Regulator hands down guidelines for 'native advertising' online

The Federal Trade Commission (FTC) has finally weighed in on sponsored content, handing down a set of guidelines for when ads should be considered misleading.

Native ads, as they are also known, are content designed to promote a company or brand that are formatted by a publisher to look like a normal article online. They usually feature a disclaimer or branding from the sponsor.

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“The FTC’s policy applies time-tested truth-in-advertising principles to modern media,” said Jessica Rich, who leads the agency’s Bureau of Consumer Protection, in a statement. “People browsing the Web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad.”

In a 16-page document released Tuesday, the consumer protection agency laid out voluntary guidelines for determining when these types of ads are deceiving consumers and how existing policies on deceptive ads apply to them.

“Regardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising,” the FTC said.

Accompanying the agency’s document clarifying its policy is a lengthy guide for businesses that do not want to run afoul of the agency’s policies.

Companies that pay for native advertising are “responsible for ensuring that native ads are identifiable as advertising before consumers arrive at the main advertising page,” the FTC said, and advertising cannot “mislead” readers or viewers about its promotional nature.

The FTC’s guide advises against labeling a sponsored post as simply “Promoted,” which it said is ambiguous and potentially could mislead consumers into thinking that the content is endorsed by a publisher site.

The agency’s guidelines are just that, rather than hard-line rules. But companies and brands in a variety of industries frequently look to the FTC’s guidance to steer clear of any disputes with regulators.

Action by the agency on native advertising is a long time coming. It held a workshop on the issue in December 2013 entitled “Blurred Lines: Advertising or Content?”

Native advertising has become common with publishers new and old looking for a better option to offer advertisers than distracting and cumbersome display ads. BuzzFeed has turned sponsored content into a lucrative revenue stream, and The New York Times launched its own in-house sponsored content shop more than two years ago.

The guidelines could also have ramifications beyond publisher-based advertisements. Native advertising can also take the form of a post on social media or a line in an email newsletter.