With paywalls and premium subscriptions finding only modest success, paid advertisements remain the primary means of generating revenue from online content. Native advertising has emerged as a leader in the competition for ad impressions and brand engagement. Expected to grow from $7.9 billion in spending this year to $21 billion by 2018, native advertising is lauded as the future of online advertising.
Native advertising is paid promotional material that resembles the form and style of editorial content. While native ads can be displayed in numerous ways, they generally subscribe to the same concept: advertisements are more effective when they resemble the form and function of the content that surrounds them. The execution of that principle varies among platforms, but familiar iterations include paid search results in Google, sponsored stories within Facebook, and recommendation widgets corralling related advertising content below news articles.
Earlier this month, an accountability unit of the Better Business Bureau warned native advertisers that they must comply with the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising when engaging in behavioral advertising. The December 9 compliance warning stated that native advertisers must provide greater transparency and consumer control when customizing ads by tracking users as they surf the World Wide Web. Enforcement is set to begin January 1, 2015.
The industry’s self-regulatory code is organized around seven principles that seek to foster consumer-friendly standards when tracking users across various websites for advertising purposes: (1) Education; (2) Transparency; (3) Consumer Control; (4) Data Security; (5) Material Changes; (6) Sensitive Data; and (7) Accountability. The cornerstones of the code are transparency and control.
In addition to requiring native advertisers to comply with the Online Behavioral Advertising Principles, the compliance warning also directs advertisers to consider the FTC’s guidance about online disclosures, and to note the National Advertising Division’s published cases regarding proper native advertising disclosures beyond those that relate to behavioral advertising.
As native advertising becomes a more prominent feature of the online experience, calls for regulation are likely to grow. The Better Business Bureau’s compliance warning is an industry effort to demonstrate the industry’s ongoing capacity for self-regulation by adapting its regulations to cover future iterations of this developing business model.