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The deal with disclosure and the ethics of native advertising

September 6, 2016 | By Theresa Cramer – Independent Journalist @Cramerstrasse

When it comes to native advertising, publishers are walking a fine line between reader trust and new revenue streams. For much of the short history of native advertising, publishers and media watchers have been debating about its transparency—or lack thereof—but in late 2015 the FTC weighed in and laid out a number of guidelines for publishers and advertisers to abide by.

According to the FTC, in general, disclosures should be:

  • in clear and unambiguous language;
  • as close as possible to the native ads to which they relate;
  • in a font and color that’s easy to read;
  • in a shade that stands out against the background;
  • for video ads, on the screen long enough to be noticed, read, and understood; and
  • for audio disclosures, read at a cadence that’s easy for consumers to follow and in words consumers will understand

As recently as April, however, AdWeek reported that 70% of Native Advertising did not comply with the FTC’s recommendations. Now Polar has taken a (slightly different) look at “The State of Disclosure.” The report found that 7.5% of native ads still aren’t using any terms to label their sponsored content. Yet, even with the hold outs, the report concludes, “2015’s FTC Guidelines for Native Advertising have influenced the levels and types of disclosure premium publishers are using on native placements.”

Polar found the most commonly used disclosure term is “Sponsored”—and all of its variants—appearing in over 55% of native ads. “Promoted” comes in next. Terms like “Partner” and “Presented By” are less popular than just not disclosing at all.

“Promoted” however is the best performing term, with a 0.19% CTR, compared to “Sponsored” with a 0.16% CTR. Still, there is more to the story. For desktop audiences, the term “Sponsored” marginally outperformed “Promoted” by approximately 26%. On mobile devices “promoted” dramatically outperformed “sponsored” by 105%.

So why aren’t companies hopping on board with “Promoted” if it delivers more clicks? Carla Johnson, an executive level strategist at Type A Communications, says, “I think this is for a couple of reasons. One is that the term ‘sponsored’ is a more commonly used term than ‘promoted’ and companies want to use terms with which people are familiar. It could also be that many companies don’t know the performance difference between the two. The interesting thing about the statistic is what the performance of both would be if they were used in equal volume.”

“This remains a thorny issue for publishers and advertisers alike—see Jon Oliver’s coverage of the topic on his HBO show for a good laugh—and publishers seem to just prefer the ring of ‘sponsored’ to ‘promoted’, even though the differences are indistinguishable,” according to Tim Bourgeois, Executive Editor of ChiefDigitalOfficer.net, and digital strategist at East Coast Catalyst. “Also, while most marketers and agencies are increasingly embracing data-driven tactics, they are also constantly making trade-offs between performance and aesthetics, and this is an example of where aesthetics is winning out, at least for the short term.”

When it comes to disclosure, it isn’t all about terms. Polar found that over 85% of native ad units contained only one disclosure term, but most incorporated two to three design elements—such as shading, a distinct border, or “info icons.” This is where things get murky. Relying on your audience to understand that a slightly grayed out box, or a different color border means that a post is actually a native ad—and not just a design choice—is less than transparent. For those immersed in the world of digital media and marketing these may seem like clear indicators of native content, but to the average reader, they don’t mean much. If these elements are accompanied by a clear “Sponsored” disclosure they can only serve to further call attention to the nature of that content, but without it, they are virtually meaningless.

Even with clear disclosures, audiences seem to still struggle to identify the difference between native ads and editorial content. MediaPost reported that in a Grady College experiment, “Overall, only 17 out of 242 subjects—under 8%—were able to identify native advertising as a paid marketing message in this experiment.” Experimenters “displayed 12 different versions of the ad, with varying types of disclosure labels (“advertising,” “sponsored by,” “brand voice,” and “presented by”), as well as different positions for the disclosure label including at the top, middle, and bottom of the page.”

With results like that, one has to wonder if the only thing left to do is point a giant neon arrow at sponsored posts. But readers’ inability to separate editorial from advertising content also says something else about native advertising—maybe even something good. If the goal of native advertising—and, more widely, content marketing as a whole—is to provide content that is on par with editorial content, then “Mission Accomplished!”

With Folio reporting that “Over two-thirds of magazine publishers leverage their own editorial teams to produce native advertisements, according to a study from FIPP and the Native Advertising Institute” it seems only natural that the quality of the content would make it virtually indistinguishable from the editorial. Whether or not you think that’s ethical depends on your outlook.

If you’re a marketer looking to deliver great native advertising, you’re probably thrilled that your audience can’t tell the difference between your copy and editorial. If you’re a reader, you might not be thrilled that you’re being fed advertising in the guise of editorial.

Here’s what it comes down to: If you’re a publisher you need to clearly mark your native advertising with disclosure terms, not just “design elements,” and continue to strive to make the content as compelling and useful as your editorial. From there it’s incumbent upon audiences to be more discerning—to pay more attention to what they are reading or watching—because unless there is a major sea change in the business of digital content (and audiences’ willingness to pay for it) native advertising is here to stay.

By day, I am the editor of EContent, where I cover the world of digital media and marketing. By night I am a reader and writer of books (including Inside Content Marketing), NPR addict, and avid gardener. Find out more at TheresaCramer.com or @TheresaCramer on Twitter.

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