Native Ads Are Here to Stay, But the FTC Wants Them Clearly Labeled

Native ads online may be formatted to look like genuine editorial content, but the Federal Trade Commission doesn't want consumers to be confused about their provenance.

The US consumer protection agency published on Tuesday rules specifying what makes online ads "deceptive," and therefore in violation of federal regulations. The rules published Tuesday focus on native ads, which are ads that replicate the look and feel of editorial content created by a publication's editorial staff. These sorts of ads are now commonplace online: Business Insider estimates that native advertising will have brought in $7.9 billion in 2015, an amount that's expected to increase to $21 billion in 2018.

To be clear, the FTC isn't saying there is anything inherently wrong with native ads, but that publications need to ensure that they're clearly labeled. Violators of these guidelines may face fines.

"[Deceptive advertising] occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising," the FTC notes in the new guidelines.

In other words, if web users mistakenly believe that a native ad was created by the site's editorial staff, they may treat the product or service mentioned in the ad with a kind of misplaced trust and not automatically dismiss it as an ad.

So why are publications using native ads in the first place if they have to tiptoe around these guidelines to ensure that they're clearly labeled? For one, native ads, because they do, in fact, mirror the look and feel of other content on a website, are thought to be more effective than traditional online advertising. (Think: When was the last time you intentionally clicked on a banner ad? Exactly.)

Another aspect to keep in mind is ad blocking. With easy-to-use browser extensions like AdBlock Plus, uBlock Origin, and Ghostery, users can ensure that they rarely (if ever) have to see another traditional online ad again. That may be great from a user experience and security point of view, but ad-supported websites do have to pay the bills somehow—hence the rise of native ads that are seamlessly woven into a site's editorial content.

The FTC first addressed the issue of online native ads in December 2013, when it invited advertisers and publishers to discuss the effects of these ads on the public.