Last Tuesday, the Federal Trade Commission released two statements on the practice of native advertising. The statements lay out exactly what the FTC considers native advertising to be, what it would consider to be deceptive use of the relatively new advertising format, and what could lead the FTC to take action against an advertiser.
One of the statements, found on the FTC's website, is "Native Advertising: A Guide for Businesses," which is designed to help businesses make use of native advertising without stepping into territory that the FTC might consider to be misleading or fraudulent. The other is the more legally relevant "Enforcement Policy Statement on Deceptively Formatted Advertisements" that spells out practices that could lead the FTC to bring a case. Basically, the statements are "what you should do" and "what you shouldn't do," respectively.
The most relevant sections of the texts, as highlighted by Jeremy Barr in an article summarizing the announcements in Advertising Age, are the ones making clear and specific what would trigger FTC action, because it is most relevant for those currently making the ads and wish to avoid running afoul of regulation.
It states that "the Commission will scrutinize the entire ad, examining such factors as its overall appearance, the similarity of its written, spoken, or visual style to non-advertising content offered on a publisher's site, and the degree to which it is distinguishable from such other content," and "disclosures that subsequently inform consumers of a natively formatted ad's commercial nature after they have clicked on and arrived at another page will not cure any misleading impression created." In other words, you can't present an ad like it's news content, and then on the last page of the story mention that it is paid for by Netflix.
In fact, the FTC makes clear that the closer a native advertisement is to a publisher's native content in terms of style and format, the closer the agency will examine the ad, and the more necessary it will deem the inclusion of a clear designation that something is an ad. "The more a native ad is similar in format and topic to content on the publisher's site, the more likely that a disclosure will be necessary to prevent deception."
As Barr notes, this is just the extension of the FTC's basic mandate, the protection of consumers from fraudulent advertising, to a new form of ad. "The same legal principles regarding deceptive conduct" apply to native advertisements, said the commission.
The whole point of native advertising, of course, is to make it indistinguishable from a publisher's normal, native content. That's how it gets around ad blocking software, gets consumers to treat it more seriously than regular ads, and sneaks over the wall between editorial and advertising. The Federal Trade Commission seems to be saying that the wall must remain in place, at least in some way that allows consumers to be aware, in a clear and unambiguous fashion, that something is either a piece of real content or an advertisement.
Up until this point, marketers creating native ads could say, when they were accused of going to far in the blending of ads and content, that they weren't breaking any rules. No, with the release of the FTC's statements, they no longer have that excuse.