Report: New Guidelines for Native Advertising

The Federal Trade Commission released a new enforcement policy statement clarifying how brands and publishers should identify native advertising, or content that is intentionally commercial but seeks to match the form and function of editorialized content. The FTC puts it this way: “People browsing the web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad.” The new guidelines make the FTC’s case for the types of content that should be presented with additional declarations.

Consumer reaction to the new, more stringent FTC guidelines will be positive but quickly forgotten. Native advertising is endemic, and the simple declaration of “Ad” before advertorial content does not present a significant burden to sound advertising and content strategies. However, the effect of these disclosures will vary across demographic group, ad formats, and group familiarity with the various content platforms.

Male millennials and other ad-block aficionados will likely have the most favorable reaction to the FTC guidelines. This group represents approximately 16% of the active adult internet users with only 1.6% of the group blocking ads on mobile devices. “Ad blocking behavior on websites is a function of audience demographics. Websites that cater to young, technically savvy, or more male audiences are significantly worse affected.” Consequently, depending on the target audience, pharmaceutical companies should closely monitor any native advertisements placed on websites curating content for young, tech savvy, male audiences (e.g., Facebook, Twitter, and education-rich news outlets).

For older internet users, the new ad denotation will likely have little to no effect. Older audiences give more credence to the curated spirit of their favorite publications rather than the individual ads within the publication. That is to say, older audiences may take notice that a piece of content is an ad, but unlike younger audiences, they are less likely to be dissuaded or choose not to engage with the content simply because it is an ad. For older audiences, trust in the editor or trust in the brand plays a more significant role.

Additionally, the new guidelines likely place a premium on celebrity content. (Internet) celebrity sponsorships are common and expected but still influential. Any lost impressions caused by ad-cautious consumers—those who refuse to click on anything with the word “Ad” at the beginning—can be made up through a mix of promotional and influencer strategies. People take interest in the causes and products that celebrities endorse insofar as they are funny, interesting, or identifiable. The FTC takes no stance of the prevalence of relationships between celebrities and business, but rather, simply wants to identify this content as commercial from the onset. However, this commercial expectation is implicit, and will not detract from the effectiveness of the celebrity endorsement.

Transparency is at the core of the FTC’s guidelines, and these guidelines cut in different ways between publishers and brands looking to produce content. While these new guidelines require a few tactical additions, namely the ad banners, the spirit of the guidelines are no different from the spirit of a well organized creative campaign. Brands will still be tasked with the challenge of writing a catchy tag line or grabbing a user’s interest in the first seven seconds of a video. The FTC guidelines present an additional challenge for brands and content publishers already struggling, but not a significant roadblock for content producers doing well. At the end of the day, people will continue to interact with content and stores they find interesting, be it ads or editorials.


 

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