Don’t Let The FTC Decimate Your Profits
A quick reminder.
Native advertising rules are now in effect!
Before the release, websites profited from native advertising blocks that fell under headlines like “Promoted Content” — basically, headers that disguised links as internal links. Or, to put it another way, click bait.
However, despite the regulation’s release, Adweek recently reported that about 70% of websites using native advertising are flouting FTC guidelines.
So, what happens if officials catch you snubbing online marketing rules and regulations? Well, they can sue you, fine you and make you pay.
Native Advertising Startup Opportunity Alert!
Another interesting tidbit to pop out of Adweek’s piece? Experts estimate that portions of the native advertising niche will generate as much as $53.4 billion by 2020.
Put Me In Touch With An Online Marketing Lawyer, Pronto!
Unaware of the new native advertising guidelines? Click here for a summary. For those in a rush, the gist is this: Make sure native advertising is distinguishable as advertising.
Are you sure you’re 100% FTC compliant? If not, get in touch. We may be able to help you avoid an FTC investigation — and subsequent fines.
Swant, M. (2016, April 8). Publishers Are Largely Not Following the FTC’s Native Ad Guidelines. Retrieved May 31, 2016, from http://www.adweek.com/news/technology/publishers-are-largely-not-following-ftcs-native-ad-guidelines-170705
The FTC issued a pair of new advertising guidelines — the Enforcement Policy Statement on Deceptively Formatted Advertisements and the Native Advertising: A Guide for Businesses. What are the chief takeaways? Will the “new rules” have a massive effect on current marketing trends?
First Things First: The Current State of Native Advertising
Jeffrey Chester, executive director of the Center for Digital Democracy, aptly described native promotions as “product placement on digital steroids.”
“Product placement on digital steroids.”
Over the years, the practice has become exceptionally popular – and effective – partly because it can be tailored to search behavior. According to the Association of National Advertisers, two-thirds of its surveyed members plan to increase embedded marketing spends this year.
Marketers love it for two key reasons:
- It’s more likely to be shared.
- It’s less intrusive than traditional advertising.
So, what, exactly, is “native advertising”? It’s promotional material that mimics the look and feel of a website. “Around the Web” links at the bottom of blog posts – (you know, the ones with the guilty pleasure headlines) – are examples.
FTC Investigation: Is Native Advertising Deceptive?
Marketers may love native advertising, but the Federal Trade Commission– which is responsible for exterminating deceptive marketing – has always scrutinized the practice with a more skeptical eye.
For years, pundits have debated the ethics of “embedded promotions” crafted to look like normal content. Is it misleading? Does it trick users into clicking when they otherwise wouldn’t? The debate has raged, and now, the FTC is adding its 10 cents.
To be clear: the FTC can’t throw people in jail for shirking its guidelines. The Commission is a quasi-governmental agency. Yes, a federal law created the FTC, and yes, a federal law grants it the authority to financially sanction businesses and individuals who engage in “unfair and deceptive” marketing; but no, the FTC’s guidelines aren’t actually laws, per say.
New Native Advertising Guidelines
What are the important points of the native advertising guidelines:
- The “net impression” counts.
- Make it crystal clear that native ads are promotional, not editorial, content.
- Don’t use the phrase “promoted stories” to demarcate native advertising from *normal* content. “Promoted,” in the eyes of the FTC, is too vague a word and can cause consumer confusion.
- Native advertisement disclosures should appear in the same frame as the ads themselves; they shouldn’t appear below the ads – especially if a user has to scroll to see them.
Word on the street is that the new native advertising guidelines are clear, helpful and include clarifying images.
How Will Native Advertising Guidelines Affect The Marketing Industry?
Industry people are talking about the FTC’s native advertising guide. And it’s no wonder: some of the biggest content players feast on the stuff. Supposedly, a third of Gawker’s revenue comes from native advertising; Vox Media allegedly has an in-house ad agency to churn it out.
And, of course, opinions about the FTC’s latest native advertising treatise run from A to Z. Some people rolled their eyes and typed dirges about the commission’s investigative inconsistencies; or, in more colloquial terms, “The FTC is so mercurial that its guides are little help.” Middle-of-the-roaders seem to be taking the release in stride, making note of the FTC’s insistence on transparency.
A blog post on Marketing Land offered three predictions regarding the new guides:
- Some of the bigger native advertising players will either tap-out or incur fines.
- Native advertising will become less effective.
- Now that the FTC has weighed in, bigger brands may start using it more.
Work With An Online Marketing Attorney
FBA sellers and online marketers love to work with Kelly Warner. Our team assists with a host of FTC compliance and online marketing issues.
We founded our practice to help entrepreneurs — and over the years have earned top marks. Let’s talk; get in touch today to begin the conversation.
Ember, Sydney. “F.T.C. Guidelines on Native Ads Aim to Prevent Deception.” The New York Times. The New York Times, 22 Dec. 2015. Web. 10 Feb. 2016. <http://www.nytimes.com/2015/12/23/business/media/ftc-issues-guidelines-for-native-ads.html?_r=0>.
Kulwin, Noah. “FTC Issues New Rules for Native Advertising on the Internet.” Recode. 22 Dec. 2015. Web. 10 Feb. 2016. <http://recode.net/2015/12/22/ftc-issues-new-rules-to-native-advertising-on-the-internet/>.
Rodnitzky, David. “Now That The FTC Has Spoken On Native Advertising, What’s Next?” Marketing Land. 12 Jan. 2016. Web. 10 Feb. 2016. <http://marketingland.com/now-ftc-spoken-native-advertising-whats-next-158262>.
Media chatter suggests the Federal Trade Commission is turning its gaze towards “native ads” – a.k.a., sponsored content. At an industry conference, Mary Engle, an FTC director, explained the agency’s core apprehension regarding native advertising. She explained:
“For us [the FTC], the concern is whether consumers recognize what they’re seeing is advertising or not.”
Is It Enough To Just Use A “Sponsored” Label?
A lot of websites demarcate promotional sections with a “Sponsored Stories” headline. Does that satisfy FTC guidelines?
Some marketers label native advertising in fine print. Think: sponsored (don’t worry, you’re not the only one who can’t read it). At the event, FTC’s Engle reminded attendees that the commission had won cases, against brands and marketers, in which the word “advertorial” was so small the average person didn’t notice it.
If It Misleads, Your Business May Bleed
A journalism axiom instructs: “If it bleeds, it leads!” Meaning: gory stories get front-page coverage because no matter how civilized, our ancient gladiator genes still crave grisly and gruesome. Call it “rubbernecking syndrome.”
As a variation on the theme, native advertisers should remember: “If it misleads, a business may bleed!”
If native advertising materials mislead “a significant percentage of consumers,” then the FTC can take fiduciary action against advertisers, designers, third-party promoters — and sometimes even payment processors.
Native Advertising and Marketing Audits Can Be a Business’ Best Friend
U.S. brands courting customers in other countries need to follow domestic and foreign advertising laws.
Are you positive you understand – and follow – every state, federal, and international marking law, regulation and guideline? Ask yourself the following questions:
- Do you know how European and UK privacy laws affect digital marketing campaigns?
- How about California’s strict digital privacy statute?
- Do you allow people in the UK to purchase your product? If yes, are you sure you’re up-to-date on the latest European Union disclosure requirements?
- Do you fully understand the Children’s Online Privacy Protection Act and how it affects your marketing efforts?
- What about Section 5 of the FTC Act and the Dot Com Disclosures?
A marketing legal review may cost a couple of hundred dollars; a censure from the Federal Trade Commission could set you back millions.