Native Advertising

Native advertising is a type of online advertising. It refers to a specific mode of monetization that aims to enhance a user’s experience on a website or other platform by providing value through relevant content delivered before, during or within and/or after an article, video, podcast, or other form of media. Unlike other forms of online marketing, native advertising is unique to the site it is on.

Unlike traditional forms of advertising, native ads “derive revenue from a platform in a way that is unique and organic to the experience.” (Digiday). As such, native ads consist of “branded content placed within third-party editorial sites that is created for its editorial surroundings; instead of a simple, same-everywhere ad, it's targeted content, sitting alongside the publisher's content, but produced by brands themselves.” (CMA). While the execution of native digital ads “varies across different websites, [they] are typically designed to blend in with a site’s editorial look and feel. The ad units usually feature content paid for by a sponsor, rather than more overt ad messaging.” (WSJ).

Forms of Native Advertising

The Interactive Advertising Board (“IAB”) puts native advertising options into six distinct categories.

1. Content Recommendation Engine Widgets: At the end of many articles, readers often encounter widgets with a heading that says “Recommended for You” or “You May Also Like…” These widgets, called content recommendation engines, allow brands to leverage the audiences of major publishers to drive traffic back to their websites;

2. Promoted Listings: Promoted listings are used by e-commerce sites to feature sponsored products first, generally on a category page;

3. Paid Search Ads: Paid search ads are like promoted listings except the listings appear at the top of customer search results. They’re used both for search engine marketing and within search results for individual domains;

4. In-Feed Units: In-feed units promote sponsored content within a publication’s natural index of articles. In addition to seeing original content as part of a stream or gallery, readers see sponsored content from advertisers. The content is marked as sponsored, but it blends into the publisher’s native experience; 

5. In-Ad With Native Elements: This type of native advertising looks like a standard ad, but it has significant contextual relevancy with the publisher. For example, a food brand might promote its own proprietary recipes on websites that publish user-generated recipes; and

6. Custom Ads: The IAB uses the catch-all term “custom ads” for contextual ads that don’t fit a specific format. For instance, if you created a Pandora playlist for workout music, Pandora might serve up ads for sports products or sports drink. (Forbes).

Benefits of Native Advertising

By creating advertisements that are in the same format as the content audiences are there to consume, marketers hope to provide a much less disruptive advertising experience. Native ads have also proven effective, drawing higher click rates than traditional banner ads, particularly on mobile devices. (BI).

Regulation of Native Advertising

The Federal Trade Commission (“FTC”) is the government agency that is tasked with promoting consumer protection, and eliminating and preventing anticompetitive business practices. In this role, the FTC issues guidelines (which are legally binding) that govern “Endorsements and Testimonials in Advertising,” “DotCom Disclosures,” and most recently, Native Advertising, among other things.

According to the FTC’s Guides Concerning the Use of Native Advertising, publishers taking the role of an ad agency by creating content for marketers should make sure they’re not creating misleading native advertising. “For us, the concern is whether consumers recognize what they’re seeing is advertising or not,” Mary Engle, the FTC's associate director of advertising practices said recently.

So, what exactly does acceptable native advertising look like? Well, Engle indicated that the FTC will focus less on the content of native advertising, and more on how such advertising is displayed and labeled on a website. We know that just having a “sponsored” label is not enough, and that sizing matters. The FTC has won cases where “advertorial” was presented in such a tiny font as to be misleading. As for what amounts to a deceptive ad: “An ad is deceptive if it misleads a significant percentage of consumers,” Engle said. That usually means 15% of consumers, and sometimes as few as 10% of consumers.

Some of the key do’s and don’ts that the FTC suggested for advertisers are:

• Use clear terms that will likely be understood by consumers, such as “Ad,” “Advertisement,” “Paid Advertisement,” “Sponsored Advertising Content” or a similar variation.

• Avoid using terms such as “Promoted” or “Promoted Stories,” which the FTC said are “at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site.”

• Using terms such as “Presented by, Brought to you By, Promoted By or Sponsored By” could increase the risk of consumers misunderstanding that it is an advertisement or that it might be endorsed by the publisher, an FTC attorney explained.

• Avoid using technical or industry jargon, different terminology about the same thing in different places on the publisher site that could cause confusion, and unfamiliar icons or company logos and brand names that are not associated with a clear text disclosure.

• Place disclosures on the main page of a publisher site and in front of or above a native ad’s headline, to ensure consumers notice them and easily associate the ad content with the disclosure. The FTC also advises that if the focal point of the ad is an image, the disclosure “might” need to appear directly on the focal point.

• If a disclosure relates to more than one native ad, an advertiser should provide “visual clues” to make it clear the disclosure relates to all ads in that grouping. In addition, if an ad is republished in “non-paid” search results, social media, e-mail or other media, the disclosure should remain.

• Disclosures should be placed at the point where consumers will first look when they arrive on the click-or-tap-into page and they be delivered to consumers in the context of multimedia ads before they receive the ad message.

• Ensure that background shading is “sufficiently saturated” for the consumer to notice it and make a distinction.

• Multimedia ads that contain an audio message “may” require an audio disclosure that should be presented in a “sufficient” volume so that consumers can hear and understand them.

• Video disclosures in multimedia ads should stay on the screen long enough to be noticed, read, and understood.