'Native' ads are not the answer to adblocking.

The tragedy of ad blocking is that it hurts worthy publishers. And in response some have sought refuge in so-called “native” advertising. But as this article describes, this approach is neither immune to ad blocking, nor – in many cases – respectful of the law.

New policy rules from the FTC will end talk of “native” advertising as a viable substitute for conventional ads.

“Native” ads are not immune from ad blocking 

Many – perhaps almost all – native advertisements are already blocked. This includes links to sponsored posts on the front page of Buzzfeed and services like Taboola and Outbrain.

It also includes high quality examples from premium publishers. The New York Times’ website ran a feature titled “Women Inmates: Why the Male Model Doesn’t Work” that was sponsored by Netflix to promote its series “Orange is the New Black”. The feature, a gorgeous mix of scrolling effects, layout, imagery and video, is butchered by ad blocking. The box below shows a comparison between the NYT feature with ad blocking switched on and off.

Not only is the appearance of the sponsored feature corrupted but the tracking pixel by which a brand measures views on the feature is also blocked. This means the publisher and advertiser will have measurement and attribution problems. 

And remarkably, The New York Times’ showcase website for its native advertising work is also corrupted by adblocking, as the box below shows.

The only invulnerable ads are podcasts and videos with the brand ‘baked in’, like the “Dear Kitten” ad. 

But there is a problem with these kind of heavily customized and integrated advertisements. They are time consuming and expensive to produce. They are unlikely to be able to scale up to fill the hole made by ad blocked revenue.

New Federal Trade Commission rules tackle deceptively formatted advertising 

Even if the “native” approach could be adopted at scale, the Federal Trade Commission published new rules in December 2015 that challenge its viability.

The FTC’s new enforcement policy targets “deceptively formatted advertising”. The FTC’s concern is that the pressure felt by publishers as a consequence of ad blocking is drawing them toward advertising formats “that are closely integrated with and less distinguishable from regular content so that they can capture the attention and clicks of ad-avoiding consumers”. 1

The new policy reiterates the Commission’s historical stance to advertising disclosure, and warns that despite the hazard of ad blocking publishers must not permit commercial content that could trick a reasonable viewer into regarding it as regular content. 

For half a century the FTC has enforced the line between editorial and commercial content. Past examples of the Commission’s approach indicate how it will address “native” online advertising. 

The misleading door opener 

Precedent for deceptively formatted advertisements online appear in print, on radio, on television, and on the telephone and by email and in person. 

Up to the mid 1970s salespeople going door to door used the cover of delivery men, arriving with unexpected pizzas or prizes. Others used the cover story of a researcher, quizzing people where they lived, and by degrees hoping to gradually bring them to a readiness to buy volumes of the Encyclopedia Britannica. 

This “misleading door opener” tactic became illegal in 1976 following an order of The Federal Trade Commission that required salespeople to present a card explaining the true purpose of their visit before entering a home. 

The FTC had already addressed the matter of misleading advertising by 1967, when it issued its first statement on a misleading newspaper advertisement that was formatted to appear like an independent editorial column. The Commission concluded that it was necessary to make “a clear and conspicuous” disclosure that the column was an advertisement. 

Labelling a “native” ad as an ad may not be enough. As the Commission stated in the 1967 example, merely adding a heading stating that piece was an advertisement would not always suffice because: 

“the format of advertisement may so exactly duplicate a news or feature article as to render the caption ‘Advertisement’ meaningless and incapable of curing the deception”. 2

The same issue emerged on radio and television from the 1980s onward, when many new radio – and then television – programme-length advertisements masqueraded as independent reviews.3   The FTC tackled similar misuses of telephony and email. The new policy refers to the CAN-SPAM Act of 2003, which was in enacted in part because some “senders of unsolicited commercial electronic mail purposefully disguise the source of such mail”.4 

Again, the issue arose with web search results. The wording of the FTC’s guidance is instructive: 

“knowing when search results are included or ranked higher based on payment and not on impartial criteria likely would influence consumers’ decision with regard to a search engine and the results it delivers”.5 

This recalls the FTC’s summary of the “misleading door opener” problem in the early 1980s: “When first contact between the seller and a buyer occurs through a deceptive practice, the law may be violated, even if the truth is subsequently made known to the purchaser”.6 

