Native Ads vs. Fake News: How Publishers and the FTC Can Draw the Line

News outlets that publish native ads face what amounts to a “fake news” problem, according to new Tow-Knight Center and Contently research — at least with a large majority of consumers surveyed, who didn’t distinguish between the ads and real news reports. But the research also found that consumers view well-executed native ads positively.

Advertisers buy native ads to convey brand messages and the ads are presented in formats similar to those used for news reports. The ads account for an increasing share of revenue at many media organizations.

The Federal Trade Commission requires the ads to be clearly labeled, but the Tow-Knight / Contently research found that 77 percent of respondents to a national online survey thought the ads were either editorial content or a hybrid of advertising and editorial content. Fifty-four percent of respondents felt they had been deceived by native ads in the past. The survey was conducted from September 1 – 13 by Radius Global Market Research and had a confidence level of 90%.

“Equating native ads to fake news is a stretch; the problem with fake news, after all, is that it’s not labeled in any way,” said Contently Editor in Chief Joe Lazauskas, who directed the research and reported on its findings. “Our research does, however, underscore the need for prominent and uniform labeling on native ads.”

Lazauskas noted that the survey found that labeling on Facebook — where ads are identified as “Sponsored Content” in a consistent way — seems to be working. More than 70 percent of respondents correctly identified the native ads on Facebook as ads.

Among the other research findings, according to Lazauskas:

  • When a trusted publisher features native advertising for an untrustworthy brand, 43 percent of consumers lose trust in that publisher.
  • Conversely, when a trusted publisher features native advertising for a trustworthy brand, 41 percent of consumers gain trust in that publisher.
  • Consumers consider “Sponsored” — not “Advertisement” — the clearest label for native advertising.
  • Brand logos are much more effective than text-only brand names in conveying to consumers that native ads are actually ads.

The full report also includes recommendations of specific steps that publishers and the FTC and take to reduce confusion about native ads and improve the ads effectiveness.

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