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Tags containing: "FTC"

Featured Post | Policy

Why Lina Khan won’t back down

It’s no small thing to be named Chair of the Federal Trade Commission (FTC). Unsurprisingly, Lina Khan’s path to that position is an impressive one. Significantly, it was characterized by deep study and evaluation of monopolies and antitrust law. Absolutely everyone expected this to be central to her tenure, and she has not disappointed in that regard. With big tech companies in her sights, she’s taken on Meta for antitrust, Google for its ad practices, and Amazon for its consumer practices around Prime.

But there are those questioning Khan’s strategy of aggressively filing cases. The criticism built to a crescendo recently when U.S. District Court Jacqueline Scott Corley declined to block the Microsoft acquisition of Activision, handing a defeat to the FTC which had hoped to snuff out a potential monopoly in its infancy.

The FTC alleged that Microsoft’s acquisition of Activision (and its bevy of popular games such as Call of Duty) could lead to a dominant position for Microsoft in the gaming sector. Microsoft quickly sought to nip the FTC’s concerns in the bud by agreeing to keep popular game titles available on rival platforms. There is, however, some debate around whether or not that was enough to address competition issues.

There’s also some debate about whether Judge Corley correctly interpreted the law. Matt Stoller notes that the Clayton Act guards against mergers that “may substantially lessen competition” while Judge Corley stated in her opinion that FTC had not proven the deal “will substantially lessen competition.” Unfortunately for the FTC, the shift from “may” to “will” sets a substantially higher bar and one that courts have supported in recent history.

Corley’s decision has led numerous groups  (some of which receive an outsized portion of their funding from big tech companies) to loudly question Kahn’s strategy at the FTC. It’s a bit hard to take these Monday morning quarterbacks very seriously, however, because some of these same groups also argue at every turn to limit the FTC’s regulatory authority. Their criticism of the FTC and the Department of Justice Antitrust Division is so routine and frequent that you are left to wonder whether they envision any role for the federal government in ensuring a fair marketplace. Most, however, understand that the FTC plays a critical role in enforcing federal consumer protection laws that prevent fraud, deception, and unfair business practices—including those that are anticompetitive.

As anticipated, Khan is clearly trying to shift the courts’ interpretation of competition and antitrust law. Of her strategy, she’s unabashedly stated that “you lose 100% of the shots you don’t take.” And given her track record so far, a rumored major antitrust suit in the works against Amazon along with newly-released merger guidelines from the FTC and Department of Justice, she’s going to keep taking shots—big ones. On top of these high-profile cases, as Jessica Rich, former Director of the FTC Bureau of Competition, opined earlier this year, the FTC has seemingly shifted its focus from “whack-a-mole” enforcement to broader rulemaking efforts.

Khan’s efforts to move the FTC into a stronger enforcement position is one that reflects a global trend, as regulators around the world ramp up their competition and antitrust efforts. For example, Europe recently enacted the Digital Markets Act and Digital Services Act, which will lead to a new wave of crackdown on dominant companies. This isn’t just Kahn’s concern, or an American concern. Policymakers around the world are trying to level the playing field.

As to Kahn’s efforts to step up the FTC’s position as rule maker and enforcer, it is critical to recognize that the history of the FTC’s authority and posture is characterized by ebbs and flows. Courts and Congress have empowered or restrained the FTC at various points in our history. For most of the last 20 years, FTC Chairs have had to operate with one eye over their shoulder.

Former Chair Jon Leibowitz secured high profile consent decrees with Google and Facebook over consumer privacy violations. These decrees were heralded as landmark agreements and have also provided the FTC with access and leverage with these companies. However, it is important to note that the consent decrees were pursued instead of expensive, more risky lawsuits. Now, with the benefit of hindsight, many have criticized the FTC for not doing enough to protect consumers and prevent monopolization. And this is where Kahn’s leadership comes into play in a big way.

