Arguments Fly During FTC Workshop on Native Advertising

Ad Industry Mounts Vigorous Defense in D.C.; Detractors Including Bob Garfield Blast Practice

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The advertising industry descended on Washington, D.C. today, mounting a vigorous defense of so-called "native" advertising at workshop held by the Federal Trade Commission to scrutinize the practice.

The workshop, called "Blurred Lines: Advertising or Content," focused on whether publishers and advertisers are doing enough to keep consumers from mistaking native ads -- which are meant to closely resemble non-sponsored content -- from the content itself.

"As consumers, we started seeing, when we went online, things we that weren't sure what they were," said Mary Engle, the FTC's associate director for advertising practices, in reference to native ads' resemblance to editorial content. Concerns about deception, she said, sparked the FTC's interest.

Trying to make money
Fearful the federal government would meddle with the hottest new form of advertising, leaders from across the spectrum came together in its defense. Executives from Procter & Gamble, Hearst, Mashable,The Huffington Post, Outbrain, Sharethrough and more participated in the standing-room only workshop that ran all day. Over the course of it, every imaginable defense of the medium surfaced, from the standard "native advertising is transparent enough" argument to a claim that consumers want more native ads.

"At the end of the day we're all trying to make money," said Jon Carmen, senior VP-operations at native ad-tech vendor Adiant. Mr. Carmen argued that publishers are operating in difficult economic conditions and content-based ads might help.

Anticipating questions about transparency, Mashable Chief Strategy Officer Adam Ostrow displayed a slide of a sponsored article on that contained four disclosures stating the piece was paid for by Lenovo.

When the questions about transparency did come, the panelists did their best to deflect them. The director of the Huffington Post's Partner Studio, Tessa Gould, displayed a pre-written tweet containing the @HuffPoPartners handle that comes up when readers try to share a native ad. Others argued that transparency would take care of itself because it is in the best interest of brands and publishers not to trick readers.

Brand imperative
Chris Laird, a marketing director at P&G, called transparency a brand imperative. "If it's not transparent, and it erodes consumer trusts, the ROI falls and we just won't invest in it anymore," he said.

The FTC has stated the primary goal of the workshop is to help it better understand native advertising. But the commission's power to bring lawsuits to protect consumers seemed to be the impetus for the hearing's strong arguments.

FTC staff attorney Lesley Fair started the day off with an implicit warning, scrolling through a series of slides with pictures of deceptive ads, including sketchy examples of direct mail, infomercials and "articles" pitching weight loss pills that have been deemed unfair, deceptive and unlawful.

'Boatload of shit'
Native advertising's detractors showed up in force as well. David Franklyn, a professor at the University of San Francisco School of Law, expressed skepticism about publisher labeling efforts. "We continue to find deep confusion between the difference between paid and unpaid content," he said.

Columnist Bob Garfield delivered a resounding attack against the medium, calling native advertising a violation of the most basic publishing ethics. "A conspiracy of deception. A hustle. A racket. A grift," he said.

Mr. Garfield, a former Ad Age editor at large, later delivered the most memorable line of the day, comparing publishers selling native advertising to an island that mined guano-catalyzed minerals until depletion. "With every transaction," he said, "publishers are mining and exporting a rare resource: trust. Those deals will not save the media industry. They will, in a matter of years, destroy the media industry: one boatload of shit at a time."

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