If the Federal Trade Commission decided to audit publishers' native ads today, around 70 percent of websites wouldn't be compliant with the FTC's latest guidelines, according to a new report from MediaRadar.
After reviewing thousands of native ads, MediaRadar found only one-third of publishers currently label their native advertising properly to adhere to rules released by the FTC in December. The guidelines clarifies which words publishers should include to make it clear that readers are reading an ad or sponsored content, rather than a traditional editorial story. Some advertisers, like Lord & Taylor, have already been slammed by the FTC for not properly labeling native content.
For example, only 5 percent of websites reviewed by MediaRadar included the word "ad" in with their native ads. Examples of publishers already complying with the FTC are The New York Times, which includes the phrase "This is a paid post" with sponsored content, or The Guardian, which labels native content as "Paid content."
Of native ads published in 2015, around 54 percent were labeled with the words "sponsor" or "sponsored." The second most popular label last year was "promoted," which was listed on around 12 percent of all native ads reviewed. Less than 5 percent of ads included phrases like "brought to you by," "partner content" or "content by." Another 12 percent of ads surveyed included no label at all.
While most publishers are labeling branded content, they often violate FTC guidelines because the labels are too subtle or aren't positioned in the correct place.
"One of the reasons native is so fascinating is because it means many different things to publishers," MediaRadar wrote. "Yes, there are frontrunners such as Forbes, BuzzFeed and The Atlantic who were early adopters for native advertising and have firm, consistent standards. But today we track almost 40 different implementation styles. Some are clearly identified, but others are extremely difficult to know that they were sponsored in any way."
Native advertising is expected to continue its forward march for the next few years. A study released on Monday by Facebook and IHS projects that revenue from native advertising through Facebook's Audience Network will by 2020 amount to $53.4 billion—roughly two thirds of all mobile display advertising revenue.
According to Facebook, the study showed that 83 percent of ads use native format on Audience Network. Apps using native ad formats through the Audience Network have grown tenfold since first-quarter 2015.
Third-party in-app native advertising is also growing rapidly, forecasted in the study to increase at a 70.7-percent compound annual growth rate between 2015 and 2020, amounting to an $8.9 billion, or 10.6 percent of mobile display advertising.
According to MediaRadar, the fastest growing category of marketers using native advertising was apparel and accessories, which grew its total native ads by 82 percent year-over-year from fourth-quarter 2014 to the same period in 2015. Other categories including financial and real estate, food, retail and travel all grew by around 30 percent.