• by Wendy Davis  @wendyndavis, December 22, 2015

Online ads can be deceptive when they are formatted to closely resemble news stories or other editorial content, the Federal Trade Commission said Tuesday in its long-awaited policy statement on native advertising.

The FTC's guidance, combined with a 16-page policy statement, which come two years after it convened a conference about native ads, suggest that the agency is troubled by some of the current practices surrounding online native ads.

The agency says that digital native ads that appear in news feeds of publishers' sites, social media posts, search results and email potentially can be deceptive, unless advertisers clearly disclose that the ads are, in fact, ads. The new guidance directs companies to label native ads that potentially could be mistaken for editorial content with terms like "advertisement," "paid advertisement," or "sponsored advertising content."

The FTC specifically criticizes labels like "promoted" or "promoted stories," stating that those terms "are at best ambiguous and potentially could mislead consumers that advertising content is endorsed by a publisher site."The agency adds that even terms like "promoted by," followed by the name of the advertiser, could be misinterpreted "to mean that a sponsoring advertiser funded or 'underwrote' but did not create or influence the content."

Not all native ads must carry the disclosures. The FTC says that some native ads "may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure."

The FTC says that whether disclosures are required will turn on how similar the ad is "in format and topic" to content on the publishers' sites. "For instance," the FTC writes, "if a natively formatted ad appearing as a news story is inserted into the content stream of a publisher site that customarily offers news and feature articles, reasonable consumers are unlikely to recognize it as an ad."

The guidance appears to reflect the view that any material that's been created by an advertiser is an "ad," even if it doesn't mention the marketer or product, according to advertising lawyer Terri Seligman, a partner in Frankfurt Kurnit Klein & Selz. "They're coming from the perspective that people are misled if they don't know that the content they're about to read has been prepared by an advertiser, rather than someone from the media," Seligman says.

She adds that it doesn't appear to matter "how engaging the content is," or even who wrote it. "The guidance is not recognizing the fact that a lot of native content is prepared by people who are journalists," she says.