Changing the courts’ interpretation of competition law is not easy. But this change—modernization—happens in every facet of law, and it is necessary to adapt to new factors. Until and unless Congress can break the permanent state of gridlock, we should support Khan’s efforts to establish a more proactive and robust role for the FTC, one that can foster more healthy competition to the benefit of consumers and businesses.

Opener art: Lina Khan, Competition and Regulation in Disrupted Times, Brussels, Belgium
Used under a CC BY-SA 2.0 license. Credit: Cory Doctorow
Perspectives | Policy

A level playing field for companies and consumers

Whether your browsing history should be private by default has become a key question in the past year. Shortly after the election, Congress repealed privacy rules that would have required broadband providers to get consent from consumers before they could share this consumer data with advertisers. Members of Congress noted that it was unfair to apply these rules only to the internet providers but not to other giant digital companies, including Facebook and Google. When Senators and Representatives returned to their home districts, however, they promptly got blasted by some of their constituents for appearing to protect the shady practices of cable companies.

Partly in response to the backlash, Rep. Marsha Blackburn (R-TN) introduced the BROWSER Act. It’s a bill designed to level the playing field for companies that collect data about consumers at massive scale. And it is inclusive of all companies that are able to collect data across much of the web like ISPs, Google and Facebook. At the same time, the bill guarantees more transparency and choices for consumers. Ignore the shrill extremists in this debate. For good faith actors representing industry or consumer groups, there’s a lot to like about this bill.

In short, the bill would require companies to obtain opt-in consent from consumers before using “sensitive” data. This would include financial, location, and health information as well as browsing history and app usage. Some have argued browsing history and app usage shouldn’t rise to the level of sensitive information. However, common sense suggests otherwise. How would you feel if someone tried to buy and then publish a list of the websites you visit? In short, this bill says where you go in both the real and virtual worlds should remain private until you grant consent. I find it hard to argue with this.

The bill goes a step further in prohibiting companies from altering or denying service for consumers who do not opt-in. This provision is likely to draw the ire of industry lobbyists. But there’s a lot of merit in putting the onus on companies to develop a good “elevator pitch” for consumers. Companies that convince customers of the value to consumers are likely to be rewarded with their business—and trust.

The bill also requires a “clear and conspicuous” privacy policy that is easy to find. This generally codifies what is standard practice for good actors today. It’s unlikely that anyone can make a credible argument against providing transparency for consumers.

Finally, the bill designates enforcement authority to the Federal Trade Commission (FTC). This is something that the entire cable lobby advocated for just a few months ago. Consumer advocates might want more robust enforcement tools for the FTC, but I question whether the federal rulemaking procedure is agile enough to adapt to changing technologies and business models. FTC guidance and enforcement cases can provide useful direction and clear lines for appropriate behavior.

To be clear, this is just the beginning of a long and uncertain legislative process. But, it’s an important development that Rep. Marsha Blackburn (R-TN), a conservative Republican with a decent amount of experience with tech issues, has moved down this path. The fact that a few voices at the edges of the spectrum are opposed means she probably got it exactly right.

Industry-Research | Perspectives

Native advertising continues to grow, but compliance issues remain

Native advertising is a compelling and profitable way for publishers to offer custom ad opportunities in the form of articles, video, programmatic and sound. What’s more, it provides a creative outlet for marketers, resulting in increased demand and desirability for publishers.

With this in mind, we at MediaRadar felt it was important to take a closer look at native trends for a more thorough understanding of best practices, as well as channels. So we recently published a study that observes the native advertising trends that emerged in 2016. The study, “Leaders and Lessons in Native Advertising,” examines thousands of native ads from nearly 13,000 brands.

Here’s what we found:

37% of publishers are not native compliant. In December 2015, the Federal Trade Commission (FTC) released its first-ever native advertising guidelines. At that time, only 29% of publisher sites examined were compliant. That number has increased by 119% year-over-year, however, with 63% of digital publishers having modified their native advertising to adhere to the FTC guidelines. Still, it leaves 37% of digital publishers that aren’t native compliant.

