The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea?

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image pinterest logo png 300x151

Pinterest recently announced it would follow in the footsteps of Facebook and Twitter, experimenting with paid promotions from a “select group of businesses.” Three days earlier, the Federal Trade Commission announced a workshop to examine native advertising in digital media, or “the practice of blending advertisements with news, entertainment, and other content in digital media.”

The workshop will build on previous FTC initiatives to “help ensure that consumers can identify advertisements as advertising wherever they appear,” and to “explore the blurring of digital ads with digital content.” That blurring, of course, is exactly what makes native advertising (like Pinterest’s plan to launch promoted pins) so effective. So why, in the digital age, has it become cause for concern?

A Brief History of Native Advertising

The term “native advertising” describes any ads that mimic the visual format and content of its environment. The classic examples are advertorials, usually full-page ads in magazine that are meant to look like articles – you know, the ones with “ADVERTISEMENT” or “PROMOTION” written discreetly in one corner. While advertorials are still widely used, the decline of print media has given rise to a new type of native advertising: digitally integrated ads.

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Thanks to this rise, native advertising is hot. According to the Online Publishers Associated (OPA), 73% of its members already used native advertising as of June 2013, while 90% plan to use native ads by the end of the calendar year.

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image OPA Native Advertising Pie Chart 2013

Digital ads usually takes two forms: native ads and banner ads, but that line has gotten blurry too. Facebook, for example, allows companies to “promote” their posts on my Facebook feed, but it also offers sponsored banner ads.

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image Facebook Sponsored 3

Sponsored banner ads are labeled, but as you can see (if you can tear your eyes from my adorable nephew), they blend right in with my Recommended Pages, which are pages that my friends have actively “liked.” Intentional? Absolutely.

Promoted ads on Facebook are fully integrated into my feed, just like promoted posts on Twitter. Here’s what those look like:

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image Twitter and Facebook promoted posts

Although these ads are labeled as such, they’re fully integrated into the hosting platform. This is what people usually think of when they talk about digital native advertising, but when you consider how integrated the banner ads were in my first example, it’s clear that the lines between native and non-native ads have gotten blurry.

Here’s an example from online magazine Slate, featuring two kinds of native advertising on its homepage:

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image slate 2

Slate’s editors (or lawyers) must have decided that the piece of content from Mini Cooper looked too much like an actual article, so it’s labeled “Sponsored Content.” The ad from TDI, however, doesn’t completely mimic the look and feel of articles written by Slate, so we’re left to identify the advertisement on our own. If you examine the homepage carefully, you can figure out which content is paid, sure. But do Slate readers carefully examine each link, or do they just click?

Native Advertising: The New Norm?

After the FTC’s announcement, consensus on the marketing blogs was that federal attention will actually be a good thing. “If native advertising is going to be one of the new standards for generating revenue,” wrote Casey Welton in Folio last week, publishers and advertisers need rules. Otherwise, native advertising will become “nothing more than digital snake oil.” On the Marketing Pilgrim blog, Frank Reed wrote that before marketers panic, they should check their own ads. “If it looks too much like content and not enough like an ad,” he warned, “the FTC might come knocking.”

The FTC is asking whether native ads are ethical, but I’m wondering how long other types of ads will exist. We know that native advertising gets more views than traditional ads (check out this study by IPG Media Lab and Sharethrough for some great data), we know that the majority of publishers either already use them or plan to do so soon, and we know that when it comes to digital, the distinction between native and non-native advertising is increasingly unclear. Social media marketing has embraced native advertising for a reason – we don’t want to sell a product, so much as we want to be part of our customers’ lives. Also, social media ads and promoted posts are great for marketing on a budget. Given these trends, native advertising will soon be the norm.

Still, if I click a link, expecting an article written by a trusted Slate writer, and land on a Mini Cooper promotion, I loose trust in the Slate brand. I don’t have the same expectations of social sharing sites, but I still feel “tricked” when I accidentally click on a paid promotion.

When Pinterest CEO Ben Silbermann announced the new promotions, on the company’s blog, he promised that the promoted pins will be tasteful, transparent, relevant, and responsive to feedback:

The State of Native Advertising: Are Pinterest’s Paid Promotions a Bad Idea? image pinterest statement

Pinterest has built a huge, powerful community of social sharers, and – for now – that community trusts their brand. The press release was a good first step, but the company still needs to exercise caution. The FTC can penalize brands for abusing native advertising, but regulations should be secondary to the real threat – losing their customers’ trust.

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