The plot surrounding native advertising thickens as the FTC steps in.

By William Dunkerley

The contentious topic of "native advertising" has drawn the attention of the Federal Trade Commission. In early December, the Commission hosted a meeting titled, "Blurred Lines: Advertising or Content?" Native advertising proponents and opponents attended .

Afterwards, Advertising Week reported that the "day-long examination of native advertising left regulators with no clear direction about how to police what has become digital media's hottest ad format."

What the FTC's Involvement Means for Editors

What is native advertising, and why is it so hot? It is basically advertising content presented in a format that resembles editorial content. If the FTC is going to police it, and if the concern focuses on so-called "blurred lines," how would that affect us as editors? Simply put, the act of policing will involve judging whether an editorial-looking piece is really editorial or if it is advertising.

For instance, suppose your publication runs new product announcements. And suppose the producers or sellers of those products pay for display advertising. Will the FTC's new scrutiny of publications lead it to evaluate whether there is a quid pro quo? If it does, the commission will indeed be looking over editors' shoulders with unprecedented intensity. The breadth of scrutiny would surely encompass more than just product reviews. It all could result in extensive intrusion into the editorial process.

Certainly the FTC's concern is legitimate. If publications are complicit with advertisers in misrepresenting the nature of content -- editorial vs. advertising -- then regulatory intrusion may be needed. But it would inflict a new burden upon editors.

An Increased Blurring of Lines

There are some big players in the publishing field that have gotten behind the push for more native advertising. The New York Times is involved in leading the way. It has announced the launch of a "full native advertising platform" starting in 2014. In justifying the move, publisher Arthur Sulzberber Jr. explained that it is because "the digital advertising market is changing fast." That's really kind of a non-explanation.

Amidst mounting concern over the blurred lines implicit in native advertising, the Times seems to be blurring its own motivations. In a December 4 article, the Times reported that "the FTC has to answer crucial questions before it can come up with any solutions: Do consumers really care about the advertisements? And is there harm being done?"

The Times tried to answer that question with a quote from a college professor: "David J. Franklyn, a professor at the University of San Francisco law school, said preliminary results from his research showed that as many as 35 percent of the consumers in groups he has studied could not identify an advertisement even when it said 'advertisement' on it. Roughly half, he said, indicated they did not know what the word 'sponsored' meant.

"Perhaps more important, he said, is that one-third of consumers say they do not care if something is an advertisement or is editorial material, and many would be more likely to click through to an item if they knew it was an ad.

"That led Mr. Franklyn to ask: 'So what are we protecting the consumer from?'"

What did that professor just say? About a third (35 percent) of his subjects couldn't identify a native ad as such. And then a third said (not sure if it's the same third, but maybe so) they don't care if something is an ad or editorial. Well, duh. What does that prove? You mean if someone can't identify a native ad when he sees it, he doesn't care whether it's an advertisement or editorial material? If that's really what the professor said, it sounds like quackish research and poor editorial judgment by the Times for publishing it.

Hot Ticket or Just Hype?

So why do some publishers and advertisers think that native advertising is such a hot ticket? They have no reality-based reason to think so.

Keep in mind that the impetus for native advertising came from the failure of online advertising to pay off. There's yet to be a format that is really successful. Banner ads have proven themselves to be ineffective; pop-ups and auto-start videos are extremely annoying. Moreover, technologies exist or are being developed to thwart them. Perhaps the push for native advertising is just another blind attempt to find a formula that works for advertising online.

The migration of native advertising to print doesn't seem to be any better thought out, either. It's another example of grasping at straws to regain revenues that were lost to the Great Recession. Last October, Advertising Age magazine reported that the Washington Post was starting to sell native ads. Now there's a company with a proven track record of making bad publishing decisions. First it ran Newsweek (as owners) into the ground as a result of a series of extremely misguided moves. (See "Why Newsweek Magazine Failed.")

The Post had been losing far more money than Newsweek. And finally the company sold off the newspaper, too. Amazon's Jeff Bezos agreed to a deal in early August. He's been in control since October 1. I wonder if he'll follow through on the native ad plans. Maybe he'll find a way to make a go of it.

It would be preferable if publishers served their advertisers with advertising opportunities that could be trusted to deliver results. I know that many publishers are still experiencing frustration as they try to regain lost ground in ad sales. But it would be far better to sharpen their sales strategies and skills to achieve their goals. For now, native advertising is an unproven idea, one with a lot of unanswered questions and with a significant risk of unintended consequences -- not only for publishers, but for editors as well.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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