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Sponsored Content Comes Under The Federal Microscope

Written by Ken Gaebler
Published: 9/26/2013

FTC to review the use of sponsored digital content, concerned about promotional digital messages created to intentionally deceive consumers.

Sponsored content, or ads that are designed to blend into the surrounding content, is becoming an increasingly common form of advertising on the Web. But while publishers and advertisers see sponsored content as a way to entice audiences to view promotional messaging, the federal government view it as potentially predatory--and the Federal Trade Commission (FTC) has recently announced plans to investigate the use sponsored content in digital media.

Sponsored Content Truth in Advertising

According to a recent report on The Hill's tech blog, Hillicon Valley, the FTC will hold a workshop in December on the topic of sponsored content. Although the FTC currently has nonbinding guidelines about the use of sponsored content, it is believed that the workshop may be the first move toward strengthening the rules surrounding these types of ads.

"Increasingly, advertisements that more closely resemble the content in which they are embedded are replacing banner advertisements -- graphical images that typically are rectangular in shape -- on publishers' websites and mobile applications," said the FTC. "The workshop will bring together publishing and advertising industry representatives, consumer advocates, academics, and government regulators to explore changes in how paid messages are presented to consumers and consumers' recognition and understanding of these messages."

The FTC's primary concern is that the difference between paid advertising and native content is made clear to consumers. Leading up to the December workshop, the FTC has asked industry stakeholders to evaluate how sponsored and native content are presented in desktop and mobile environments and steps that may be taken to make consumers more aware of content that is actually paid advertising. One suggestion has been that advertisers include the word "ad" to tweets that serve as paid advertisements.

The outcome of the FTC's investigation is an important concern for both digital publishers and advertisers. While publishers have a vested interest in protecting the quality of their content, online ads comprise a key revenue stream for many websites. Sponsored content enables advertisers to achieve the desired return on their advertising investments and the elimination of sponsored content ads could impact publishers' bottom lines.

So across the industry, it's hoped that the FTC's efforts will result in an updated list of best practices that offers a middle ground between consumer protection and advertisers' ability to leverage various forms of paid content.

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