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FTC Native Ad Workshop Gets Prickly

11 Dec, 2013 By: Doug McPherson

WASHINGTON – Warnings, veiled threats and even an expletive flew at the Federal Trade Commission’s (FTC) workshop last week on native advertising – sponsored content that resembles news.

Advertising industry executives traveled to Washington amid staunch opposition to defend native advertising at a workshop called “Blurred Lines: Advertising or Content.” The question: Are publishers and advertisers doing enough to keep consumers from mistaking native ads from the content itself?

AdAge reported that FTC staff attorney Lesley Fair set the stage with a warning, scrolling through a series of slides with pictures of deceptive ads: direct mail, infomercials and “articles” pitching weight-loss pills that have been deemed unfair, deceptive and unlawful.

Mary Engle, the FTC’s associate director for advertising practices, said concerns about deception sparked the FTC’s interest. “When we went online, we started seeing things we that weren’t sure what they were,” Engle said.

And Federal Trade Commissioner Edith Ramirez said companies that run native advertising run the risk of misleading consumers. “By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a nonbiased source,” she said.

Executives from Procter & Gamble, Hearst, Mashable, The Huffington Post, Outbrain, Adiant and Sharethrough attended and offered arguments to keep the practice.

One Mashable exec showed a slide of a sponsored article on that contained four disclosures stating the piece was paid for by Lenovo.

Chris Laird, a marketing director at P&G, said transparency was a brand imperative. “If it’s not transparent, and it erodes consumer trusts, the ROI falls and we just won’t invest in it anymore,” he contended.

David Franklyn, a professor at the University of San Francisco School of Law, expressed skepticism about publisher labeling efforts. “We continue to find deep confusion about the difference between paid and unpaid content,” he said.

Columnist Bob Garfield, a former AdAge editor, called native advertising a violation of the most basic publishing ethics. “A conspiracy of deception, a hustle, a racket, a grift,” he said. “With every transaction, publishers are mining and exporting a rare resource: trust. Those deals will not save the media industry. They will, in a matter of years, destroy the media industry: one boatload of sh*t at a time.”

MediaPost reported that the two sides generally agreed that sponsored content and news should be delineated, but there was little consensus on the details – including which types of native spots should trigger disclosures, and how to word disclosure in a way people will understand.

One unanswered question was what language companies should use to describe native ads. Current common terms include “sponsored by” and “presented by.”

“Really smart people may come to different conclusions about what ‘sponsored’ means,” said Chris Hoofnagle, a lecturer in residence at the University of California, Berkeley, School of Law. Hoofnagle added that he thinks “sponsored by” indicates an arrangement – which was typical on PBS – where a company pays to have its name associated with a show that was created independently. Online, however, “sponsored by” often refers to content that an advertiser has created.

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