By Diane Bartz
WASHINGTON (Reuters) - The growing online usage of ads designed to blend in with the rest of a website's content, a practice known as "native advertising," may be illegal in some instances, the Federal Trade Commission warned on Wednesday.
The FTC said that a survey of online publishers found that 73 percent allowed native advertising, the digital descendent of the newspaper "advertorial" and television's infomercials.
"Marketers have ... moved past the banner ad into advertising that is more seamlessly, and inconspicuously, integrated into digital content," FTC Chairwoman Edith Ramirez said in a speech that opened a conference on "Blurred Lines: Advertising or Content."
"While native advertising may certainly bring some benefits to consumers, it has to be done lawfully," she said. "By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source."
The website Buzzfeed.com is often cited as an effective user of native advertising.
Among the content on the website recently was a list of "13 dogs who get an A for effort," sponsored by the pet food brand Purina Pro Plan, and a list of "15 Creative Snowmen That Will Blow Your Mind," sponsored by Columbia Sportswear.
Ramirez said the FTC was not contemplating specific regulations to deal with the issue in the online space.
The FTC has already pursued companies using existing authorities if it concluded that the line between unbiased editorial content and advertising had been crossed.
In June of this year, the commission sent letters to certain search engine companies, which it did not name, urging them to ensure that they carefully distinguish search results from paid advertisements.
The major search engines are Google, Microsoft's Bing and Yahoo!.
The FTC also went after a company that used fake news sites to sell acai berry weight loss products, using logos like "One trick of a tiny belly" and similar come-ons.
The FTC caused a stir in 2009 when it issued guidelines requiring bloggers who endorse products to indicate if they have received any payment in cash or in products from the company involved.
Dan Jaffe, a top lobbyist at the Association of National Advertisers, said that nothing he heard from Ramirez on Wednesday indicated that the FTC planned to shift any strategies, but holding the workshop was a significant step.
Among the participants at the conference were publishing and ad industry representatives, consumer advocates, academics, and self-regulatory groups.
"This should be a signal to everyone that this is very high on their radar screen. ... The FTC is highly likely to step in forcefully in this area," Jaffe said.
(Reporting by Diane Bartz; editing by Ros Krasny and Leslie Adler)