5 Native Advertising Mistakes That Attract FTC Attention
Whether you call it native ads, sponsored ads, or branded ads, there is no denying that paid content has taken the digital marketing sphere by storm.
If you look at content platforms like Buzzfeed and even news publications like The New York Times, you’ll most likely encounter a native ad or two and for good reason.
In recent years, paid content has surpassed traditional banner ads in terms of attracting the attention of customers.
These days, people have become adept in skipping, blocking, or ignoring ad displays on their browsers and even in social media. Often, readers use ad blocking tools or hurriedly scroll past banner ads.
Because consumers have become less receptive to typical display ads, marketers have resorted to more creative, effective, and relevant ad formats like the native ads.
Since these ads look and sound like editorial content, readers are more willing to engage with them. In fact a case study from GE shows that click through rates for native ads remained at around eight percent, compared to a display advertising average CTR of just 0.19%.
Native Ads and the FTC
As native advertising gained traction over the past few years, governing bodies including the Federal Trade Commission (FTC), the government agency tasked with promoting consumer protection together with eliminating and preventing anticompetitive business practices, has released rules and guidelines on how brands and publishers alike should treat this type of advertisements.
According to the FTC,
“Advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.”
The FTC’s rules indicated on the Guides Concerning the Use of Native Advertising are anchored less on what content is acceptable in native ads but rather on displaying and labelling them.
Publishers who are taking the role of an ad agency by creating content for marketers should make sure they’re not creating deceptive and misleading native ads.
Real World Consequences
It is worth noting that the FTC’s rules are backed by actual consumer protection laws. This means that if an advertiser or a publisher fails to comply with these guidelines then there will be consequences.
Such is the case for the fashion label Lord & Taylor.
The brand allegedly placed a paid article on Nylon magazine. At the same time, the publication posted a photo of the retailer’s Design Lab Paisley Asymmetrical Dress on their Instagram together with a caption approved by Lord & Taylor.
However, there were no indications that the post was a paid advertisement.
Moreover, Lord and Taylor contracted 50 fashion influencers on Instragram to post a photo of themselves wearing the dress and use the handle “@lordandtaylor” and the hashtag “#designlab” in their captions.
Moreover, the influencers we’re reportedly paid between $1000 and $4000 but failed to mention in their posts that they we’re part of the coordinated campaign to promote Lord & Taylor’s spring fashion line.
In just two days, the influencers’ posts reached 11.4 million Instagram users while Lord & Taylor’s own Instagram received 328,000 engagements. What’s more, the asymmetrical paisley dress sold out quickly.
“Lord & Taylor needs to be straight with consumers in its online marketing campaigns,”
said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
“Consumers have the right to know when they’re looking at paid advertising.”
But the brand got more than what they bargained for when the FTC filed complaint charges stating that they deceived consumers through their native advertisements.
In the end, the brand agreed on a settlement for their violations of the FTC’s rules.
What Can Marketers Do to Avoid FTC Attention?
The FTC’s regulations, should not, in anyway, discourage you from using native ads. Nothing changes the fact that when done right, there are tons of benefits to be reaped from this truly ingenious form of advertising.
All you really need to do as an advertiser is to ensure that you don’t do the following mistakes:
Mistake #1: Failing to Disclose the Commercial Nature of an Ad
The FTC is adamant in maintaining transparency in advertisements. Clearly, this is where Lord and Taylor failed to hit the mark. Therefore if you want to steer clear of any issues, be sure to always indicate that your native ads are paid content and not the independent opinion of the publishers.
Mistake #2: Failing to Make Disclosures Clear and Prominent
You should always label your native ads clearly and prominently. This is to ensure that consumers know that the content they are looking at is an ad. Some principles you can adapt include:
- Prominently display company logos and names and use the terms “promoted” or “presented by”. Remember however that these shouldn’t be your only means of disclosing the commercial intent of your ad piece.
- Use the terms “Ad”, “advertisement”, or “Sponsored Advertising Content” as a way to indicate commercial intent.
- Avoid using technical jargon.
- Place your disclosures near an ad’s focal point. This is usually in front of or above the headline.
- Make sure that your disclosures are clearly visible to your consumers. Use contrasting colors to make them standout.
Mistake #3: Failing to Enforce Disclosures Throughout Your Ad Network
According to the FTC’s Enforcement Policy, everyone who participates in the creation or presentation of native ads, whether directly or indirectly should ensure that they don’t mislead consumers about the commercial nature of the ad. This includes ad agencies, publications, and operators of affiliate advertising networks.
Mistake #4: Failing to Disclose Material Connection Between Your Brand and an Endorser
Material connection refers to a connection between the endorser and the seller that might materially affect the weight or credibility a consumer gives the endorsement. If you are enlisting influencers, bloggers, and other people for your marketing efforts, make sure that they mention having received something in exchange for their endorsement.
Mistake #5: Failing to Monitor what your Affiliates are Doing On Your Behalf
The FTC’s Endorsement Guides lists the following principles for running an effective compliance program:
- Because advertisers are responsible for substantiating objective product claims, explain to your network the claims you can support;
- Instruct them about their responsibilities for disclosing their connection to you;
- Periodically search to make sure they’re following your instructions; and
- Follow up if you spot questionable practices.
The key to fully enjoying the benefits of native ads is through proper implementation. These are just some of the major tips we have so you can avoid the attention of the FTC.
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