The Federal Trade Commission (FTC) vowed in 2017 that it would hold media companies accountable for failure to properly disclose sponsored content and native advertising. Having regulated brands and social media influencers for years where sponsored posts are concerned, trade publication WWD reported that the FTC started taking notice of one of the primary sources of revenue for media companies in light of waning returns on more traditional digital advertising.
Designed to safeguard consumers against misleading content — particularly ads masquerading as organic or unpaid posts — FTC guidelines require paid content to be posted with clear, unambiguous disclosures. These guidelines aren’t new for brands, and influencers have become well-acquainted with them with the rise of social media platforms. But for media companies, this signals a new era in sponsored content, content marketing, and native advertising.
The age of ad blockers has hit online publications and media companies particularly hard. Depending on ads served to readers in order to keep their publications profitable and free, ad blockers that prevent those ads from being served have carved deeply into ad revenue of media companies. So, in response, many media companies have turned to native advertising and sponsored content as a means of making up losses in traditional digital advertising.
Some publications have verticals that are sponsored by brands. Others have brand labs or in-house teams that act as agencies to create native advertising in the form of branded content that closely matches the style of the publication itself. Others still run or help create content sponsored and designed to push particular products or brand ideals.
For example, BuzzFeed partnered with the Ontario Tourism Marketing Partnership Corporation to create a series of articles, like “11 Ontario Experiences That Are A Thrill-Seekers Dream,” that closely mimics the tone, style, and appearance of the rest of the content on BuzzFeed.
The New York Times also has a brand marketing unit called the T Brand Studio, which produces and posts paid content from advertisers like Adobe and GE. Appearing in a familiar format, these posts are designed to be something of a branded experience and appear under the New York Times name with clear disclosures.
Creating the content is only half the battle for media companies, though. In order to keep advertisers interested in native advertising, media companies have to make sure that the content is compelling and performs well. That’s why some media companies (like Time) are using influencers. Because influencers have the power to boost reach and engagement with audiences, media companies often partner with them to make marketing efforts more effective.
The FTC guidelines regarding native advertising aren’t complicated, but they do leave some things open up to interpretation. Here’s what the FTC has to say on the subject of native advertising:
“What do businesses need to know to ensure that the format of native advertising is not deceptive? The Enforcement Policy Statement explains the law in detail, but it boils down to this:
- From the FTC’s perspective, the watchword is transparency. An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.
- Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure. In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising.
- If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent.
It offers a bit more guidance on disclosures, saying:
In general, disclosures should be:
- in clear and unambiguous language;
- as close as possible to the native ads to which they relate;
- in a font and color that’s easy to read;
- in a shade that stands out against the background;
- for video ads, on the screen long enough to be noticed, read, and understood; and
- for audio disclosures, read at a cadence that’s easy for consumers to follow and in words consumers will understand
It’s not uncommon for brands to partner with media companies who partner with influencers to drive traffic and clicks to sponsored content. But those partnerships stir up some complicated questions with regard to who’s responsible for failures to properly disclose sponsored content and native advertising.
The Lord & Taylor case is a prime example. The brand came under fire when aspects of its #DesignLab campaign weren’t properly disclosed, including an article in Nylon Magazine’s online edition that had no obvious outward appearance of being paid content (as opposed to an objective article) and the posts from a group of 50 influencers who were paid to be a part of the campaign.
The FTC held Lord & Taylor responsible for the misstep and Lord & Taylor eventually settled, but this new FTC stance on sponsored content from media companies suggests that in the future, publications like Nylon could be held responsible, too.
Though the FTC guidelines have been derided for their ambiguity and sluggish evolution, they exist to protect consumers from misleading advertising. FTC regulations are in place to ensure that customers know when what they’re seeing is an advertisement or if the information they’re being presented with is influenced by payment or promotional goals.
This is particularly important when it comes to native advertising, which is designed to match the style and appearance of other content on a site or platform. Sponsored Instagram posts created through Instagram’s native advertising look strikingly similar to regular Instagram posts. Native advertising efforts on online publications are often designed to look exactly like other articles on the site. It can be confusing, and FTC guidelines are meant to curb some of that confusion for consumers.
Despite a number of ethical doubts and gray areas, for the most part, they don’t concern the FTC, which told WWD that its primary concern is content that’s not properly disclosed, not the ethical quandaries that surround native advertising.
As The Fashion Law points out, the FTC doesn’t have a proven track record of enforcement. So, even with the FTC’s stated intention to hold media companies accountable for failures in disclosure, there’s plenty of reason to suspect that enforcement efforts might be underwhelming. Though it called Lord & Taylor out for violations, it was noticeably lax when it came to violations from celebrity endorsers, like the Kardashians, Rihanna, Chrissy Teigen, and more.
Whether or not the FTC promise to regulate media companies is coupled with stricter and more consistent enforcement for other entities posting sponsored content remains to be seen. But one thing is becoming eminently clear as the relationships between brands, influencers, and media companies become ever more intertwined: Everyone involved in creating and posting sponsored content and native advertising needs to understand and comply with FTC guidelines. See our guide to the updated 2018 endorsement guidelines here.