Nearly 40 Percent Of Publishers Ignore FTC's Native Advertising Rules

on March 19, 2017 in Native Advertising

Forbes

ForbesFTCMarch2017.jpgForbes - Nearly two out of five publishers using native advertising are not compliant with Federal Trade Commission guidelines for identifying such content, according to a new industry study.

MediaRadar reports that 37 percent of publishers do not adhere to the FTC rules for labeling the material as sponsored. That figure is actually an improvement; nearly a year ago, only a third were following the rules.In a new study called, “Leaders and Lessons in Native Advertising,” MediaRadar, a New York-based ad sales intelligence platform,  reviewed more than 12,000 native advertising campaigns from January to December 2016.

Native advertising in publications in another day was called “advertorial.” It is paid content or advertising that is placed within part of a newspaper or magazine and intended to look like the other content around it.

The same holds true online, where it is harder to differentiate between what is host content and paid or native content.

These distinctions prompted the Federal Trade Commission to promulgate guidelines for native advertising in December 2015.

The FTC, seeking to avoid consumer confusion or misunderstanding, requires advertisers – and publishers -- to provide some form of disclosure. A label stating, “sponsored content” or “paid advertisement” can make it clear the story is an ad. Publishers who follow this rule also will be conforming to generally accepted rules of journalism ethics.

The FTC also made it clear that the guidelines mean business and that the agency would seek enforcement over any native ad that is “deceptively formatted.”

The department store giant Lord & Taylor was the first company to face the FTC’s enforcement for an ad that did not include appropriate disclosures, for in an article in Nylon. Lord & Taylor also paid for posts on Instagram without indicating sponsorship. The case was settled in March 2016.

As recently as last April, MediaRadar reported that only a third of publishers were following the rules. The Lord & Taylor case no doubt got publishers’ attention, and the FTC will be glad to see that now a majority of publishers follow the rules. The fact that 37 percent still don’t get it may give the FTC some work.

The MediaRadar study had several other significant findings:

Length of campaigns. The average native campaign lasts two months, and the renewal rate is low – only 33 percent.

Demand. Demand for native will continue to grow. MediaRadar reports that on average there are 610 new native advertisers each month.

This figure comports with at least one other industry report that anticipates fast growth for this type of advertising product. A study conducted by two industry groups predicted that by 2018, native advertising will account for a quarter of all news media revenue.

Fields of interest. MediaRadar found that media and entertainment is the top field for native advertising, with 3,198 brands using native campaigns. The other top fields in the report are. in order, professional services (2,017 brands), finance and real estate (1,246 brands), technology (1,231 brands) and retail (1,153 brands).

MediaRadar is bullish on native advertising in 2017, stating that 2017 “will present a decisive test” for publishers, forecasting better renewal rates and longer campaigns.

To get to that point, the company urged publishers to increase the volume of space and inventory devoted to native, to create in-house editorial teams to write the creative and, importantly, to leverage the content so that the material lives in different platforms, therefore reaching a variety of audiences.

 

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