• by February 4, 2016

If you were the steward of a brand, what personality would you like your brand to evoke in the consumer’s mind? 

A brand is a set of associations in a consumer’s mind.  It is also a recognizable signal of value that differentiates one product from another. Since consumers are more likely to value and purchase brands they trust, marketers should do everything possible to project a trustworthy image.  

As the effectiveness of (clearly identifiable) banner ads continues to decline, more marketers are turning to native advertising -- paid ads that mimic the look and style of the surrounding medium. Some two-thirds of all marketers already include it in their marketing mix according to the ANA.

Business Insider predicts native advertising spending will rise from an estimated $7.9 billion in 2015 to $21 billion in 2018.

This gets us to the issue of disclosure, transparency and deserved trust in the labeling of native advertising. There is a literature of proof that native advertising, unless clearly labelled as such, can hurt a brand’s image by making consumers feel they have been misled.

For instance, a 2014 study by Contently [titled “Sponsored Content Has A Trust Problem”] found that two-thirds of readers felt deceived upon realizing that an article or video was sponsored by a brand. Publishers are also affected: a 2015 Civicscience poll found that 61% of respondents said sponsored content hurt the credibility of media [specifically news] outlets.

A previous article urged marketers to emulate the naval captains of old by showing their colors proudly. Many advertisers, to be sure, have seen the wisdom of clearly disclosing their sponsorship. In this respect, and on transparency more broadly, the ANA’s Bob Liodice remains the leader, arguing that marketers “have a responsibility to be transparent to maintain trust.”

Sadly, some marketers, agencies, and media suppliers have ignored the transparency principle -- enough, in fact, to arouse the concern of the Federal Trade Commission. At Christmas, the FTC published guidelines on native ad disclosure that, to continue the naval analogy, amount to a “shot across the bow” of those continuing to “sail under false flags.”

In so doing, the FTC may be saving marketers from themselves by ensuring they don’t destroy the trust relationship between their brands and their consumers/readers.

The guidelines, importantly, also include the principle that “Disclosures should remain when native ads are republished by others” and cautions that its prohibition applies to any entity that participates in “creating deceptive advertising content”

But marketers and their suppliers shouldn’t need the FTC’s intervention to do what is ultimately in their enlightened self-interest: ensuring the continued effectiveness of native ads. Just as overuse of intrusive ad forms led to the rise of today’s ad-blocking filters, continued attempts to fool users into clicking on material they don’t want to see is likely to annoy them -- with harmful consequences to the brand.

While, the IAB has seen fit to take issue with the FTC guidelines, which set forth specific rules about labeling native ads, for being “overly prescriptive,” there is good evidence to support the FTC requirements. And it comes from our own industry. 

A recent study in the Journal of Advertising found that only 8% of subjects were able to distinguish native ads from news content absent clear labeling. Naturally, the IAB is aiming to aid its members by preserving their flexibility in using a proven and effective tool; it may be reasonable to discuss the use of alternative labels with the FTC. 

However, perhaps the IAB could role model enlightened self interest to its membership. Such a move would demonstrate that the IAB and its followers do not represent counterfeit currencies –--whether it is robot “audiences” or faux content. The Public Trust is not a bottomless bin of lollipops.

If marketers want consumers to trust their brand, or suppliers want their brands to trust their products, they must behave in ways that deserve that trust. As Charlie Munger, Warren Buffet’s “The Sage of Omaha’s” partner, and vice chairman of Berkshire Hathaway, says: “The highest form a civilization can reach is a seamless web of deserved trust.”

Perhaps it’s time to take a page from the Omaha Sage.