• by Erik Sass  @eriksass1, March 1, 2014

Native advertising, it seems, is the solution to all our problems: it offers advertisers a way to reach consumers that promises to reverse years of declining click-through rates, while desperate publishers get a lifeline in the form of new revenue streams. And while it's already a multibillion-dollar segment of the advertising industry, and growing fast (71% in the past year, according to BIA/Kelsey estimates), there is one big problem with it: In many cases, it is based on an attempt to deceive consumers into thinking they’re seeing something that is not a paid advertisement.

The term “native advertising” can refer to a wide range of formats and executions, and no industry standard definition currently exists, although various organizations, including the Interactive Advertising Bureau, are working to develop guidelines and recommendations. Meanwhile, there's no getting around the unpleasant truth that a good many native ads are intrinsically deceptive.

Native purveyor Sharethrough defines it as: “Native advertising is a form of paid media where the ad experience follows the natural form and function of the user experience in which it is placed.” Additionally, it suggests, “Native ads match the visual design of the experience they live within, and look and feel like natural content,” and they “must behave consistently with the native user experience, and function just like natural content.”

In short, marketing messages are presented in a way that makes them hard to distinguish from editorial content, including their location on the page, choice of font, graphics and layout, all in an effort to get readers to give them the same consideration -- and trust -- they give to editorial content.

The problem with those kinds of definitions may not simply be that they break with longstanding industry traditions of separating the church of editorial content from the state of commercial messages, it is that they may actually break with laws protecting consumer rights.

During a keynote presentation at MediaPost's recent Social Media Insider Summit, Vejay Lalla, a partner at Davis & Gilbert LLP and a recognized authority on advertising law, implied that some executions of native advertising that many in the industry now consider best practices may actually violate the spirit -- if not the letter -- of the law. He cited Section 5 of the FTC Act, which explicitly states that an ad is deemed “deceptive if it omits material information, and that the omission is likely to mislead a consumer acting reasonably under the circumstances.

Lalla did not single out any specific offenders, but this past year has seen some notable and epic native fails, perhaps none greater than The Atlantic's infamous treatment of paid content for the Church of Scientology that was depicted to look like one of the magazine's stories. While the story carried a “sponsor content” banner on it, the placement elicited so much backlash that The Atlantic immediately pulled it and published an apology, acknowledging, “We screwed up.”

The real problem with native is that nobody seems to know where to draw the line, even the FTC. When the regulatory agency held a workshop -- entitled “Blurred Lines: Advertising or Content?” -- last December, it seemed to raise more questions than it answered, leaving many observers wondering whether the line has actually moved into an entirely new sandbox where almost anything can go.

“By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source,” FTC Commissioner Edith Ramirez said during the workshop, according to a report by MediaPost's Wendy Davis, who went on to note that “One of the biggest unanswered questions” discussed a the workshop was “what language companies should use to describe native ads. Current common terms include ‘sponsored by’ and ‘presented by’.” Clearly, such labeling was not enough for certain treatments, like The Atlantic's. The question is whether it will be enough for lawmakers.

In a newsletter article on the trend, Gilbert & Davis’ experts noted, these issues precede current forms of native advertising and go back to earlier forms of advertorials, paid endorsements, video news releases and other approaches that deceptively blurred the line, citing “decades of law enforcement actions against publishers, including infomercial producers and operators of fake news websites that marketed products. In these actions, the FTC relied on Section 5 of the FTC Act, under which the omission of material facts with respect to an advertising claim is deceptive.”

You can argue that native advertising is just the logical progression of ongoing trends in digital media, including the idea that brands are now publishers, or even more disruptively, that they can be “journalists.” You can also question the journalistic tradition of separating “church and state” -- meaning a firewall between editorial and advertising -- which began in the nineteenth century, when journalists first began pressing publishers to protect them from commercial considerations. But the fact remains that most American adults still take that division for granted.

The separation between editorial and advertising is enshrined in rules like the guidelines promulgated by the American Society of Magazine Editors, which emphasize that “Media consumers should always be able to distinguish between content produced by journalists and content delivered on behalf of advertisers. In other words, no fooling the reader.” Turning to digital media specifically, ASME states that “Native advertising should not use type fonts and graphics resembling those used for editorial content and should be visually separated from editorial content.”

Reading the ASME guidelines, it's hard to avoid the feeling not only that most native ads violate these rules, but that it would be impossible for native ads to obey the rules while maintaining their efficacy. In short, the whole point is that the ads look like the content around them -- and if they don't, they won't work as well.

The reputational risk to publishers is real. It's one thing when a few ads look like editorial content, but there are now so many native ads, so cleverly disguised, that in a strange inversion it's actually becoming hard to tell if a particular piece of editorial content isn't advertising. Currently, Mashable has a post titled “Snickers Explains Why Godzilla Was So Mean.” The post includes an amusing video revealing that the well-known monster was just hungry, and actually an affable and easygoing creature once he had a Snickers bar. In other words, it's an ad… or is it? There's nothing that identifies it as an ad being presented by Mashable (e.g., a disclaimer, or a Snickers brand image somewhere near the headline) and also no indication that it isn't an ad. I'm still not sure.

One thing that can be said in native advertising's defense is that it works. But that brings us to another unpleasant truth: given the history of previous online ad formats (pop-up ads, spam, display) it's very possible native advertising's efficacy will decline rapidly once its novelty wears off. This is even more likely in light of the unreconstructed, old school approach of many brands: Sam Ford, director of audience engagement at strategic communications firm Peppercomm and a member of WOMMA's Membership Ethics Advisory Panel, observed that “Companies now have the ability to tell stories, but 90% of the time we’re doing what we’ve always done. We’re trying to align people with whatever we want them to believe, really just the old persuasion model.”

So is there any way to save native advertising from itself? The question boils down to the quality of the content presented in native ad posts. Basically, if you're going to use visual trickery to fool someone into reading your content, they better be impressed with what they see. In other words, the native content must “deserve” to be there.

Forrester analyst Ryan Skinner observed: “The more value marketers are able to put in their native advertising, the less likely readers are to feel aggrieved or surprised.” To achieve this vision, he went on, content should be “labeled as advertising and clearly from the brand,” “shareworthy,” and “valuable to both brand and audience.” In addition, native ads should be targeted “towards a specific, often niche, audience… in scenarios where the reader is not surprised to find stories from brands.”

Likewise, Justin Choi, president and CEO of native ad platform Nativo, identified a number of criteria for native content that “deserves” to exist alongside editorial. First, “brand content must be contextually relevant to what consumers are already actively consuming on the publisher site.” Second, “consumers must learn something or benefit in some way from the content,” and third, “clicking on brand content yields an expected experience,” meaning the content isn't wildly at odds with the teaser leading to it.

Ford noted that all this requires advertisers “Actually get to know the communities we're trying to reach. You have to look at the world and life from their perspective and what they need.” Of course this is setting the bar rather high for advertisers: essentially every native ad has to be at least as good as the editorial content around it, promising a time-consuming, labor-intensive, and yes, expensive process -- the exact opposite of what advertisers are usually looking for. “Creating the content people want to see is the real challenge,” according to Ford; it's an open question if advertisers are up to it.