8 Takeaways From the FTC's Ruling on Native Advertising

On December 22, 2015, the Federal Trade Commission (FTC) published a policy statement on native advertising — Commission Enforcement Policy Statement on Deceptively Formatted Advertisements — along with a companion business guide titled Native Advertising: A Guide for Businesses.

The policy attempts to bring order to an area of online advertising that had, up to that point, operated in a largely unregulated grey zone.

The FTC has addressed what it calls "deceptively formatted advertising" for decades. Advertorials drew scrutiny as far back as 1967, and infomercials became a focus in the 1980s. But the December 2015 ruling was the first FTC policy to specifically target native advertising — a format that, by design, often doesn't look like an ad at all, which is precisely why regulators felt compelled to act.

Key Takeaways From the FTC Ruling

The 16-page policy covers a range of misleading and deceptive advertising tactics. It opens with a foundational principle:

"The Commission has long held the view that advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself."

The document also acknowledges the shifting economics of digital publishing. Because so many consumers now block or skip ads, publishers have moved toward "formats and techniques that are closely integrated with and less distinguishable from regular content so that they can capture the attention and clicks of ad-avoiding consumers."

The main policy points are as follows:

• Native ads must clearly identify themselves as paid advertising if there's a reasonable chance consumers can't tell they're looking at an ad.
• The disclosure (e.g., the word "ADVERTISEMENT") must be readable, visually contrasted against the background colour, and positioned near the ad's focal point.
• When native ads are distributed by third parties — in non-paid search results, on social media, in emails, and so on — they must carry their disclosure regardless of where they appear. The FTC recommends adding a disclosure at the start of the title tag, at the beginning of the ad's URL, and in the metadata. For example: www.example.com/advertising/title-of-article
• If a native ad matches the look and feel of a site but can be clearly identified as an ad by its message or subject matter (e.g., a car ad on a news site with a headline like "Test Drive This Car Today!"), a separate disclosure may not be strictly necessary.
• Disclosure terminology must be plainly understandable to ordinary consumers. Acceptable terms include Ad, Advertisement, Paid Advertisement, and Sponsored Advertising Content. The FTC specifically recommends against terms like "Promoted" or "Promoted Stories," which can mislead consumers. Terminology should also be consistent across a site and free of technical or industry jargon.
• The policy applies not just to advertisers, but to every party involved in creating or distributing ads — agencies, ad networks, and publishers included.

Points five and six have direct implications for content recommendation platforms like Outbrain and Taboola. Both currently use vague labelling such as "More From the Web," which can easily be confused with a publisher's own "Related Articles" section — particularly when the two sections share the same font, layout, and visual style.

The image above shows how Taboola displays native ads on Adweek's site. The content recommendation section is visually nearly identical to the editorial section directly above it — same font, same style, same proportions — making it genuinely difficult for most readers to distinguish paid placements from editorial content.

What Happened After the Policy Was Released?

The FTC's new rules had real consequences almost immediately. One high-profile case involved Lord & Taylor, which paid 50 online fashion influencers to post pictures of themselves wearing a dress from the retailer's Design Lab collection on their Instagram accounts, using the hashtag #DesignLab. The campaign reached 11.4 million users, generated 328,000 brand engagements, and drove the dress to sell out.

The problem: Lord & Taylor never disclosed that the influencers were paid. The FTC took notice, and the company ultimately reached a settlement over the undisclosed paid promotions. Lord & Taylor's representatives indicated the company cooperated fully with the FTC's inquiry once it was initiated.

It's a textbook example of exactly the kind of undisclosed promotion the December 2015 ruling was designed to address — and more cases in this vein have followed since.

How Many Native Ads Actually Comply?

According to MediaRadar, 70% of sites needed to change how they display native ads in order to comply with the new FTC guidelines. That's a significant proportion of the industry.

The business guide itself provides 17 examples of ads or promotional content where disclosure is required. The first three illustrate the FTC's logic clearly:

Example 1

The Winged Mercury Company sells running shoes. An ad for the company's flagship shoe appears on a financial news site. The ad contains an image of the shoe, the headline "Run Fast, Run Smart, Run Winged Mercury," and a hyperlink to learn more about Winged Mercury shoes' innovative shock absorption. The color scheme, font, and graphics of the ad look like the format of the financial news that appears on the site. However, the slogan "Run Fast, Run Smart, Run Winged Mercury" together with the message to learn more about Winged Mercury shoes' shock absorption likely convey to consumers the commercial nature of the content. In addition, the subject matter of the ad differs substantially from the financial news on the site. Therefore, a specific disclosure that the content is an ad is probably not necessary, absent extrinsic evidence to the contrary.

In short: If an ad's look and feel matches the site but its message or subject matter is clearly different from the site's editorial content, a disclosure isn't necessarily required.

Example 2

Fitness Life, an online health and fitness magazine, features articles about exercise, training advice, and product reviews. An article on Fitness Life's main page is titled "The 20 Most Beautiful Places to Vacation." The article displays images in a scrolling carousel of beautiful spots for fitness enthusiasts to visit. The Winged Mercury Company paid Fitness Life to create this article and publish it on Fitness Life's site. The article says it is "Presented By" Winged Mercury and includes an image of the company's logo. Although Winged Mercury's sponsorship of the article is a form of advertising, the article itself is not, as it does not promote any of Winged Mercury's products. It only contains images of places where readers – including potential Winged Mercury customers – might like to visit. Thus, the article does not need to be identifiable as an ad before or after consumers click into it.

In short: If a company pays a publisher to create an article but doesn't promote any of its own products within it, the content doesn't need to be identified as an advertisement.

Example 3

A kitchen cabinet company paid an online lifestyle magazine, Styling Home, to create and publish an article entitled, "10 Must-Haves for a Great Kitchen." The article, which displays a series of images depicting well-designed kitchens, appears in the same layout as other articles on the Styling Home site. Most of the images in the article depict and promote the sponsoring advertiser's products. Thus, the article is an advertisement. The ad's format, however, is likely to mislead consumers to believe it is an ordinary Styling Home article and reflects the independent views of the Styling Home writer, and not those of the sponsoring advertiser. Therefore, a clear and prominent disclosure of the article's commercial nature is necessary.

In short: If a company pays a publisher to write an article that promotes its products, a clear and prominent disclosure is required.

The remaining 14 examples are available in the FTC's full business guide.

The Bigger Picture

Native advertising emerged largely because banner ads had stopped performing. Click-through rates were dismal, and users had become adept at ignoring — or outright blocking — display formats. Native ads were a response to that dynamic, designed to blend into editorial environments and capture attention that traditional ads had lost.

The irony is that the same quality that makes native ads effective — their resemblance to editorial content — is exactly what drew regulatory attention. The FTC's position is clear: blending in is fine, but deceiving consumers about the commercial nature of content is not.

One practical path forward for advertisers is better personalization. Ads that are more relevant to the individual are inherently less annoying and more effective, regardless of format. That relevance depends on data — specifically, on the ability to segment audiences accurately. Data management platforms (DMPs) are the infrastructure layer that makes this possible, pulling in data from CRM systems, analytics tools, marketing automation platforms, and other sources, then organizing it into audience segments for use in ad retargeting, media buying, and content personalization.

Making ads more relevant doesn't eliminate the need for disclosure — the FTC's rules apply regardless — but it does address the underlying friction that pushed the industry toward deceptive formats in the first place.