• by Tobi Elkin , Staff Writer @tobielkin, August 3, 2016

The nonprofit Online Trust Alliance (OTA) on Wednesday conducted a study that found 71% of native ads on top media sites fail to offer adequate labeling, transparency, and complete consumer disclosure.

This is a blow to the native ad/branded content business and should be a wake-up call for publishers and content studios.

The study, an analysis of native ads on the top 100 news websites, found that 71% earned failing scores for disclosures, delineation, and discoverability. The bottom line: The sites didn’t offer consumers the ability to easily discern pure editorial from ads.

As most readers of this column know, native advertising refers to Web site content that’s funded and produced outside the publisher’s editorial review or influence, yet is designed to appear similar to editorial on that site. As the OTA mentions, “this illustrates the tension -- paid for and controlled separately, but presented in a way to appear as editorial. The potential for audience confusion or misinterpretation is obvious, and the rapid rise in the deployment of native has already prompted concerns from advocates, media and regulators.”

“While the industry looks at native advertising as the holy grail to drive new revenues, they are failing to address the long-term issue. With 71% of native ads failing to pass the consumer transparency acid test, this report should be a wake-up call to the industry. Inaction is not an option. Conversely, providing these concrete examples and recommendations helps advertisers, networks and publishers in moving forward,” Craig Spiezle, executive director at the Online Trust Alliance, told Native Insider via email.

Consumers are increasingly growing annoyed and confused when they can’t tell the difference between native advertising and editorial content that’s adjacent to native content The best native content often performs better than pure editorial content in terms of engagement and time spent.

Of the 100 sites the OTA audited, 69% had one or more native ad on their respective homepage. Of the native ads observed, 9% earned what OTA deemed top trust scores, meeting or exceeding clear transparency requirements, 20% of the native ads were classified as in need of improvement, and 71% received failing grades.   

“Native advertising has the potential to provide valuable content to consumers, new revenue for publishers and greater relevancy for advertisers,” stated Digital Content Next (DCN) CEO Jason Kint. “The principles and checklist developed by OTA are a positive and constructive step as the industry experiments with terms and strategies to appropriately label native advertising. We are pleased to see that DCN members continue to lead by example in protecting consumer trust.”