610 new advertisers bought native each month. Adoption and demand for native ad content was extremely high, with an average of 610 new advertisers using native content solutions each month. And many of these advertisers are open to purchasing digital packages – not just native as a standalone. This is good news for publisher ad sales because native continues to drive bigger deals for more revenue.

An average native campaign runs for two months. Renewal rates and campaign duration for native remain low overall. Based on 2016 data, native renewal rates are at only 33% across all media sites. An even smaller portion of those – 20% – renew less than 20% of the time. The average native campaign duration is only two months. However, sites with more established native programs have a 49% renewal rate. This includes sites with native programs where more than 50 brands are placing native buys.

Media & entertainment is most popular category. The top-five categories in native advertising from January to December 2016 include:

  1. Media and entertainment (3,198 brands using native campaigns)
  2. Professional services (2,017 brands)
  3. Finance and real estate (1,246 brands)
  4. Technology (1,231 brands)
  5. Retail (1,153 brands)

Takeaways

Overall, there has become a greater demand for native advertising content. More publishers are familiarizing themselves with the FTC native advertising rules than ever before. However, there is still room for improvement, with more than one-third of publishers remaining non-compliant. And while the number of native ad campaigns continues to grow, renewal rates and campaign durations remain low.

Also, the media and entertainment industry is the most popular native advertising category, setting itself apart from the rest of the pack in terms of native ad adoption. But this may change in the coming years, as native becomes more popular and more industries begin regularly investing in native ads.

Todd Krizelman (@ToddKrizelman ) is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

 

Perspectives | Revenue

Why publishers and advertisers need to get native advertising right

Native advertising has come a long way from its debut in the digital marketing environment, when the lines between advertising and editorial were blurry at best. But a new study from the cloud-based intelligence platform MediaRadar, “Leaders and Lessons in Native Advertising,” found that 37% of publishers still aren’t complying with the Federal Trade Commission’s rules on disclosure for native advertising.

In late 2015, he FTC clamped down with more guidelines and an 11-page guidebook for businesses to promote more transparency within native advertising and ensure clarity for audiences, as I wrote at the time. Of course, 37% is a huge improvement from 61%, which was the figure cited in last year’s study on non-compliance. But the bottom line is that honesty about native ads has yet to become the status quo. In a world where fake news and ad fraud have troubled audiences and skewed our instincts for what’s valid, it’s to the benefit of publishers and advertisers to work harder.

The Evolution of the ‘Explicit Native’

Attracting the attention of users quick to download an ad-blocker or scroll past promoted posts on social media poses a significant challenge for marketers and publishers. Enter native advertising, thought to be the panacea for balancing editorial interest with advertising dollars. The FTC guidelines emphasized explicit disclosure of native ads in proximity to the headline (which, let’s face it, is the only thing many readers will allow their eyes to glaze through).

While the IAB deemed the terms “overly prescriptive,” DCN’s own Jason Kint said the impact of the guidelines would largely depend on what cases the FTC brought to the fold. There’s a difference between publishers and advertisers “trying to do the right thing” versus those engaging in “egregious acts of deception,” to use Kint’s words.

Native Exposed

And we saw the first case the FTC brought up, in March 2016, when it charged retailer Lord & Taylor for allowing 50 Instagram stars to wear the exact same dress — with none of those influencers noting in their posts that wearing the dress was a coordinated campaign. Nylon magazine also ran an article and an Instagram post featuring the dress. It was almost as if Lord & Taylor had decided to blatantly disregard the FTC’s disclosure rules.

The FTC saw it as such and brought charges against the retailer, eventually reaching a settlement. The company, for its part, announced that it “never sought to deceive” its customers. But it was a clear warning that the FTC was serious in doubling down on enforcement, and that actions speak louder than words when it comes to trusting marketers. No matter that the FTC’s makeup under President Donald Trump is still a mystery (there are only two current members of the Commission) — the stage has already been set for advertisers to work harder to ensure compliance and not outsource this work to other parties.

