Publishers and marketers believe they are being responsible by distinguishing native advertising—advertising designed to look and feel like journalism—from news content by using colors, boxes, and labels containing terms like “sponsored by” or “presented by.” But none of those things work with all users or on all platforms. In fact, these elements may leave users even more confused, researchers said at a Federal Trade Commission workshop in Washington, DC on Wednesday.
Consumers skip over labels, and even when they see them, many don’t understand what the labels mean, said David J. Franklyn, professor and director at the McCarthy Institute for Intellectual Property and Technology Law at the University of San Francisco School of Law, where he researches consumer knowledge of native and search advertisements.
“When people are presented with a story that looks like a story, they think it’s a story,” said Franklyn, who presented a study that surveyed 10,000 people both in the US and abroad. “What we’ve found is that there is deep confusion about the difference between paid and unpaid content.”
Whether you call it native advertising, branded journalism, or sponsored content, there have been attempts to blur the lines between advertising and journalism since at least 1912, when congress passed the Newspaper Publicity Act, which required publishers to label advertisements that resembled news stories and editorials. The law is still in effect today, but branded content at news organizations has become more pervasive in recent years. Nearly three quarters of US publishers offer native advertising opportunities on their websites, Marketing Land reported in July. Another report found that 41 percent of brands and 34 percent of ad agencies currently use native advertising “with many others hoping to do so in the coming year,” said FTC Chairwoman Edith Ramirez.
Marketers argue that branded content allows for more relevant and highly targeted messaging and provides added value to consumers by increasing awareness and generating buzz and engagement around their products. Critics, on the other hand, respond that this practice improperly exploits consumers’ trust in a publisher or deceives them outright to influence their purchasing decisions. The FTC, which has the authority to protect consumers against unfair or deceptive ads, only requires that a percentage of reasonable consumers are confused by the disclosure in order for a publisher and/or marketer to run afoul of the agency’s prohibition of unfair and deceptive practices. The problem is the seamless, inconspicuous manner in which advertising is now being integrated into digital content.
Even really educated and savvy consumers can be fooled. For example, marketers and publishers participating in the daylong workshop believed they were being responsible by labeling content “sponsored by,” “brought to you by,” or “presented by.” But Chris Jay Hoofnagle, director of Information Privacy Programs at Berkeley Law & Technology Center, said when he sees those labels, he reaches a very different conclusion.
“When I hear ‘sponsored by’ I think about things like PBS,” said Hoofnagle. “When you watch the MacNeil/Lehrer Show (PBS NewsHour), it starts out with ‘brought to you by BP.’ I would never think that BP told the television show what stories to run. What I assumed from that representation is that BP provided underwriting that laid a groundwork for the good reporting at PBS.” With native advertising, Hoofnagle learned Wednesday, the exact opposite is true. Rather than publishers independently creating content and then going out to get advertising to support it, advertisers approach publishers and say, “I want you to run a story that is compatible with my product,” continued Hoofnagle. “It doesn’t have to promote my product, but it has to puff it up in some ways. That’s a complete opposite mental model.” Franklyn agreed, calling it an “inversion” of the relationship between content and advertising in the publishing industry.