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Keep Calm and Stay FTC Compliant

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From its introduction only a few years ago, native advertising has generated clicks, captured attention, and raised controversy. Native is everywhere, from Hennessy’s partnership with Vanity Fair for the original film ‘Never Stop. Never Settle’ to branded playlists on Spotify. At MediaRadar we find native ads placed both programmatically and direct. There are more than 760 websites selling native. We found 7,004 advertisers buying native ads since Jan 2015 (1,437 on DCN member websites).

Advertisers are constantly creating new ways to leverage this form of advertising, but there has been significant blurring between advertiser messaging and editorial content.

The FTC, however, has signalsed that these days without regulation are coming to an end. On a quiet day on December 22, the FTC released guidelines on how native advertising should be implemented. These rules create strong separation between advertising and editorial.

So, who is impacted by the FTC’s regulation? Well, almost all publishers. Of the hundreds of sites selling native advertising, FTC violations can results in a civil penalty of up to $16,000, per count. Recently, Lord & Taylor was found to violate native ad regulations without disclosing a digital influencer campaign for Instagram.

MediaRadar found that 70% of sites will need to modify their current native advertising in order to adhere to the FTC guidelines.

Here is what you need to know in order to be compliant:

  1. Disclose Advertising. When the promoted or sponsored content mimics a website’s look-and-feel, disclosure is necessary. Readers need to know what content was influenced or paid for by advertisers.
  2. Use Precise Language. The FTC is explicit that words like “presented by” or “promoted by” are not sufficient notice. Instead use words like “Paid by” or “Advertiser.” FTC Recommended Language Accepted Language: “ad,” “advertisement,” “paid advertisement,” or “sponsored advertisement.”
  3. List the Author or Advertiser Logo. Include the advertiser’s logo in all native advertising. If an author credit is included, the advertiser should be shows in place of a person’s name. This reinforces to the reader that this is a paid placement, not regular editorial.
  4. Ad Position Matters. Location of an ad’s acknowledgement should be at the top left corner of a native ad (today, they are commonly identified at the bottom).
  5. Video or Sound. Video and sound ads are more complex—so a disclosure is needed on both the thumbnail and pop-up.

Native offers one of the highest CPM ad units and we observe favorable renewal rates on most sites. While these guidelines will create limits in how native is executed, we do not believe it poses a threat. Some of the largest firms, including the New York Times, have labeled with “Paid Post” from the start. And since the guidelines went into effect, there has been no ebb in the torrent of native ad buying. With more prominent labeling, advertisers can creatively use content to drive increased product awareness or increased sales.