And if the evolution of labeling content as native indicates anything, most digital publishers are trying harder. There’s been a 119% year-over-year growth in doing so. So how about the 37% of publishers choosing not to comply? They’re risking their reputation and revenue.

The Benefits of Going All In

With native set to continue to grow again this year, it seems only logical to go all-in on following the rules while delivering good advertising, and not circumventing the rules for the same goal. Yet some challenges going forward are that most native advertising campaigns only last a couple of months, and native renewal rates are fairly small at 33% across all media sites.

How should we address this? Well, MediaRadar’s study indicates that publishers who have robust native advertising operations and have invested in the necessary tech — including the New York Times, Wall Street Journal and Quartz — have a stronger renewal rate at 49%. Top publishers who sell and measure the impact of native successfully can expect renewal rates of 60 to 80%, according to MediaRadar’s forecast.

Tips for Success

That being said, here’s some advice for publishers going forward:

  1. Invest more in native advertising for more profit. It’s not going away, so seizing the right packages and running campaigns long enough to actually benefit is key. That also means considering the use of in-house native advertising teams, or freelancers devoted solely to creating native advertising.
  2. Communicate the results. This helps prove the efficacy of the advertising. And, granted the results are positive, this helps increase renewals.
  3. Consider newer ad categories that have yet to jump on the native bandwagon. Media and entertainment, professional services, finance and real estate, tech and retail were the top five categories in native advertising last year, so look beyond those to expand.
  4. Invest in the right technology. It will help sustain your business in the long run.
  5. Don’t break the rules. Unless you’re OK with potentially risking some revenue (a fine of $16,000 for every native ad violation) and your reputation among users.
  6. Try harder. The big issue for publishers who don’t follow the FTC’s guidelines, it seems, is that they want to game the system to make bad native ads work. But sacrificing quality or trust isn’t the way to go. The answer: Better advertising.

Industry-Research

FTC recommendations for cross-device tracking

In the simplest terms, cross-device tracking occurs when platforms, publishers, and ad tech companies trace consumer activity across connected devices. The Federal Trade Commission (FTC) recently released the Cross-Device Tracking: An FTC Staff Report, providing usage guidance and recommendations for this relatively new tracking method.

The cross-device tracking benefits include the ability to:

  • Log into email or social media accounts from multiple devices.
  • handoff from one device to another (e.g. one can start reading a book on one device and pick it up on another).
  • Helps to fight against fraud, companies recognize users sign-on to devices with easy authentication methods.
  • Personalize advertising by analyzing a consumer’s activities on all devices and then matching with offline behavior.

Many companies also use a probabilistic approach to extrapolate which consumer is using a device, even when a consumer is not logged into a service. This method of probabilistic tracking uses IP address matching. Typically, an ad platform places a cookie on a consumer’s browser, the cookie regularly includes the IP address of the device running the browser. Since the devices on the same local network often have the same public IP address, the ad platform can surmise that the devices using the same IP address, belong to the same household. It’s important to note that most of the probabilistic tracking companies, like third-party advertising, do not have a direct relationship with consumers nor have access to user agreements on data collection and data sharing.

Many consumers have little awareness of cross device tracking and the information captured from their smart televisions, health information from wearable devices, or offline shopping habits. Therefore, the FTC recommends the inclusion of four central practices for companies conducting cross-device tracking:

  1. Transparency
    Companies should provide meaningful information to consumers about cross-device tracking activities to help inform consumer decisions about whether to use existing opt-out tools, or whether to stop using a site, app or service.
  1. Choice
    Companies should offer consumer choices about how their cross-device activity is tracked. Consumers should be informed as to how the practices apply or are implemented.
  1. Sensitive data
    Companies should stop cross-device tracking on sensitive topics, including health, financial, and children’s information, without consumers’ affirmative express consent.
  1. Security
    Companies are required to maintain reasonable security, in order to avoid unexpected and unauthorized uses of data.All companies in the digital ecosystem, especially those that are consumer-facing, have a responsibility to inform consumers of third party and cross-device tracking companies being utilization on their site and apps.

