Native advertising for pharma: Winning format or slippery slope to regulatory headaches?

Did you see that ad? In many cases of native advertising, the answer is no--because people can't always tell what's an ad and what isn't. A study in the December Journal of Advertising found that the majority of consumers can't tell the difference between native advertising and editorial content. As more pharma marketers begin to embrace the format, and as the Federal Trade Commission continues to home in on native advertising for any deceptive practices, the findings are worth noting.

In two different experiments, researchers from Grady College in Georgia found surprisingly low recognition of advertising. In the first, consumers were asked to read two stories, one that was native advertising and the other editorial. The native ads were marked with a variety of labels including "sponsored content," "advertisement," and "presented by" placed in different areas around the page. Overall, fewer than 8%--17 people out of 242--recognized the native advertising as an ad.

In the second experiment, the placement of the ad disclosure was tested using eye-tracking technology to find out where more consumers would notice it. In the traditional--and FTC-advised--top-of-the-page location, 40% of consumers noticed the disclosure, but 90% noted it when it was in the middle of the page, and 60% noticed it at the bottom.

Mediapost noted in an article about the study, "These findings should come as no surprise, considering that native advertising is intentionally presented in a format that resembles surrounding editorial content."

Justin Freid

However, that format has helped it become a hot-topic marketing tool, and while native advertising in pharma is still nascent, interest is growing. Justin Freid, VP of search engine marketing & emerging media at CMI/Compas, said publishers are increasingly offering pharma clients the opportunity to do native or sponsored content.

"The HCPs and consumers we're trying to reach are used to display and banner advertising, so there's a lot of banner blindness out there. We're working to create a lot of different types of new and engaging formats," he said. "With sponsored content or native advertising, you have the ability to get more information in front of a person and reach them at a time when they're more deeply engaged."

He noted the FTC's recent guidance that emphasized transparency and "clear and prominent" disclosures. The agency asked marketers to use direct wording such as "ad," "advertisement," "paid advertisement" or "sponsored advertising content" to distinguish native advertising, and to place the disclosure close to the headline where readers generally begin.

While Freid declined to name specific clients, he said the returns on native advertising that his agency has seen on behalf of pharma clients in general are "significantly higher than impressions" and have better engagement numbers and more people taking actions after seeing them.

Freid also offered a few tips to pharma marketers starting out with native ads. Make sure the ad is clearly marked--a la the FTC guidelines--and make sure the information provides value without pushing specific brands or being too one-sided. He also advised taking a page from CMI/Compas' playbook. The agency taps its SEO team for search and historical data around a condition or disease to find out what information people are looking for and then creates native advertising based on that.

- read the Journal of Advertising article
- see the Mediapost article
- get the FTC guidance

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