FTC issues guidelines for native advertising

Advertisers and publishers say these types of ads — known as native ads and packaged to look like journalism — are less intrusive and more appealing (not to mention more likely to be shared on social media) than other online ads.

The long-awaited guidelines function as a warning shot to the online ad industry and lay out for the first time how advertisers and publishers should deploy and label native ads.

The agency states, for instance, that advertisers “should not use terms such as ‘Promoted’ or ‘Promoted Stories,’ which in this context are at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site.”

“People browsing the Web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement.

The FTC’s guidance caps a long period of growth in native advertising, which mimics the look and feel of the host site.

The practice has grown ever more popular in recent years as advertisers and publishers — including Forbes, Yahoo, BuzzFeed and the New York Times — have sought to reach savvy Web users who increasingly block or simply ignore traditional online ads.

[...] native ads have only grown more popular as consumers spend more time on their mobile phones, whose small screens have prompted marketers to look beyond intrusive banner ads and pop-ups.

Forbes’ BrandVoice, for instance, allows advertisers like Fidelity and IBM to produce their own editorial content, which then appears on the Forbes site in the same style as an article done by the magazine.

The rise of automated ad buying and the ability to show tailored ads to specific groups of people mean that advertisers can now serve native ads to specific consumers based on their online behavior.

Chester, who sent several memos and letters to the FTC about native ads, expressed concern that the agency’s guidance did not address the ways that advertisers are using data to serve up specific native ads based on people’s interests and online behavior.