In December, the FTC released a Policy Statement on Deceptively Formatted Ads, i.e. Native Advertisements. Since then, it has proven controversial.

What’s the Issue with Native Advertisements?

Native Advertisements are any sponsored posts published in the same format as other content on a platform. Buzzfeed, for example, often features promoted stories. Snapchat displays ads within select stories, appearing as a normal snap other than the subtle word ‘ad’ in the bottom-right corner.

 

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The FTC sees this as deceptive. Some platforms display ‘sponsored,’ ‘ad,’ or ‘promoted’ prominently on posts; others, however, will display the words in smaller text or in less visible places. In fact, Contently surveyed 509 males and females to find if consumers could tell the difference between ads and articles. Fortune acted as the control, with an editorial article about Whole Foods, as opposed to the native advertisements placed in the other content platforms. In 4 out of 6 study groups, the majority believed that the sponsored posts were real articles. The graph below displays how respondents interpreted each ad. It’s clear that the majority believed they were looking at editorial content.

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Members of the FTC are not the only ones taking issue with native advertisements; it’s been a frequently discussed issue over the last few years. Some amusing examples are John Oliver’s satire in 2014 and South Park’s recent jab.

How Does the Policy Statement Affect Native Advertisements?

The aim of the new policy is to require companies to clearly indicate whether content is editorial or promotional. Disclosures will need to be in front of or above headlines, and on any images that are considered to be the focal point of a piece. A general rule-of-thumb is that the disclosures should be displayed wherever a consumer may look at first. Additionally, disclosures must also be visible when republished; this includes search results, social media, and emails.

Chicago attorney Brian Heidelberger describes how to comply with policy standards below.

How Should I Feel about the New Policy?

ftcforbesThere has been a great deal of debate on how the rules will affect both companies and consumers. Marketers are conflicted, made evident by Co.CREATE’s article.

Mark Howard, CRO of Forbes Media, is concerned the move will prevent creativity. Howard states: “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. If you put out stringent guidelines, are you going to put people back in the box?”

His statement should come as no surprise, as Forbes was one of the first adopters of native advertisements. Forbes even featured a native ad for Fidelity on its cover in March of 2015, a bold move that only a few others have made.

Laura Janness, CSO at Barton F. Graf 9000, on the other hand, says that the rules will not affect the way her company does business. Her agency aims to create content that people want to engage with, rather than tricking people into clicking the advertisement so that the platform reaps profit. The label doesn’t kill the content; it simply requires agencies to be more transparent and to produce quality native pieces. Similar to an amusing commercial, high-quality native content will continue to be consumed and shared. This idea is summed up perfectly with Howard Grossage’s quote, “People read what interests them, and sometimes it’s an ad.”

Conclusion

Native ads will still have a major presence on content platforms, but they will be better labelled. There will continue to be a debate on native ad labels and whether native ads should even exist. As long as the native content is high-quality, there should be no reason not to use it.

To learn more about the FTC’s Statement, follow the links below:

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