U.S. says online ads should be clearly marked, undeceptive

U.S. says online ads should be clearly marked, undeceptive

2:08pm EST

By Diane Bartz

WASHINGTON (Reuters) – The growing online usage of ads designed to blend in with the rest of a website’s content, a practice known as “native advertising,” may be illegal in some instances, the Federal Trade Commission warned on Wednesday. The FTC said that a survey of online publishers found that 73 percent allowed native advertising, the digital descendent of the newspaper “advertorial” and television’s infomercials.“Marketers have … moved past the banner ad into advertising that is more seamlessly, and inconspicuously, integrated into digital content,” FTC Chairwoman Edith Ramirez said in a speech that opened a conference on “Blurred Lines: Advertising or Content.”

“While native advertising may certainly bring some benefits to consumers, it has to be done lawfully,” she said. “By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source.”

The website Buzzfeed.com is often cited as an effective user of native advertising.

Among the content on the website recently was a list of “13 dogs who get an A for effort,” sponsored by the pet food brand Purina Pro Plan, and a list of “15 Creative Snowmen That Will Blow Your Mind,” sponsored by Columbia Sportswear.

Ramirez said the FTC was not contemplating specific regulations to deal with the issue in the online space.

The FTC has already pursued companies using existing authorities if it concluded that the line between unbiased editorial content and advertising had been crossed.

In June of this year, the commission sent letters to certain search engine companies, which it did not name, urging them to ensure that they carefully distinguish search results from paid advertisements.

The major search engines are Google, Microsoft’s Bing and Yahoo!.

The FTC also went after a company that used fake news sites to sell acai berry weight loss products, using logos like “One trick of a tiny belly” and similar come-ons.

The FTC caused a stir in 2009 when it issued guidelines requiring bloggers who endorse products to indicate if they have received any payment in cash or in products from the company involved.

Dan Jaffe, a top lobbyist at the Association of National Advertisers, said that nothing he heard from Ramirez on Wednesday indicated that the FTC planned to shift any strategies, but holding the workshop was a significant step.

Among the participants at the conference were publishing and ad industry representatives, consumer advocates, academics, and self-regulatory groups.

“This should be a signal to everyone that this is very high on their radar screen. … The FTC is highly likely to step in forcefully in this area,” Jaffe said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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