The FTC’s Quixotic Fight Against Native Advertising

I wasn’t going to write about the FTC’s latest salvo on native advertising. When the agency announced its “enforcement policy” on Dec. 22, I was focused on making sure there was enough “Bud’s Famous Egg Nog” in the fridge and constructing my argument that binge watching Empire absolutely fits the holiday spirit.

But so many things about this announcement cry for commentary.

Starting with the timing for the announcement. Why would you communicate to the business world two days before Christmas when Corporate America has already checked out? It’s possible that the FTC’s PR department made a case that Dec. 22 would be a slow news day, conveniently leaving out that readership plummets in the run-up to Christmas.

And why did it take the FTC so long to distill its 2013 workshop on a native advertising — the basis for the “enforcement policy” — into action? I recognize that federal agencies like the FTC aren’t known for being nimble of foot, but two years?

It’s also revealing that the FTC used this announcement to remind everyone:

“Over the years, the FTC has brought many cases challenging the format of ads as deceptive. For example, the Commission has taken action against ads that deceptively mimicked the format of news programming or otherwise misrepresented their source.”

Are we supposed to say, “Bravo”?

As for the policy itself, let me put it this way. It reads like it came from a federal agency that studied the wrong stuff, panicked — what do you have to show for the time? — and generated what amounts to a style guide for applying the term “sponsored content.”

Unfortunately, native advertising doesn’t fit in a tidy box.

It’s messy.

Consider the consumer’s perception if a native ad appears in the trending section of a media property. In the case of Mashable, the moniker “What’s Hot” connotes editorial, but the section intersperses sponsored content with editorial.Even though the Bitdefender native ad meets the FTC’s requirement of clear identification, some readers will assume the content is editorial by virtue of its being in the “What’s Hot” section.

What about a native ad that arrives via social media from the very publication running the native ad? Again, the psychology of some consumers will assume a link tweeted by a publication must be editorial whether the publication labels the tweet as “sponsored” or not.

In fact, when a company buys a native advertising package, the deliverables include promotional real estate on the site (like Mashable’s What’s Hot section) as well as distribution through the publication’s social channels.

To this point, I’ve addressed paid promotion since the cost of the native ad includes this (though this is not transparent to the consumer).

Yet, there’s an organic search side to native advertising that the FTC misses as does the canned quote from Jessica Rich, the director of the FTC’s Bureau of Consumer Protection, “People browsing the Web, using social media or watching videos have a right to know if they’re seeing editorial content or an ad.”

Here’s a native ad from Pfizer in Mashable:If you decided to search for news on this bacterial infection of the eye and plugged the word “trachoma” into Google, here’s what Google serves up:That’s right. The Mashable native ad from Pfizer shows up in the second slot in the Google news feed.

How can this be?

Google News assumes the Mashable content is editorial since Mashable doesn’t signal otherwise. Furthermore, Mashable inserts the keyword “trachoma” in the article’s headline, subheads and the first sentence to help Google establish relevance for the search.

Heck, leaving nothing to chance, Mashable actually takes the time to optimize the title tag for organic search. We know this because the title tag does NOT default to the article’s headline.It seems reasonable to assume that consumers finding this Pfizer-sponsored piece through the Google News feed would perceive it as editorial.

When you zero in on the URL, there’s nothing to delineate the native ad from editorial.The construction of the URL has a CYA quality with Mashable making Pfizer happy with the keywords “trachoma treatment” and placating the FTC with a third keyword “brandspeak” inserted into all of the native ad URLs in case their federal friends knock on the door.

And what about the searches within a media property?

Take a look at The Wall Street Journal’s Risk and Compliance page sponsored by Deloitte:Everything appears in order. The Journal clearly identifies the sponsored content from the good stuff.

Yet, what happens if the consumer conducts a search on “cyberthreats” within the Journal?Again, the search results deliver sponsored content interspersed with editorial. As a result, many consumers are going to size up the Deloitte link “Cyberthreats Take Aim at Individuals and Roles Inside Organizations” as editorial even though it carries the “content from our sponsor” moniker.

The FTC’s latest enforcement policy calls out an ad’s format as deceptive if it “materially misleads consumers about the ad’s commercial nature, including any implied or express representation that it comes from a party other than the sponsoring advertiser.” What the FTC fails to grasp is the consumer’s path to a native ad has just as much potential to deceive.

Which brings us back to the core conundrum that shadows native advertising. The value of native advertising increases when the consumer believes he or she is reading legit editorial content. That’s why publications are turning to means beyond the actual ad format to give the illusion of editorial.

From a revenue standpoint, it’s working. Spending on native ads reached $7.9 billion in 2015, a number expected to hit $21 billion by 2018 (source: Business Insider Intelligence Unit).

The FTC understands what’s at stake.

If only they understood native advertising.

Yes, it’s messy.