Industry-Research

Is it good business for your native ads to comply with FTC guidelines?

It’s been a little over a year since the FTC published guidelines for native advertising. In just 12 months this has led to a significant shift in how native or sponsored content has been implemented. In our original analysis, MediaRadar discovered that in year 2015 75% of publishers hosted native campaigns without any mention of the content being advertising. With the FTC’s guidelines in place however, that number has dropped substantially. Over January we’ve re-run our analysis. Now just 5% of publishers fail to mark native content at all. This is a significant shift in accountability and transparency.

At the time the regulation was announced, some in the industry was concerned that such thorny legalese would dampen adoption of native advertising. But this has not been the case. At all. Here are some quick stats based upon our most recent analysis of native advertising:

  • We have found monthly increases in the number of brands placing native, in almost every month. There are 16,000 native advertisers buying ads in the past year, up 73% from 2015.
  • Programmatic native exchanges have become very good at amplifying native, placing 4,182 native advertisers in calendar year 2016. These are advertisers running on exchanges such as Triple Lift, Nativo, Bidtellect, and Giant Media.
  • There have been very few fines over publishers or advertisers violating the guidelines. The FTC set the new guidelines and the industry has reacted and internalized the feedback.

It is true that there are still examples of native content that is not complaint with FCT guidelines. Folio covered this as recently as last week. But in the big picture, with our country focused on fake news, there is more emphasis on premium content, and premium transparency, than ever before.

Todd Krizelman (@ToddKrizelman ) is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

Perspectives

Ensure that your native ads are FTC compliant

From its introduction only a few years ago, native advertising has generated clicks, captured attention, and raised controversy. Native is everywhere, from Hennessy’s partnership with Vanity Fair for the original film ‘Never Stop. Never Settle’ to branded playlists on Spotify. At MediaRadar we find native ads placed both programmatically and direct. There are more than 760 websites selling native. We found 7,004 advertisers buying native ads since Jan 2015 (1,437 on DCN member websites).

Advertisers are constantly creating new ways to leverage this form of advertising, but there has been significant blurring between advertiser messaging and editorial content.

The FTC, however, has signaled that these days without regulation are coming to an end. On a quiet day on December 22, the FTC released guidelines on how native advertising should be implemented. These rules create strong separation between advertising and editorial.

So, who is impacted by the FTC’s regulation? Well, almost all publishers. Of the hundreds of sites selling native advertising, FTC violations can results in a civil penalty of up to $16,000, per count. Recently, Lord & Taylor was found to violate native ad regulations without disclosing a digital influencer campaign for Instagram.

MediaRadar found that 70% of sites will need to modify their current native advertising in order to adhere to the FTC guidelines.

Here is what you need to know in order to be compliant:

  1. Disclose Advertising. When the promoted or sponsored content mimics a website’s look-and-feel, disclosure is necessary. Readers need to know what content was influenced or paid for by advertisers.
  2. Use Precise Language. The FTC is explicit that words like “presented by” or “promoted by” are not sufficient notice. Instead use words like “Paid by” or “Advertiser.” FTC Recommended Language Accepted Language: “ad,” “advertisement,” “paid advertisement,” or “sponsored advertisement.”
  3. List the Author or Advertiser Logo. Include the advertiser’s logo in all native advertising. If an author credit is included, the advertiser should be shows in place of a person’s name. This reinforces to the reader that this is a paid placement, not regular editorial.
  4. Ad Position Matters. Location of an ad’s acknowledgement should be at the top left corner of a native ad (today, they are commonly identified at the bottom).
  5. Video or Sound. Video and sound ads are more complex—so a disclosure is needed on both the thumbnail and pop-up.

