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Consumers need protection from deceptive native ads, 'sponsored' content

The Federal Trade Commission (FTC) is hosting a workshop today on “native advertising” – the practice of blending ads with news and other content in such a way to make it difficult to distinguish paid and unpaid content. The agency will tackle issues concerning the popular marketing tool’s blurred lines between advertising and editorial content. Public Citizen’s President Robert Weissman, alongside industry representatives from Buzzfeed, The Wall Street Journal and others, will speak on the panel addressing best practices in transparency and disclosure.

The use of native advertising and sponsored content – content created by or on behalf of the advertiser that “runs within the editorial stream [and] integrates into the design of the publisher’s site” – has become increasingly pervasive, as companies seek online marketing tools that are not obvious attempts to sell goods and services. A marketing research firm predicted that spending on sponsored content would rise by 22 percent between 2012 and 2013, up to $1.88 billion.

Because marketers pay for, and often create, sponsored content, and the end goal is commercial, it should be clearly labeled as advertising, pursuant to FTC disclosure rules. (Marketing industry leaders claim that sponsored content is not always advertising, so it should not be labeled as such.)

And because it is often impossible to tell that the content is appearing only because a corporation or other entity paid for it, many native ads may be in violation of the purposes of Section 5 of the Federal Trade Commission Act, which is designed to prevent unfair and deceptive advertising. Absent clear labeling that sponsored content and other native ads are in fact advertisements, consumers are likely to be misled.

Even if content is labeled as “sponsored,” consumers may not understand that the content was created or modified by the advertising company. Nor is it likely clear from the mere use of the words “sponsor” or “partner” that an entire web page or article is created for the benefit of the advertiser to implicitly advertise a product.

The FTC should issue explicit guidance to clearly identify paid content, and thereby protect consumers from the misleading nature of the sponsored content. Further transparency is needed in a world in which advertising increasingly is embedded into our daily lives.