Ex-FTC Chairman: Don't Fear Regulators For Native Ads

Increased Chatter About a Hot Buzzword Doesn't Mean the Agency Will Seek Rulemaking

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Part of the reason native advertising is so loved among marketers is that it gives them access to space usually reserved for editorial content. A banner ad on the side of a web page is in a prime position to be ignored. But push a tailored message using a publication's headline and copy styles in better real estate, and readers are much more likely to pay attention.

Former FTC Chairman Jon Leibowitz
Former FTC Chairman Jon Leibowitz

However, the blurring line between editorial and advertising -- native ads' secret sauce -- has raised concerns that consumers are being duped. That in turn has caught the eye of the U.S. government. In December, the Federal Trade Commission will hold a "native advertising" workshop, the first time it will officially discuss the practice. The FTC has the power to bring lawsuits in the name of protecting consumers.

Ad Age asked former FTC Chairman Jon Leibowitz, who just stepped down in February, what the industry should expect from the workshop.

When the FTC gets involved, does that mean the industry isn't doing a good enough job regulating itself?

No, not at all. In fact, the FTC typically holds workshops with stakeholders to determine whether or not something might be a problem. That doesn't mean there is a problem or that they necessarily want to regulate. What it really means is they want to take a deeper dive into an issue of public policy that affects consumers. In 2006, the commission held a workshop on consumer protection into the next "Techade." I thought it was a silly title but a really important issue. That workshop led to more thinking about privacy and ultimately a report. The commission always wants to see what the new issue on the horizon is. That's part of why it's looking at native advertising.

Should the industry be worried about this at all?

No. Keep in mind, the FTC is not going to engage in rulemaking. Even if the FTC wanted to, it's under the Magnuson-Moss rule, which is a kind of medieval form of rulemaking that makes it very difficult to do any rulemaking. People get concerned when the commission does a workshop; I think this is the commission doing its job.

Is this time different, though? There have been cries even from within the industry that native advertising is sketchy.

And that's another reason to do an examination with stakeholders, because if it turns out from the perspective of the consumer that some of these ads appear to be news content, that might raise concerns. Again, you start with an issue, bring stakeholders together and find out if it's a problem. I don't think anyone has determined that yet.

What sparks the FTC's attention before it holds a workshop? What are people at the FTC reading? Who are they listening to?

They read the newspapers. They are always talking to stakeholders. So their ear is to the ground and the workshop could have developed in a number of different ways.

What is your definition of native advertising?

There is no clear-cut definition yet. It's sort of a "I know it when I see it' kind of label. Native advertising can be in the eye of the beholder. That's probably one of the reasons they want to hold a workshop, to understand what it is and what it is not.

Are there any red lines to be mindful of when it comes to native advertising?

I don't think of it as a red-line issue that requires Vladimir Putin to come in and resolve the situation, but I do think that the commission will have a better handle on what might be problematic after it holds its workshop.

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