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Third-party publishers of headlines and images at the bottom of news articles that link to "recommended stories" must more clearly label "sponsored content," the National Advertising Division said Wednesday.
The NAD's recommendation focused on Taboola, one of several companies that place headlines and images on publishers' websites -- usually below or next to news stories -- that link to a combination of advertising and editorial content on that site or other sites. Companies like Taboola get paid when a reader clicks on a link; they share that money with the publisher.
These links are part of a "recommendation widget," which adopts the look of the site where it appears. For that reason, the Interactive Advertising Bureau considers such widgets a form of native advertising. Taboola's widget carries one of two labels in small, light gray font: "promoted content" when all the stories are editorial in nature and "sponsored content" when they're a mix of promotional and editorial.
Above the widgets, an additional -- and indeed bolder -- label might say "Recommended Videos," "More in the News," "We Recommend," "You Might Also Like" and so on.
Taboola's chief competitor is Outbrain, but another rival, Congoo, lodged a complaint with the NAD saying Taboola's labeling is too vague. The result is consumers may click on a link believing it's editorial content when in facts it's advertising.
Administed by the Better Business Bureau, the NAD is the marketing industry's self-regulatory body, backed by agencies and marketers.
The NAD rejected the notion that a label above these widgets say "advertisement" to indicate some of the links are paid for by marketers.
"In the absence of consumer-perception evidence demonstrating that consumers do not understand the words 'sponsored content' or 'promoted content' to mean 'paid content,' [NAD] is reluctant to mandate specific words to use for disclosure," the organization said in a statement.
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It did, however, recommend that Taboola increase the size, font color and boldness of its "sponsored content" or "promoted content" labels, as well as their placement on the page. The NAD also urged Taboola to better explain the nature of the links inside its recommendation widget.
For instance, a Taboola widget at the bottom of an Entrepreneur.com article contains six images and headlines with links. Half of them take readers to another Entrepreneur story. The other three headlines and images drive readers off the site. In these cases, the name of the site is identified below the thumbnail images, but it does not indicate whether the site is promotional in nature. One link, for example, takes readers to an article about boosting testosterone, which is on a site called "Better by the Minute." The article is an ad for Nuginex, a supplement that claims to boost testosterone.
The NAD recommendation said "that to the extent Taboola may link consumers to site which must be labeled 'advertisement' or links to a site that appears to be a news source but is maintained by an advertiser, that Taboola discontinue such links or modify its disclosures to disclose that the link is to an advertisement."
Taboola agreed to incorporate the NAD's recommendations on the size, color and boldness of its labeling in future version of its widgets. The company also said it will either stop linking to content that misappropriates itself as editorial in nature, or modify how it discloses that the links are ads.
In an interview with Ad Age on Wednesday, Taboola CEO Adam Singolda said the company is taking a leadership position in more clearly labeling the stories to which it links. Its competitors, Mr. Singolda pointed out, continue to use vague language.
"We're very happy to take part in this type of conversation," he said.
A phone message left with Congoo was not returned as of press time.