Wednesday, December 23, 2015

The Customer Experience Implications of the FTC’s New Rules on Native Advertising

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Yesterday, the FTC issued new guidance on native advertising, sponsorship, and disclosure. In some respects, the new FTC guidance contains little new. It is just another reminder that the same tenets of ethical marketing are as true today as they were more than a century ago when the Postal Act required newspapers to differentiate advertising content from editorial content. But even if the rules remain unchanged, the rapidly evolving media and advertising landscape makes it vital that marketing leaders understand and act upon the new FTC guidance.

The rise of the empowered consumer, protected by ad-skipping DVRs and adblocking software, has raised the stakes for marketers and publishers. Likewise, the disintermediation of content delivery, with peer-to-peer sharing and Facebook's news feed algorithms and Instant Articles, is upending the control that content creators once had over the distribution of information (and advertising) to consumers.

Media companies, adjusting to the loss of viewers, subscribers, and attention, have turned to native advertising to bolster revenues. And marketers, eager to overcome consumers' avoidance of advertising, have eagerly adopted approaches such as native advertising and influencer marketer. There is, of course, nothing wrong with these strategies when carefully executed, but marketing leaders must recognize that creative and innovative practices carry additional customer experience risk that must be managed to minimize regulatory, trust or reputation risks.

Where the FTC stands is clear. While the FTC blog post has a mild headline, "FTC issues Enforcement Policy Statement and business guidance on native advertising," the title of the guidance itself is less circumspect, "Enforcement Policy Statement on Deceptively Formatted Advertisements." The agency makes its intent apparent from the first sentence of the blog post: "If what looks to be an article, video, or game is really an ad – but it’s not readily identifiable to consumers as such – the FTC has another word for it: deceptive."

If you are a marketing professional, I urge you to take the time to read the Policy Statment along with the accompanying "Native Advertising: A Guide for Businesses." To read the highlights and a summary of what the new guidance means for marketing leaders, please visit my blog post on Gartner's blog for Marketing Leaders.

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