FTC to Pharma on Native Advertising: Proceed with Caution

April 18, 2016 – Although native advertising – online content that appears similar to the news, feature articles or other material that surrounds it – is being added to more pharma media plans,  industry needs to ensure that such advertising is not at all deceptive to consumers, according to the Federal Trade Commission (FTC), which issued an 11-page guidance document on the topic at the end of last year (https://www.ftc.gov/tips-advice/business-center/guidance/native-advertising-guide-businesses).

“Native advertising is attractive to pharma because it offers a different experience than other venues and an opportunity to engage with the end user,” Justin Freid, vice president, Emerging Media, CMI/Compas, told the Coalition for Healthcare Communication. “There has been significant interest from this industry over the past 18 months and I think it will be on most, if not all of our media plans over the next year,” he noted.

However, industry should proceed with caution when pursuing native advertising plans, said Coalition Executive Director John Kamp. “The FTC is offering a very clear warning to all in the advertising industry, specifically that advertising must be labeled as advertising,” he said.

In its guidance, the FTC advises all businesses that the agency applies the same truth-in-advertising principles it has always used to evaluate whether the format of an ad is deceptive, and calls for native advertising to be transparent and include clear and prominent disclosures so consumers understand that the content being provided is advertising.

“Thus, advertisers are responsible for ensuring that native ads are identifiable as advertising before consumers arrive at the main advertising page,” the FTC states in the guidance. “In addition, no matter how consumers arrive at advertising content, it must not mislead them about its commercial nature.”  The agency also recommends that advertisers should “consider the ad as a whole, and not just focus on individual phrases, statements or visual elements.” Specifically, the FTC states that “the more a native ad is similar in format and topic to content on the publisher’s site, the more likely that a disclosure will be necessary to prevent deception.”

Freid noted that it is important for companies “to have high-quality content and provide value,” and that CMI/Compas is developing its own guidance for pharma clients that will recommend that the words “ad,” “advertising” or “sponsored ad” appear on the native ad content.

Advertisers also should develop real content that “fits” with the editorial content that it accompanies, according to Freid. “You don’t want to say ‘come read articles about exercises for those with Type II diabetes’ and then just drop users on the brand page – you actually need to have valuable content and worthy resources for consumers to utilize,” he said.

It is worth noting that at the very end of the FTC’s native advertising guidance, the agency states that the FTC can and has taken action against parties that helped create deceptive advertising content, such as advertising agencies, so it encourages all parties to ensure “that anyone participating in the promotion of their products is familiar with the basic truth-in-advertising principle that an ad should be identifiable as an ad to consumers.”

“This guidance is classic FTC – warn first, but take action later,” Kamp said. “Now is the time for all would-be advertisers to make sure that their native advertising is clearly recognizable as advertising and not confused with editorial content.”