of the conditions that regulations might dictate. So...it doesn't really affect us.

Finally, David Rodnitzky, columnist at Marketing Land, delivers a pretty good summary of it all:

No industry welcomes FTC involvement in their business, so the mere fact that the agency is paying attention to native advertising indicates a failure of the participants in the native advertising industry to regulate themselves. And it’s not like they didn’t see this coming.

Indeed, even I foresaw this regulation two years ago. As I wrote in MarketingLand in 2014, “Surely I’m not the only person who… thought, ‘Gee, these native ads probably don’t do enough to clearly and conspicuously disclose the fact that this is an ad.’”

Recap: We should all have seen this coming, and native advertising, the industry, has itself to blame for these regulations.

The guidelines of the FTC are not laws, but publishers and advertisers who fail to comply could suffer a public backlash or even financial sanctions. Who will it be, if any? Only time will tell, but the industry seems anxious to find out what happens next.

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