Native offers one of the highest CPM ad units and we observe favorable renewal rates on most sites. While these guidelines will create limits in how native is executed, we do not believe it poses a threat. Some of the largest firms, including the New York Times, have labeled with “Paid Post” from the start. And since the guidelines went into effect, there has been no ebb in the torrent of native ad buying. With more prominent labeling, advertisers can creatively use content to drive increased product awareness or increased sales.

Todd Krizelman is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

Perspectives | Policy

Consumer advocate Julie Brill leaving FTC

Julie Brill has been an unwavering advocate for the consumer during her time as FTC Commissioner. DCN had the privilege of hosting her at our event last December “The Consumer Rules: Lessons From Ad Blocking” where I interviewed her on everything from the definition of consumer harm to the notion that privacy today is more about controlling who you communicate with — and how — than seclusion.

Hindsight is 20/20 but many of her concerns over the years related to privacy and consumer trust in the digital ecosystem have come true with the advent of major issues like ad blocking.  I look forward to seeing where her expertise and focus on consumers and privacy takes her as she re-enters the private sector.

 

Perspectives | Policy

Perspective of premium publishers: privacy rules for broadband providers

On Friday, February 26, Jason Kint, CEO of DCN, wrote to Federal Communications Commission (FCC) Chairman Tom Wheeler to lay out the perspective of premium publishers with regard to their upcoming privacy rules for broadband providers.  The letter urges the FCC to require broadband providers to provide consumers with transparency and meaningful choice with regard to the collection and use of personal information especially when this data will be used for purposes that fall outside of a consumer’s expectation and outside of the context of the interaction where the data was collected.

For example, a reasonable consumer would expect a mobile broadband provider to collect data about how a consumer uses their mobile device so the company could make improvements to the broadband service or ensure efficient management of the network.  However, consumers would not expect (or even know) if a mobile broadband provider was using this same set of data to tailor advertising to consumers on websites or apps.

As several news outlets reported, at least one mobile broadband provider was inserting a unique identification header every time a consumer’s mobile browser fetched content from a website.  This header was used by advertising partners of the mobile broadband provider to identify individual consumers, track their online behavior and target advertising based on that behavior.  However, neither the mobile broadband providers nor their partners meaningfully disclosed to consumers’ information about this activity or the ability to opt out.  In addition, it was later discovered that the header was being used without the knowledge of the broadband provider by some of their advertising partners to respawn cookies that a consumer had deleted – effectively reversing a consumer’s choice for privacy.

Consumers have different expectations with regard to 1st party, direct relationships versus other types of transactions which are indirect and out of context.  The FCC’s privacy rules should account for the differences in these relationships.  As our letter points out, greater transparency and choice will help rebuild consumer trust and help the digital economy reach its full potential.

Perspectives | Revenue

What’s next for publishers after FTC’s native ad guidelines?

Native advertising has always had the advantage over banner ads because it mimics the look and tone of editorial content. And because publishers may have confused readers with native ads that look too much like editorial, the Federal Trade Commission (FTC) announced guidelines late last month in an effort to keep readers from being misled. It also announced an 11-page guidebook for businesses on how they can comply with the FTC’s new policy.

The overarching theme behind the FTC’s new guidelines is that advertising must be absolutely clear to consumers, and the language used to describe it must be explicit. Plus, disclosure should be in proximity to the headline and should be disclosed before people click on the story – much stronger rules than is now common practice.

Impacting Innovation
So will these new regulations stymie native advertising’s potential? The Interactive Advertising Bureau (IAB), while welcoming the guidelines, took some issue with them, saying the emphasis on the clarity of meaning was “overly prescriptive, especially absent any compelling evidence to justify some term over others.”

”While guidance serves great benefit to industry, it must also be technically feasible, creatively relevant, and not stifle innovation,” Brad Weltman, IAB’s vice president of public policy, said in a statement.

