The Federal Trade Commission recently released a Staff Report regarding consumer recognition of native and search advertising entitled “Blurred Lines”, summarizing its findings from its self-styled “exploratory research”. Unsurprisingly, the FTC concluded that the use of disclosures consistent with prior FTC guidance increased the likelihood that consumers would recognize online ads as ads.

The FTC’s testing consisted of taking samples of search and native advertising (4 of each, half on desktop implementations and half on mobile displays) and making changes to the pages to improve the ad disclosures (for example, by changing the term “Sponsored” to “Ad”, changing the colors and fonts of the disclosures, and changing background shading). Results were assessed on the basis of observations of 48 participants and eye tracking data. While the observations confirmed an increase in ad recognition, even with such disclosures, a “significant percentage” of the participants nonetheless did not recognize that the ads were ads.

Although the Report readily acknowledges the statistical and scientific limitations of its testing, the FTC interprets the results as justifying its native and digital advertising guidance. Of course, the FTC Report did not purport to analyze the impact on the effectiveness of Ads with “improved” disclosures, nor is it likely that the FTC would be very sympathetic if the improved disclosures advocated by the Report resulted in less effective advertising (typically measured by clicks and conversions).

Takeaway: The Report makes clear that the FTC continues to place a high priority on ensuring that consumers can recognize advertising when it is presented to them and will continue to take enforcement action when necessary. Accordingly, marketers and publishers must remain keenly aware of and observe the FTC’s guidance for digital advertising and specifically for native advertising.