What the FTC will examine 

The FTC’s rubric in the new policy, and indeed in its action on other media, is that “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”.7 

To determine whether advertising is misleading under the new policy the Commission will examine overall appearance, similarity of written, spoken, or visual style to non-advertising content on the same site, and the degree to which it is distinguishable from non commercial content.8

Similar to the newspaper column example of 1967, the Commission regards the misrepresentation of commercial content as independent opinion as a violation: 

“Depending on the facts, false claims that advertising and promotional messages reflect the independent, impartial views, opinions, or experiences of ordinary consumers or experts are presumed material.” 

For certainty the policy appears to repeat the point, stating that the following are violations: 

“any misrepresentations that advertising content is a news or feature article, independent product review, investigative report, or scientific research or other information from a scientific or other organisation”.9 

In its accompanying guidance document for businesses the Commission states that disclosures should be prominent and understandable: 

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.  Furthermore, depending on the context, consumers reasonably may interpret other terms, such as “Presented by [X],” “Brought to You by [X],” “Promoted by [X],” or “Sponsored by [X]” to mean that a sponsoring advertiser funded or “underwrote” but did not create or influence the content. 

If it works then the FTC says you probably should not be doing it. 

The FTC’s new policy includes a paragraph that should give pause to promoters of “native” advertising of all hues. 

Deception occurs when an ad misleads consumers about a material fact. Material facts are those that are important to consumers’ choices or conduct regarding a product. Misleading representations or omissions about an advertisement’s true nature or source, including that a party other than the sponsoring advertiser is the source of the advertising, are likely to affect consumers’ behavior with regard to the advertised product or the advertisement. Consumers with such a misleading impression, for example, are likely to give added credence to advertising messages communicated and to interact with advertising content with which they otherwise would have decided not to interact.10

It appears to suggest that one can judge whether an ad misleads a consumer about the provenance of an advertisement by the degree to which consumers “are likely to give added credence to advertising messages communicated and to interact with advertising content with which they otherwise would have decided not to interact”.10 In other words, if a “native” ad works then it is probably a breach of Section 5 of the FTC Act.

Caution

All of this is bad news for a new generation of eager young native-advertising driven sites and marketeers, and the more established publishers who have gradually started to adopt native formats. But it is good news for the consumer.

US publishers, having jumped on the native-advertising bandwagon, will have to carefully evaluate how their native ads tread the line set out by the FTC. The legality of many of these ads is now in question. Yet even if the FTC does not shortly begin enforcement actions against publishers and advertisers misleading consumers, the native ad format is not a viable response to ad blocking. The general run of native ads, as with conventional ads, are not block-proof.

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Update

14 January 2015:
On 13 January 2015 the UK regulator, the Advertising Standards Authority, censured BuzzFeed for a deceptively formatted advertisement.

An advertorial for Dylon on the entertainment and news website BuzzFeed, seen on 9 October 2015, headed “14 Laundry Fails We’ve All Experienced”. It was styled as a BuzzFeed article and featured photos and social media posts highlighting laundry ‘fails’. Below the heading, text stated “Dylon Brand Publisher” next to the logo for Dylon’s Colour Catcher product. At the bottom of the advertorial, text stated “It’s at times like these we are thankful that Dylon Colour Catcher is there to save us from ourselves. You lose, little red sock!”.

Notes:

1.   Enforcement policy statement on deceptively formatted advertisements, FTC, 22 December 2015, p. 1.
2.  Statement in regard to advertisements that appear in feature article format, FTC, 28 November 1967.
3. Enforcement policy statement on deceptively formatted advertisements, FTC, 22 December 2015, p. 5.
4.  https://uscode.house.gov/view.xhtml?path=/prelim@title15/chapter103&edition=prelim
5.  Enforcement policy statement on deceptively formatted advertisements, FTC, 22 December 2015, p. 6.
6.  FTC Policy Statement on Deception, 14 October 1983.
7.  Enforcement policy statement on deceptively formatted advertisements, FTC, 22 December 2015, p. 1.
8.  ibid., pp  11-5.
9.  ibid., p. 15.
10.  ibid.
11.  ibid.