NEW YORK: More than one third of publishers are failing to label sponsored content correctly, according to a new study, and brands need to sit up and take notice.

MediaRadar, an ad sales intelligence firm, looked at sponsored content ads from 12,000 brands during the course of 2016, and reported that 37% of digital publishers were not native compliant – meeting the FTC guidelines issued in December 2015 – and were risking reputation and revenue.

There has been a significant improvement over the past year, however, as a previous study at the time the guidelines were issued found that 71% of publishers didn't comply, Ad Exchanger noted.

"More publishers have familiarized themselves with the rules and are observing them. But there is still room for improvement," said Todd Krizelman, CEO at MediaRadar.

"There is a group of people unaware that the law exists, or that doesn't care," he added.

In the main, these appear to be smaller publishers, and many of them are likely to be mislabelling content – only 5% of publishers provided no labelling at all – with terms such as "sponsored" (74%) or "promoted" (11%) rather than the FTC-approved "sponsored content".

Further, 32% of publishers apply these labels to the bottom of posts, while FTC guidance prefers the top.

But it is not only publishers who need to be cognizant of the regulator's guidelines – brands too are under an obligation, with the FTC regarding them as the primary party responsible for labelling sponsored posts correctly.

"The brands should know better," Krizelman said. "We don't see errors with big firms like P&G or Unilever, but we do see large national brands that are buying ads that aren't properly noted."

This may because they are new to the format: MediaRadar tracked 610 new advertisers each month buying native, with the number of publishers offering this option tripling in two years.

Native advertising is growing in popularity since it enables advertisers able to avoid ad blocking and generate higher click-through rates while publishers can boost digital ad revenues. It's also well suited to the way people use mobile devices.

Edwin Wong, senior director of research and insights at Yahoo, has detailed in ANA Magazine How pioneering marketers can navigate the uncharted terrain of the native ad.

Data sourced from Ad Exchanger; additional content by Warc staff