However, DCN CEO Jason Kint had a more nuanced take on the rules: “Ultimately the impact of these guidelines will very much depend on what cases the FTC brings,” Kint told me via email. “We hope the FTC will use their enforcement authority to stop egregious acts of deception and not punish publishers and advertisers trying to do the right thing.”

An Ongoing Problem
According to the FTC, terms such as “Promoted” or “Promoted Stories” — which are commonly employed to label native advertising — are “at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site.” Words such as “Ad” and “Sponsored Advertising Content,” according to the FTC, are much more direct and clearly understood as advertising by consumers, and should be used instead.

The FTC’s conern is meritted. A study conducted by Contently last year found that most consumers can’t distinguish native advertising from regular content on a website. “Our findings show that no matter what steps publishers have taken, there is still significant confusion on the part of readers as to what constitutes an article and what constitutes an ad,” Contently said in its report on the study. The company suggested the “devil may be in the details,” and that perhaps readers also aren’t choosing to take the time to recognize the difference between an article and an advertisement.

Jeffrey Chester, the executive director of the Center for Digital Democracy, meanwhile, likened native advertising to “product placement on digital steroids. There’s no way that saying, ‘This is an ad,’ means anything,” he told the New York Times.

Ensuring Clarity
Perhaps these reactions indicate that publishers and advertisers just haven’t yet found the right way to ensure clarity — which only substantiates the FTC’s argument that obvious and well-placed statements are necessary to describe native advertising. Indeed, digital publishers such as Mashable and the Huffington Post were relatively calm about the new policy, with the Huffington Post saying it’s the result of inconsistency in the market.

But the bigger issue for publishers, according to the IAB, is that more enforcement on native advertising is bound to come. While the FTC’s regulations are not quite the law of the land, most publishers and advertisers are going to want to comply to avoid financial sanctions or risk being held out as bad actors.

And that brings publishers and advertisers back to a predicament that once seemed far away from this new, innovative kind of advertising. So publishers will have to weigh their desire to push the envelope with innovative ad forms and being crystal clear to users about ads. The winners will be the ones who can do both, without sacrificing quality or trust.

Perspectives | Policy

Ad blocking: It might be time for an FTC assist

This week, we released our 2015 DCN Ad Blocking Report  which shows that 33% of U.S. consumers are very likely or somewhat likely to try ad blocking software in the next three months. Coupled with research by Adobe and PageFair that showed a 41% increase in the use of ad blocking from 2014 Q2 to 2015 Q2 it’s clear we’re seeing a steady, significant rise in consumers using ad blocking software.

Interestingly, Doc Searls notes that ad blocking (which he calls “the biggest boycott in human history”) started spiking right around the time that Do Not Track (DNT) signals began to be ignored. As we’ve written before, we think consumers have been actively searching for ways to control their online experience and better protect their privacy. They started with clearing cookies, then enabling DNT and now they’re blocking ads altogether.

As our research and that by others has noted, ad blocking software meets a number of consumer needs, a major one being poor online experiences due to advertising. Some ads can be intrusive and annoying and pages load much faster without ads (much less endless third party calls).

Consumers are also concerned about their privacy and are looking for better ways to opt out of having their data collected with little transparency. Consumers are concerned about their security and the various unknown entities having access to and potentially compromising their devices.

While meeting consumer experience needs is laudable and an important wake up call for industry, the other side of the coin may be fraught with harmful and shady business practices.

As I wrote in September, ad blockers shouldn’t block conversations between a publisher and a consumer – this kind of back and forth dialogue helps the publisher better understand and meet consumer needs while it also helps educate consumers. After all, let’s keep in mind that most early adopters of ad blocking software tend to be young males (hint: I was once one of them – we didn’t always appreciate the big picture).

