DCN - Native advertising has come a long way from its debut in the digital marketing environment, when the lines between advertising and editorial were blurry at best. But a new study from the cloud-based intelligence platform MediaRadar, “Leaders and Lessons in Native Advertising,” found that 37% of publishers still aren’t complying with the Federal Trade Commission’s rules on disclosure for native advertising.
In late 2015, he FTC clamped down with more guidelines and an 11-page guidebook for businesses to promote more transparency within native advertising and ensure clarity for audiences, as I wrote at the time. Of course, 37% is a huge improvement from 61%, which was the figure cited in last year’s study on non-compliance. But the bottom line is that honesty about native ads has yet to become the status quo. In a world where fake news and ad fraud have troubled audiences and skewed our instincts for what’s valid, it’s to the benefit of publishers and advertisers to work harder.
The Evolution of the ‘Explicit Native’
Attracting the attention of users quick to download an ad-blocker or scroll past promoted posts on social media poses a significant challenge for marketers and publishers. Enter native advertising, thought to be the panacea for balancing editorial interest with advertising dollars. The FTC guidelines emphasized explicit disclosure of native ads in proximity to the headline (which, let’s face it, is the only thing many readers will allow their eyes to glaze through).
While the IAB deemed the terms “overly prescriptive,” DCN’s own Jason Kint said the impact of the guidelines would largely depend on what cases the FTC brought to the fold. There’s a difference between publishers and advertisers “trying to do the right thing” versus those engaging in “egregious acts of deception,” to use Kint’s words.
And we saw the first case the FTC brought up, in March 2016, when it charged retailer Lord & Taylor for allowing 50 Instagram stars to wear the exact same dress — with none of those influencers noting in their posts that wearing the dress was a coordinated campaign. Nylon magazine also ran an article and an Instagram post featuring the dress. It was almost as if Lord & Taylor had decided to blatantly disregard the FTC’s disclosure rules.
The FTC saw it as such and brought charges against the retailer, eventually reaching a settlement. The company, for its part, announced that it “never sought to deceive” its customers. But it was a clear warning that the FTC was serious in doubling down on enforcement, and that actions speak louder than words when it comes to trusting marketers. No matter that the FTC’s makeup under President Donald Trump is still a mystery (there are only two current members of the Commission) — the stage has already been set for advertisers to work harder to ensure compliance and not outsource this work to other parties.
And if the evolution of labeling content as native indicates anything, most digital publishers are trying harder. There’s been a 119% year-over-year growth in doing so. So how about the 37% of publishers choosing not to comply? They’re risking their reputation and revenue.
The Benefits of Going All In
With native set to continue to grow again this year, it seems only logical to go all-in on following the rules while delivering good advertising, and not circumventing the rules for the same goal. Yet some challenges going forward are that most native advertising campaigns only last a couple of months, and native renewal rates are fairly small at 33% across all media sites.
How should we address this? Well, MediaRadar’s study indicates that publishers who have robust native advertising operations and have invested in the necessary tech — including the New York Times, Wall Street Journal and Quartz — have a stronger renewal rate at 49%. Top publishers who sell and measure the impact of native successfully can expect renewal rates of 60 to 80%, according to MediaRadar’s forecast.
Tips for Success
That being said, here’s some advice for publishers going forward:
- Invest more in native advertising for more profit. It’s not going away, so seizing the right packages and running campaigns long enough to actually benefit is key. That also means considering the use of in-house native advertising teams, or freelancers devoted solely to creating native advertising.
- Communicate the results. This helps prove the efficacy of the advertising. And, granted the results are positive, this helps increase renewals.
- Consider newer ad categories that have yet to jump on the native bandwagon. Media and entertainment, professional services, finance and real estate, tech and retail were the top five categories in native advertising last year, so look beyond those to expand.
- Invest in the right technology. It will help sustain your business in the long run.
- Don’t break the rules. Unless you’re OK with potentially risking some revenue (a fine of $16,000 for every native ad violation) and your reputation among users.
- Try harder. The big issue for publishers who don’t follow the FTC’s guidelines, it seems, is that they want to game the system to make bad native ads work. But sacrificing quality or trust isn’t the way to go. The answer: Better advertising.
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