My newest article is FTC-relevant. In Native Advertising and Endorsement: Schema, Source-Based Misleadingness, and Omission of Material Facts, my former student, Eduard Meleshinsky and I explain why native advertising may mislead consumers and we present evidence from an experiment where we presented survey respondents with an advertorial. Let me say here that if you are working on native advertising or advertorials, this article by Amar Bakshi is a must read: Bakshi A. Why and How to Regulate Native Advertising in Online News Publications (PDF). Univ. of Balt. J. of Media L. & Ethics. 2015.

Abstract: Native advertising is the new term for “advertorials,” advertisements disguised as editorial content. Modern native advertising started in the 1950s, but its first uses were clearly signaled to the consumer. This paper explains why consumers might be misled by advertorials—even when labeled as such—when advertising material has elements of editorial content.

Results summary: We surveyed consumers (N=598) with a realistic, labeled advertorial embedded in a blog. We found that just over one-quarter of respondents (27%) thought that the advertorial was written by a reporter or an editor. We find that labeling—even using a “sponsored content” disclosure—is insufficient to disabuse a significant minority of consumers about the provenance of the advertising material. Our findings are not generalizable, since we targeted the survey to internet users who appeared on marketing lists derived from behavioral tracking. However, our findings are compatible with those of other researchers who suggested that in addition to initial disclosures, elements in the advertorial itself must also signal to the consumer that this may be commercial material.

While the advertorial we tested was a story about the potential of abuse of diet pills, the writing made dramatic claims about the effectiveness of named products for weight loss and included a portrait replicated from a real advertisement appearing in a health magazine. We found that merely using a blue background to frame the endorser’s portrait led many respondents to think her to be a medical expert. Traditionally, the appearance of a lab coat or stethoscope has signaled a medical expert endorsement, something subject to greater regulation. Our findings point to consumers using subtle clues about context to associate an endorser with an expert profession. We conclude by discussing regulatory options for the FTC, including a ban on advertorials, enhanced disclosure requirements, and approaches that put the burden on publishers to show that advertorials are not misleading.