Native Advertising (AKA Product Placement) New FTC Rules


Table Of Contents

”Listen to audio version”


A couple of years ago a new buzzword was created, that had marketers hopping (and still hopping today!) to get on board and try out the new-fangled advertising Hail Mary.  And that discovery?  In a nutshell - Product Placement, with a new name - Native Advertising.

In December, the Federal Trade Commission published new guidelines for native advertising, and in this blog, we take a look at what this means for Product Placement marketing.




What Is Native Advertising

Good old trusty Wikipedia defines native advertising as a type of advertising, usually online but feasibly elsewhere, that matches the form and function of the platform upon which it appears.

What that actually means is - a brand appears in content (print, digital, video...TV) in a way that appears organic and natural, so that the viewer believes the product is part of the content, and provides additional credibility to the brand and making the consumption of the advertising a more enjoyable experience.  

Remember when we said Native Advertising is Product Placement? Well... that is the definition of GOOD product placement too!  The only difference here is that SOME Product Placement is on a trade or loan basis without a fee being paid, while other Product Placement uses a fee to guarantee scripting and camera angles are on the brand's logo.



What The FTC Says

Per the FTC's website, this is what the FTC says, using (actually quite entertaining) examples.

"Native ads...can be integrated into content, including entertainment programming and video games.  In some instances, consumers are likely to understand that a sponsoring advertiser paid for the product integration.  In other instances, a disclosure may be necessary to avoid deceiving consumers. 

Example (9)
A video game immerses a player in a virtual world.  While exploring part of the virtual world, a player sees billboards advertising actual products.  The marketers of the advertised products paid the game designers to include the ads in the game.  That billboards are advertisements is apparent to consumers.  To the extent that the billboards are for actual products, consumers are likely to attribute the ads to the sponsoring advertisers and no disclosure is necessary.  However, the sponsoring advertisers would be liable for any deceptive product claims on the billboards.

Example (10)
The same virtual world game in Example 9 integrates branded products in other ways; for example, game characters wear a specific sunglass brand, drink a particular brand of beverage, and patronize a particular donut shop.  The sponsoring advertisers paid the game developer to include their branded products in the game.  However, the game conveys no objective claims about the various branded products.  Even though consumers may not realize that the sponsored advertisers paid for their branded products to appear, disclosure of this paid product placement is not necessary to prevent consumer deception because whether the branded products appear in the game because of payment by the sponsoring advertiser or because of the video game developer’s creative judgment is not likely to be material to consumers.

Example (11)
A game app tests players’ skills to survive in the wilderness and offers a choice of supplies and equipment in each game phase.  When players tap to make a choice, a box appears containing a selection of items – for example, a flashlight, a rope, and a hatchet.  Each item is accompanied by a short message – for example, the phrase “Light your path” with the flashlight.  Among the items players can select is a bar of soap identified by brand name with the text “Clean up.”  If tapped, the soap icon takes the player out of the game and into the soap manufacturer’s branded game app.  Based on consumers’ customary use of the game and the similarity of the soap to other items players can select in the game, consumers might not recognize the icon as an ad before tapping and leaving the game.  Because the in-app ad’s format misleads consumers in this respect, a clear and prominent disclosure informing them of the icon’s commercial nature is necessary before consumers tap on it.

Example (12)
On its website, a home improvement TV show features “do it yourself” videos hosted by an expert builder who provides advice on home projects.  A stain manufacturer, ZYX Paints, pays the show to produce and publish on the home improvement show’s site a video on building a wood deck.  In the video, the show’s expert builder uses a ZYX Paints stain and recommends it to protect and maintain the deck.  The ad’s look and feel closely resemble other videos posted on the home improvement show’s site, which customarily are unpaid.  In this situation, consumers are likely to perceive the video as independent content reflecting the impartial opinion of the expert builder host or the show’s writers, and would not likely attribute it to the sponsoring advertiser.  An effective disclosure informing consumers of the video’s commercial nature before they play it is necessary to prevent consumer deception. 

Example (13)
Instead of the video described in Example 12, the home improvement show is paid by ZYX Paints to create and publish on the show’s site a video that shows the expert builder host using ZYX Paint stain on the deck.  However, rather than the expert builder expressly recommending the product to protect and maintain the deck, the camera zooms in on the product’s label.  Whether an effective disclosure informing consumers of the video’s commercial nature would be necessary depends upon reasonable consumer expectations.  In this particular situation, consumers would likely interpret the use of the branded stain product to be the expert recommendation and opinion of the expert builder host or the show’s writers, rather than a paid inclusion.  In that case, a clear and prominent disclosure of the video’s commercial nature is necessary before consumers play it."


So What Do You Think?

So after reading the above - do you think Native Advertising and Product Placement have some very similar attributes?  Let us know - we'd love to know what marketers think!


What Is Product Placement

Is Product Placement right for your brand?  Watch this video to learn more about how this marketing practice works, what brand categories it works for, and the results brand marketers see!

Watch the video to learn what is Product Placement