“For us, the concern is whether consumers recognize what they’re seeing is advertising or not,” Mary Engle, the FTC's associate director of advertising practices, told attendees at the Clean Ads I/O conference in New York City on Wednesday.

Traditionally, the FTC has not held publishers responsible for misleading ads on their properties, be they TV networks, radio stations, websites or apps. They were just a distribution channel.

“But when the publisher is creating the content, they’re more involved in the process, and that creates some potential liability,” Engle said.

She highlighted examples of native advertising on BuzzFeed, Wired and Gawker.

Engle indicated that the FTC will focus less on the content of native advertising, and more on how such advertising is displayed and labeled on the site.

“I would urge advertisers to think about how to communicate [disclosure] to consumers while wanting the ad to be in the flow of what consumers are seeing,” she said.

Just having a “sponsored” label won’t be enough. The FTC has won cases where “advertorial” was presented in such a tiny font as to be misleading. According to the FTC, reasonable consumers may only look at the headline and not the fine print.

“An ad is deceptive if it misleads a significant percentage of consumers,” Engle said. Questioned, she clarified that usually means 15% of consumers, and sometimes as few as 10% of consumers. The FTC uses tests which ask consumers questions about an ad to measure how misleading an ad is.

While FTC is not a “gotcha” organization, IAB EVP and general counsel Mike Zaneis said, it will likely crack down on native advertising disclosures.