FTC to examine ‘sponsored content’ online advertising

The Federal Trade Commission will examine the growing field of “sponsored content” in digital media, the organization announced Monday.

The agency will hold a workshop in December on the ads, which look similar to stories posted on news and social websites and have become increasingly common as media look for new ways to make money.

The FTC, which has the authority to bring charges against companies that deceive consumers, now has nonbinding guidelines on the use of the sponsored content ads. The workshop could be a first step toward expanding or strengthening them.

“Increasingly, advertisements that more closely resemble the content in which they are embedded are replacing banner advertisements — graphical images that typically are rectangular in shape — on publishers’ websites and mobile applications,” the FTC said Monday.

“The workshop will bring together publishing and advertising industry representatives, consumer advocates, academics, and government regulators to explore changes in how paid messages are presented to consumers and consumers’ recognition and understanding of these messages.”

In advance of the Dec. 4 workshop at the agency’s New Jersey Avenue satellite building in Northwest D.C., the FTC asked stakeholders to consider how ads are presented alongside non-sponsored content in the desktop and mobile environments. It also asked stakeholders which entities control those presentations, how consumers understand the differentiation between sponsored and non-sponsored content and what can be done to effectively differentiate between the two.

Concerns about how advertising in news and social media is made distinct from other content are not new.

Whether it’s deceptive infomercials or native advertising, “it’s all part of the same discussion: Is the distinction between regular content and advertising clear to consumers?” Lesley Fair, senior attorney at the FTC’s Bureau of Consumer Protection, said in agency blog post on Monday.

John Simpson, director of Consumer Watchdog’s Privacy Project, said the workshop is likely the first step toward an agency report. In March of this year, the FTC released its updated DotCom Disclosures, which explained that “clear and conspicuous” disclosures must accompany online ads, regardless of platform, to avoid violating commission standards.

In the report, the agency suggested adding the word “Ad” to a tweet to indicate that it is an advertisement. Simpson said it “seems likely” that the agency will update its guidelines based on what it learns through the workshop.

A representative of the trade group that represents online advertisers welcomed the FTC’s move. The workshop will provide the online advertising industry with “a great opportunity to raise the awareness level of key Washington decision makers about this evolving format,” Interactive Advertising Bureau Senior Vice President Mike Zaneis said.

“The FTC has provided previous examples of ways to provide consumer notice in a variety of native advertising categories ... and we look forward to working with the Commission to further educate industry on best practices,” Zaneis said.

—This story was updated at 4:59 p.m.