Monday, December 09, 2013

FTC Chimes in on Native Advertising

You can call it "native advertising", "sponsored content," or some other trendy word for the modern iteration of an "advertorial." Whatever you call it, the Federal Trade Commission (FTC) may be calling out publishers, as well as advertising and public relations professionals, if they don't make it obvious when any content has been paid for and is not bonafide editorial or journalistic content.

That's the outtake from a December 4 FTC workshop on the subject.  The newly redesigned (as of today) site does not give the detailed results of the workshop. But trade publications including PRWeek have covered the results.

Most interesting in the remarks from FTC Chairwoman Edith Ramirez is the proliferation of sponsored content. Citing a study from the Online Publishers Association, she noted that 73% of online publishers offer  sponsored content. In addition, she stated that 34% of advertising agencies work with clients to create sponsored content. I have read separately that the PR community is not engaged with this as much, largely because of the belief that earned media has more influence and because those in advertising are already used to paying for reach.

But the FTC's primary concern is deception of consumers. Therefore, any sponsored content must be clearly labeled as such to avoid any potential confusion between advertising and editorial content.

Some might argue that with shrinking media resources the sponsored content idea is a win-win: publishers get content that is harder to come by with fewer reporters, they get revenue, and those seeking publicity have an avenue to reach people.

To a degree that's all true. However, not every organization has the kin of budget to pursue sponsored content to scale, or even at all. Also, if PR pros and others are supplying content, in the online environment people are losing the distinction between old media, new media, and the brand journalism that is increasing via corporate and organizational blogs, online news sites, etc. It's the same as young people grabbing a TV remote and having no idea what the difference is between cable and network TV. Or, using Netflix or some other device to view a show or an episode, with no thought given to the source of the show. Content is no longer tethered to creator or carrier.

But I would add that the FTC concern for consumer deception is a good one when it comes to news, which is entirely different than entertainment content in its importance and the perception of source. As Ramirez notes, the laws already state that connections between endorsers and sellers must be disclosed. That law can have new interpretation in the context of sponsored content.

As I tell my law and ethics students, government regulatory agencies often enact rules and laws where professionals left to themselves fail to follow basic  ethical guidelines. Such is the case here. The PRSA Code of Ethics  principle of "disclosure of information" covers the idea  of making sponsored content transparent. If your professional goal is to ensure that publics are able to make fully informed decisions, you would not hide the fact that content in a publication was written and paid to be placed by a brand or an agency. If your only goal is to persuade people by any means, then you are likely to cross an ethical line.

The FTC workshop merely discussed the issue. But enforcement may come if publishers and advertising and PR professionals think only of persuasion and not of public interest.