In late August, China's state legislature announced it would tighten rules on advertising in the mainland to provide added consumer protection. According to a draft revision of the advertising law, celebrities would no longer be allowed to promote products and services that they had not tried, and any who did so could be fined or even face legal liability.
While the draft regulation on celebrity endorsement is a step in the right direction, another form of advertising that is gaining ground and which needs to be examined by regulators in Asia is native advertising.
Media in the region increasingly see this relatively new form of advertising as a promising solution to help them grow again, with media organizations like the South China Morning Post, Yahoo Japan, Tech in Asia and others publicly announcing forays in native advertising earlier this year.
Hidden in plain sight
Today, most of those working in marketing, PR, advertising or social media know about native advertising, but to the untrained eye, native advertising can be hard to detect.
The New Yorker's Ken Auletta has said that native advertising is basically promising corporations that want to advertise: We will camouflage your ads to make them look like news stories. It has become popular with advertisers precisely because it is, in many cases, hard to distinguish from noncommercial content. Good native advertising fits within the context of the content surrounding it and aligns with the media outlet's style, tone and content type.
This kind of advertising, some argue, benefits everyone -- media, brands and audiences -- as native ads generate higher click-through rates than ordinary display ads, with click-throughs translating to advertising dollars for media and increased sales for brands. For audiences, good native ads are usually more relevant and interesting than display ads.
In fact, Zachary John, Yahoo's vice president in charge of monetization and business operation of mobile and emerging products, was recently quoted as saying: "The shift to native advertising has been a big win for the industry. Native on mobile is the way forward, it makes users feel that ads are better."
While this may be true, there is reason for concern as well. Native advertising is often hard to detect because no guidelines exist for identifying them as paid content. Some media clearly label native content as advertisement, while others do not because they are not required or encouraged to. And while the Federal Trade Commission in the U.S. is said to be working on adding "native" guidelines to its laws on advertising, it is unclear whether any Asian organization or government is currently following suit.
Authenticity is key
One of the reasons that native content needs to be examined is that it raises questions around the separation between "church and state" -- the line that is meant to exist between the editorial and the business sides of media organizations. This line, which is designed to ensure editorial independence, has become increasingly blurred with the rise of native advertising. With multiple studies showing that people frequently fail to recognize native advertising for what it is, it is easy to understand how this new style of marketing could lead to distrust over the authenticity of published information.
If audiences are not able to recognize the difference between editorial and commercial content, they could become increasingly skeptical of the veracity of content and the reliability of the sources of information -- even when content has not been sponsored. Eventually, this could lead to a loss of confidence in media organizations, which would be negative for media, brands and audiences alike.
Given that native content is published primarily on mobile and digital media, and that a number of Asian countries today enjoy some of the world's highest rates of mobile penetration, the region is particularly prone to seeing this form of content proliferate and impact consumers.
Need for self-regulation
To ensure positive outcomes from native advertising, it is important for an industry body to put together guiding principles that outline best practices and ground rules for the use of native content. In the absence of clear guidelines, native advertising in Asia is at risk of becoming as off-putting as paid links were in the early days of the Internet, when sponsored links frequently ferreted their way into the unpaid-for portion of search engine results. The lack of transparency created a negative search experience for audiences until the FTC set guidelines in 2002 that required search engines to clearly distinguish ads from "natural" search results.
The industry should not wait for consumers in Asia to vote with their feet. It should take note of transparency trends and self-regulate. More transparency around what is sponsored content and what is not will ultimately benefit everyone -- media, advertisers and consumers.
Cedric Vanhaver is a Hong Kong-based vice president at FleishmanHillard, a public relations and marketing agency.