Also, as has been reported, ad blocking companies will accept payments to whitelist ads from companies. Of course, those ads need to meet a set of acceptable ads criteria. But those criteria tend to be nebulous and interpreted behind closed doors while the payment is being negotiated, which doesn’t make for a healthy marketplace. Indeed, it is often the case that the ads that are whitelisted are text-only ads that add absolutely nothing to the overall experience for the consumer. I would argue that, rather than read any conceivable text ad, most consumers would rather laugh at a new Geico ad or mock one of Matthew McConaughey’s ethereal, self-indulgent car commercials, especially if that ad was stripped down to a minimum of 3rd party tags and did not track me across the web.

Regardless of what ads should be shown or whether they should be shown at all, I think we can all agree that disrupting an important dialogue between consumers and publishers and shaking down publishers to whitelist ads are not the hallmarks of a healthy ecosystem. It would be helpful for the Federal Trade Commission (FTC) to examine whether these business practices and agreements are undermining the ability of content creators and consumers to find a value exchange that works for both. The FTC plays an important role in keeping our industry healthy by working with good faith actors to establish best practices, shining a light on new, emerging technologies and bringing enforcement cases to end shady business practices.

Needless to say, these issues are top of mind for DCN and the premium publishers we represent. We’re looking forward to an opportunity to explore this topic, among others, at our December 16th event The Consumer Rules: Lessons from Ad Blocking. It will be held at the Newseum in Washington, DC from 8:30 to 11:00 AM on Wednesday, December 16. Because solving the issues causing and caused by ad blocking requires wide ranging participation, we’re hosting an interactive discussion featuring Jed Hartman, Chief Revenue Officer of the Washington Post; Heather West, Senior Policy Manager, at Mozilla; Ben Barokas, CEO of Sourcepoint; and Fatemeh Khatibloo, Principal Analyst at Forrester Research. Following the panel, we will have a fireside chat with FTC Commissioner Julie Brill.

It should be a lively discussion; it is certainly an important one.

Perspectives | Policy

Straight talk on consumer privacy from FTC commissioner Brill

Julie Brill, the outspoken FTC Commissioner, recently gave a stirring summary of how unaddressed consumer concerns have led to the rise of ad blocking software.

From cookies to device fingerprinting and cross-device linking, consumers continue to struggle to understand when they are being tracked, who is tracking them and how to opt out. The problem worsens for consumers when you consider that tracking technologies are becoming nearly invisible and ever more comprehensive. To underscore the concern, the FTC is hosting a workshop on November 16 to examine the practice of “cross device tracking.”

Piling on top of this transparency and education problem, controls for consumers haven’t kept up with the technology developments. And frankly: Ignoring clear signals sent directly from consumers is a perilous path. As Commissioner Brill opined, it’s surprising “the ad tech industry hasn’t been more motivated to offer consumers better tools to protect their privacy, because it has always been the case that consumers could take matters into their own hands.”

Indeed, fighting against better consumer controls has been a major contributor to the rise in ad blocking. Early on, the “cookie” became the boogieman of internet privacy so consumers began to delete them altogether. According to a Pew Research Center 2015 survey, 59% of consumers clear their cookies or browser history – the top method used by consumers to protect their privacy.

A few years ago, Do Not Track (DNT) emerged as a hopeful solution, providing a persistent way to signal consumer choice. But, despite a promise at the White House in 2012, ad tech industry representatives have been fighting a DNT standard for years even though it’s already built into every major browser and the World Wide Web Consortium (W3C) recently finished a reasonable standard for how the signal should be sent and how servers should respond.  The W3C standard clearly reinforces the distinction between 1st and 3rd parties and importantly makes it clear that companies who straddle the line (e.g. Google, Facebook) require consent before tracking users out of context.  So it should come as no surprise that, as Doc Searls notes here, the “hockey stick” rise in ad blocking starts around the same time it became clear that industry wasn’t going to honor DNT signals.

Do you see a pattern here? I do. It’s time for us to get off this merry-go-round of ignoring and then fighting consumers. As Commissioner Brill suggests – let’s “provide consumers with something they clearly want: to see advertising that respects their privacy and that they can trust.”

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