If you saw these links under an article you just finished reading, would you be surprised to learn that the links are sponsored? The NAD thinks you might.

Taboola Ads

Taboola is an advertising network that purchases space from online publishers on behalf of its clients, places ads in those spaces, and earns money based on the number of clicks on the ads. The ads are labeled in a variety of ways including, “You May Like” (as above), “More in the News,” or “Recommended Videos.” One of Taboola’s competitors argued that because the labels are vague, consumers might mistakenly think the ads link to editorial content.

The NAD agreed, despite Taboola’s “promoted content” or “ sponsored content” disclosures on the top-right of the ads. The NAD was concerned that the placement of the disclosures in the upper right hand corner appeared in a place “that consumers are less likely to notice and read.” Even the name of the sponsor below the ads was “not sufficient to disclose to consumers that the links are paid links.”

The NAD recommended that Taboola more clearly disclose that ads are sponsored content by increasing the size, and improving the placement, of its “promoted” or “sponsored” disclosures. The NAD also cautioned that the combination of the image, article title, and name of the destination site should not mislead consumers about what’s on the landing page.

This is the second NAD decision on native advertising we’ve discussed this year. Like the previous decision, this one suggests that the NAD believes that consumers are likely to be confused by native ads and that the disclosures advertisers typically use are not sufficient.

PureGreen Coffee

 

 

No, we won’t share our tips to help you lose your belly this summer. But we will share some tips to help you stay out of court.

Last week, the FTC sued a group of companies and their executives for false advertising, alleging that they used deceptive tactics to sell their Pure Green Coffee weight loss supplement. The case involves three hot topics at the FTC: health claims; native advertising; and endorsements.

The companies advertised that the supplement could help consumers lose 17 pounds in 12 weeks, without diet or exercise. According to the FTC, however, the study underlying the claims was fundamentally flawed and falls far short of the standard necessary for health claims.

To advertise the supplements, the companies created seemingly independent “news” sites that featured mastheads of fictitious organizations, such as Women’s Health Journal. According to the FTC, these sites were designed in a way that made it “impossible for people to know whether they were seeing news or an ad.”

The companies also featured endorsements from purportedly independent consumers throughout the sites. The FTC claims, however, that the endorsers didn’t purchase the supplement and that they weren’t independent. Instead, the individuals had been paid $200 and received a free 30-day supply of the supplement in exchange for the endorsements.

Diet and health claims have been a longtime focus of the FTC. If you make these types of claims, you should work closely with your legal team to ensure you have the necessary support. As we’ve noted in previous posts, the FTC has also been taking a close look at native advertising and endorsements. The key in these areas is transparency. Consumers should be able to distinguish between news and ads, and should be informed when an endorsement has been sponsored.

As part of its monitoring program, the NAD recently reviewed an editorial in Shape Magazine that promoted the benefits of certain SHAPE-branded products. The NAD was concerned that promoting the products in that format could blur the line between editorial content and advertising in a way that could confuse consumers.

As we’ve noted before, the FTC’s Endorsement Guides generally require advertisers to disclose any connections between themselves and those who endorse their products, if those connections wouldn’t be otherwise obvious. Shape’s publisher argued that the relationship between the magazine and SHAPE-branded products was obvious and, therefore, that no additional disclosure was necessary. The NAD disagreed.

Although consumers may be aware that SHAPE-branded products are related to SHAPE magazine, the NAD was concerned that consumers may nevertheless believe that editorial recommendations in the magazine are independent of the influence of a sponsoring advertiser. Accordingly, the NAD recommended that the publisher more clearly disclose content as advertising when it mentions a SHAPE-branded product.

This isn’t the first case to tackle this issue. We previously noted that the NAD asked a company to disclose it was behind several seemingly-independent recommendations of its products. What makes this case different is that there was an obvious connection between the publisher and the product. This decision suggests that the NAD may take a more stringent view of what constitutes “obvious” than would most advertisers.

shape

Yesterday, the FTC held a workshop to discuss legal issues surrounding the blending of ads with other content in digital media — sometimes called “native advertising” or “sponsored content.” From a marketing perspective, one benefit of this strategy is that ads may look more like content and, therefore, attract more consumer attention. But many regulators and consumer groups are concerned that native ads may be presented in such a way that consumers won’t be able to distinguish between ads and other content.

The FTC has consistently taken the position that consumers should be able to easily make this distinction. In many cases, that requires that an advertiser disclose that content is sponsored or paid-for by the advertiser. However, the FTC noted that, while that requirement is generally applicable across all media, context does matter. For example, consumers may be more likely to understand the paid nature of advertising in “traditional” print and television media than they are in “new media,” such as blogs.

Given these differences, developing clear guidelines across the board is a challenge. At the workshop, panelists representing various groups discussed the merits and pitfalls of native ads and their regulation. Almost everyone agreed transparency was important, but how to achieve that was an open question. While some consumer groups argued that native ads should be labeled with words such as “Sponsored” or “Advertisement,” some law professors presented research that cast doubt on whether those labels are effective or understood by consumers.

Although native advertising isn’t new, it’s becoming more prevalent and sophisticated, which is part of what prompted yesterday’s workshop. It’s too early to predict what will come of the workshop, but the FTC will attempt to issue guidelines for advertisers that engage in this practice. In the meantime, we expect to see more enforcement actions — such as the ones we discussed here, here, and here — to continue. Accordingly, if you run native ads, work closely with your counsel to stay on the right side of the blurred line.

This afternoon, the FTC announced the panelists for its upcoming workshop on Native Advertising. The term “native advertising” generally refers to ads that are presented in the native format of the website, publication, or platform in which they appear. Consider, for example, an advertorial on a news site, paid results on a search engine, or Sponsored Stories on Facebook. Although native advertising offers various benefits from a marketing perspective, it also poses several legal risks.

While the FTC workshop isn’t until December, my article on the same topic in last month’s E-Commerce Law & Policy explores the legal issues surrounding native advertising.  Click here to read more.

This week, the NAD issued an important decision involving advertising practices in social media. Here are the highlights.

  • eSalon operates a hair-styling blog, and many posts promote the company’s products. Because the blog didn’t have eSalon branding, the NAD was concerned that consumers would view the blog as independent, despite a fine-print disclosure at the bottom of the site. The NAD recommended that eSalon disclose its affiliation at the top of each page.
  • eSalon provides consumers incentives to promote the company’s products in social media. As we’ve noted before, advertisers must take steps to ensure the consumers disclose those incentives. The NAD recommended that eSalon advise reviewers of their disclosure obligations and that the company not re-post reviews that fail to include these disclosures.
  • eSalon’s Pinterest page includes a review section with links to content discussing the company’s products. Although some of the content was independently generated, other content was sponsored by eSalon. The NAD advised eSalon to clearly differentiate sponsored content from independent content.
  • eSalon used celebrity photos to highlight the celebrities’ hair color choices. The NAD was concerned that consumers would interpret the use of the photos as implied endorsements by the celebrities. As a result, the NAD recommended that eSalon not use celebrity photos unless the celebrities have endorsed the product.

This case serves as a reminder that advertisers need to take steps to differentiate sponsored content from independent content. For more on these issues, take a look at this article on Advertising and Promotions in Social Media, and stay tuned for a new article in the next few weeks.