They say that the best marketing tool is word of mouth. Despite the allure of clever product placement, viral videos, and creative billboard designs, the best advertisements are still personal. We tend to trust the opinions and experiences of our friends, family, neighbors, and acquaintances. A Nielson study shows that 92 percent of consumers worldwide trust “earned media” (i.e., recommendations from friends and family and word of mouth) over “paid media” (i.e., traditional advertisements). In this digital age, word of mouth may look a little different, but research clearly indicates that earned media is a powerful way to win new customers. While we are not discussing and recommending different products, brands, and services in person as often, we constantly share what we’re doing, what we’re buying, and what we’re “pinning” online. In turn, we trust the activity of our peers that we see on social media and we use those opinions to shape our consuming habits. These modern realities are part of the reason why native advertising is such a big problem from the perspective of the Federal Trade Commission (FTC), and why blogger activity should be of particular concern to the FTC as well.
What is Native Advertising?
Broadly speaking, native advertising, also known as “sponsored content,” is advertising that blends into its environment. The classic example occurs in print media, where the layout of one page in a magazine looks very similar to the other pages in the magazine, but is actually a paid advertisement. In the virtual world, news websites will often include affiliate links at the bottom of an article to other news stories that are actually advertisements—they are either articles written solely for the purpose of advertisement, or they are links to other news websites where the other websites paid to advertise on this one. Sometimes, websites will contain articles written in a style typical for the website, but the whole article will be sponsored by some brand or company, and will ultimately be an advertisement for said ad or company. One big industry player that frequently advertises in this style is Buzzfeed.
While native advertising is a completely legitimate advertising tool, the FTC is concerned about consumer welfare. The FTC believes that consumers must be informed and should not be deceived. Simply put, consumers need to know if they are looking at editorial content or an advertisement. The FTC’s Endorsement Guides states that:
If an endorser is acting on behalf of an advertiser, what she or he is saying is usually going to be commercial speech – and commercial speech violates the FTC Act if it’s deceptive. The FTC conducts investigations and brings cases involving endorsements under Section 5 of the FTC Act, which generally prohibits deceptive advertising.
In practice, this means that publishers, bloggers, and other content-creators need to make sure to provide appropriate disclosures on their sponsored content. For instance, a disclaimer in small text or in a shade that does not stand out from the background would not be enough. At the core of the FTC’s regulations on native advertising and sponsored content is a deep concern about consumer trust. Therefore, the test for violating the FTC Guidelines is based on how deceptive an advertisement is, measured by asking consumers questions about said advertisement in order to determine how misleading it is. An advertisement is considered deceptive if it misleads “a significant percentage of consumers,” which Mary Engle, the FTC’s associate director of advertising practices, states is generally 15 percent of consumers, but sometimes can be as few as 10 percent.
Clear Implications for Bloggers
Blogs can be a really powerful marketing medium because bloggers with a high readership can be tastemakers. This influence is especially true of lifestyle bloggers. Lifestyle bloggers curate a certain lifestyle, pretty and packaged, and present it to their audience as something they should shoot for. The content they create can have a huge reach. For instance, BlogHer, a popular online forum for women bloggers, reports over 40 million hits a month. Since many blogs make money via sponsored posts, these hits could translate into many consumers seeing and being strongly influenced by sponsored blog posts.
The FTC has warned that there may be legal ramifications for publishers that participate in creating the content of an ad. Participating in the creation of an ad blurs the line between merely displaying a paid advertisement or promotion, and creating original content for the purposes of advertisement. Such ads could open up the publisher to legal liability. When a blogger agrees to do a sponsored post, it usually falls into this bucket. The blogger is generally charged with creating original content which showcases and talks about a certain product in exchange for compensation. Therefore, it is critical that bloggers disclose clearly that they are being paid to promote something, since the consumer could easily misinterpret it as editorial content.
Moreover, the FTC has warned that online content creators need to be especially careful with regard to social media campaigns. Recently, for instance, Cole Haan ran a “Wandering Sole” social media contest via Pinterest. The contest encouraged Pinterest users to take pictures of their favorite Cole Haan shoes and their favorite places and tag them with “#WanderingSole” for a chance to win $1,000. Though the FTC did not take enforcement action against Cole Haan, the FTC stated that the advertising campaign was misleading to the average Pinterest user, who would not necessarily know why there were Cole Haan posts, and that the hashtag “#WanderingSole” was not sufficient disclosure. This controversy about appropriate disclosures in social media points to a central concern about misleading users of social media. In essence, the FTC is concerned that increased social media use for advertising purposes could easily be misinterpreted as individuals’ endorsements of products or brands without monetary incentives. Social media campaigns are dangerous territory because an average consumer might misinterpret social media presence as a legitimate “word of mouth” recommendation. This individual nature of social media use is analogous to the capacity and presentation of a typical blogger. It plays into the same concept of consumer trust that the FTC is worried about.
A New Frontier
The FTC has stated that it is generally not monitoring bloggers. After all, bloggers are usually individuals and not big corporations, and we generally assign more responsibility and expect more care in terms of following trade and advertisement regulations from big corporations. Under the current regulatory framework, it does not make sense for the FTC to prey on individual bloggers who make mistakes by insufficiently disclosing sponsorship relationships.
However, the FTC needs to seriously consider the implications of bloggers pushing sponsored content. As mentioned earlier, word of mouth is a powerful advertising tool. Blog readers tend to feel as though they “know” the blogger. Successful blogs, especially lifestyle blogs, publish quite regularly and share personal details and personal tastes. Considering the FTC’s concerns about manipulation of consumers via native advertising tactics, bloggers and their sponsored posts could pose some serious problems. If bloggers do not properly disclose, this form of advertising can be extremely misleading to the reader. From the reader’s perspective, he might trust the blogger’s opinion much like he would a friend or coworker. Thus, though the number of sponsored posts probably pale in comparison to the number of advertisements consumers encounter through general native advertising, sponsored blog posts are likely to have a greater influence on consumer behavior. If blog readers are not properly informed that the content they are reading is sponsored in some way, each dishonest and manipulative blog post can very much shape the consumer choices of blog readers.