Consumer Basics

What to Know about Sponsored Content

It’s getting harder to distinguish advertisements from objective content.

It’s getting harder to distinguish advertisements from objective editorial content. In fact, it could be becoming its very own parlor game for the 21st century.

That’s because advertisers, fighting all sorts of ad-blocking and ad-skipping technology, are trying to be increasingly creative about how to present their products and services in ways that don’t signal that it’s marketing. Ads are appearing as celebrity endorsements, in Google search query results and as suggested posts at the bottom of news articles. They are all over Facebook, Twitter, Snapchat and Instagram. In fact, social media is awash with When an individual (or cute pet) promotes a good or service, primarily on social media, because they were paid to do so, or because of a material connection between the person (or pet) and the company.

It’s not that blending ads, disguising ads, masking ads — however you want to phrase it — is new. The FTC notes that its first sponsored content case dates back to 1967 and involved a newspaper column reviewing cuisine of local restaurants that was really a paid ad. In the 1980s, the agency found that a bookseller had violated the FTC Act through a deceptive direct-mail ad formatted to appear as a book review from a magazine. After the FCC removed its ban on program-length commercials in the 1980s, the FTC went after a few that were formatted to look like objective consumer programming and required that infomercials slap a big “Paid Advertising” disclosure at both the beginning and during the ordering portion of the ad.

Now, sponsored ads are taking so many new forms in the digital world that it’s getting harder to spot them than it is to find Waldo. Sponsored content appears not only in the places mentioned above but also in video games, product reviews, email, online comment forums, personal blogs, and even infographics. Perhaps the question really is where doesn’t an ad appear these days?

While advertisers are relying more and more on native ads — they are expected to spend more than $8 billion by 2018, and are spending more than $250 million every month on influencer marketing — a recent analysis of the top 100 news sites by the Online Trust Alliance (OTA) found that a majority were not properly disclosed as ads. One in four influencers were asked not to disclose their connection to the company, according to a survey by SheSpeaks reported in AdAge. Yet, more than 90 percent of consumers trust influencers more than ads or traditional celebrity endorsements, recent research disclosed. About 40 percent of Twitter users say they’ve made a purchase as a direct result of a tweet from an influencer.

What consumers need to know is that while ads are popping up everywhere in many different formats, the law about sponsored content is pretty simple, as the FTC recently reminded the business world in its recent policy statement and guide to businesses.

In its policy statement, the FTC noted that sponsored messages are deceptive if they mislead consumers into believing they are independent, impartial, or not from a sponsoring advertiser itself. Specifically, the agency notes that sponsored content that is not prominently represented as such is problematic because it can lead consumers to give greater credence to advertising claims or to interact with advertising with which they otherwise would not have interacted.

In evaluating whether an ad’s format is misleading, the FTC considers the net impression the advertisement conveys to reasonable consumers including overall appearance and similarity of the ad content to the written, spoken or visual style of the non-advertising content.

The agency also signaled it was not happy with some of the tags being used to supposedly identify sponsored. (There are so many words for sponsored content these days it could fill its own mini dictionary.  The OTA study found that 43 different terms were being used to identify a native ad). Among the monikers we at have noticed are “promoted,” “promoted by,” “promoted stories,” “brought to you by,” “sponsored by,” “sponsored links,” “promoted stories,” “suggested posts,” and “recommended links.”) Among the phrasing the FTC would like to see companies use is “Ad” (Great idea!) or “Advertisement” or “Paid Advertisement.”

The FTC said identifiers also had to be clear and unambiguous, as close as possible to the sponsored content, in a font and color that makes it stand out and is easy to read, and in plain language that can be read with ease in videos or understood verbally.

That all seems pretty simple, right? But under these guidelines, 70 percent of publishers are not in compliance, according to Todd Krizelman, co-founder and CEO of Media Radar. In fact, about one-quarter of websites run native ads without any mention of a sponsor.

So be wary when you are reading content of interest. It may be an ad.

For more on sponsored content and native ads click here.

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