Native Ads: What Happened to the FTC?

Will Shepler | November 2, 2017

Native ads are by no means a new concept. Nor will they disappear any time soon. According to eMarketer, digital spending on native in 2017 is expected to exceed $22 billion, an increase of 36% over 2016. And that trend shows no signs of abating, despite the intervention of the Federal Trade Commission.

In December 2015, the FTC announced a set of guidelines for the proper use of native ads, including many examples of correct disclosure verbiage and placement. The short version is that advertisers should not deceive consumers by embedding paid content without notification. But in daily practice, the lines are blurry.

To impress upon the market that they were serious about enforcement, the FTC brought action against Lord & Taylor in March 2016. On top of merely passing off paid placements as genuine and organic, Lord & Taylor failed to disclose that they had paid influencers to promote their product. Though the FTC had its first culprit and an opportunity to make an example, they instead simply told them not to do it again. No fines. No prosecution.

The guidelines and wrist-slap moved the market somewhat. Compliance in the market rose from 29% in December 2015 to 63% in December 2016. Still with nearly a third of native ads breaking the rules, why aren’t the prosecutions piling up? Could it be that the FTC is following the Napster prosecution model, where it waits until most have come into compliance before using their power to eradicate remaining offenders? Yes.

But more likely, the answer is related to the November 2016 regime change in Washington. Due to departures, resignations and expiring terms, since February 2017, the FTC has been running with just two of the usual five commissioners. As a result, the FTC has focused on its core mission of protecting consumers from true harm and leaving marginal concerns for later. Now, this interim period of uncertainty is coming to a close with the president appointing three new commissioners this fall to fill the empty seats.

Will the fully staffed FTC return its gaze to native ads? We will have to wait and see. In the meantime, research your placement partners, disclose your intent and follow the rules.