February 17, 2014 -

Native Advertising: Blurring the Lines Between Content & Advertising Without Getting in Trouble

There’s nothing new about native advertising.  Before the Internet, there were infomercials, and in magazines, advertorials.  The Internet already has cute names for advertisements formatted as blogs and articles: flogs (as in “fake blogs”) or an even more creative term for fake articles.  But as online content moves away from direct analogues to the print world, content creators and marketers are becoming more creative in designing and integrating advertising into their websites and apps.

Ad executives, the Interactive Advertising Bureau (IAB), and even the Federal Trade Commission (FTC) are weighing in on native advertising.  There’s no consensus yet on how to define it; so far people just “know it when they see it.” A common theme is developing, however, and it involves an advertiser’s influence being somehow fused with the website or app’s editorial content.

If you think this is all pretty vague, here are a few concrete examples:

  • A search engine’s paid listings, where a listing is taken out of the normal, “organic” (i.e., consumer-expected) rankings and elevated to the top of the search results because an advertiser paid for the placement
  • Facebook’s sponsored stories, where advertisers can pay to increase the frequency and prominence of certain posts and friends’ likes to promote their content.

(Other types include sponsored content and promoted listings. Check out the Additional Resources at the bottom for more information.)

The FTC’s Revised Guides Concerning the Use of Endorsements and Testimonials in Advertising already require disclosure where a blogger or other Internet content provider is compensated or provided some other material incentive to promote or endorse a product, service or website.  The disclosure requirements become less certain when the advertiser can influence editorial content but doesn’t dictate it so directly.  For example, imagine a digital camera manufacturer paying a website to write an article about famous, picturesque destinations (as opposed to an article extolling the virtues of the camera itself).  The advertiser would be prominently listed as the “Sponsor” and may have other branding on the page.

Is this native advertising? It’s not overtly a camera ad, and the advertiser didn’t specify the details of the article, but the website may not have otherwise chosen that topic.  It doesn’t fit squarely into the FTC’s guides on use of endorsements and testimonials, but it’s also clear that an advertiser’s commercial interests are at play.

The site’s addition of the “Sponsored” label communicates an association with the advertiser, but is that enough to dispel consumers’ likely assumption that the site, and not an advertiser, dictates the editorial content?   Even if inadequate disclosure results in some consumer confusion, does the level of harm merit regulating this as an unfair or deceptive marketing practice under Section 5 of the FTC Act?  There is yet no consensus among government regulators or industry self-regulatory organizations like the IAB.

While we expect the FTC to specifically weigh in on native advertising sometime in 2014 (they’ve already sent a letter to major search engines and held a public workshop), so far there is no specific guidance. Websites and apps integrating native advertising should review and follow existing guidance from the FTC, including:

  • Marking ads so consumers can differentiate between editorial content and advertisements
  • Marking content that is made more prominent because of payments by advertisers
  • Disclosing advertisers’ material connections to the content
  • Generally avoiding “deceptive practices,” meaning practices that are likely to mislead reasonable consumers in a manner that would be material to their decision to buy or use a product or service

Additional Resources: