Publishers -- And Marketers -- Must Meet Ethical Standards in Native Advertising

Both Have Responsibility to Ensure Consumers Aren't Deceived

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Publishers -- and marketers -- must meet ethical standards in native advertising

Native advertising -- or what we used to identify by the slightly less opaque term advertorial -- has earned some pretty interesting headlines lately. Presented in the context of editorial content, native advertising is heralded as a savior of the publishing industry, opening up a new revenue stream for publishers and freelance journalists, or maligned as the death of journalism because it undermines public confidence in journalistic independence.

Much of the discussion has centered on the responsibility of publishers to ensure consumers aren't hoodwinked by ads-posing-as-editorial-content. It is important to remember, though, that advertisers bear a responsibility to consumers as well.

In January, The Atlantic faced a wave of criticism when it published a piece written by the Church of Scientology. Critics argued first that it blurred the line between advertising and editorial, and then that only "pro-Scientology" remarks were accepted in the comments log. The Atlantic later apologized, acknowledging that its marketing staff moderated some comments, and alluding to the challenges presented as it "explored new forms of digital advertising." The piece carried a yellow label denoting it as "sponsored content," but some critics contended that the label was not prominent or clear enough.

There is little new about this debate. In fact, the relevant Federal Trade Commission opinion on the matter was issued in 1968, when it reminded advertisers that sponsored content that "uses the format and has the general appearance of a news feature and/or article for public information which purports to give an independent, impartial and unbiased view ... [must] clearly and conspicuously disclose that it is an advertisement."

Earlier this year the FTC reasserted its message that advertising should not be disguised as news when it settled with marketers allegedly using fake news sites to promote and make health claims for their products. The settlements required "the defendants to make it clear when their commercial messages are advertisements and not objective journalism."

In order to evaluate whether the label on the Scientology article was sufficient to alert the reader that she was viewing commercial content requires a review of FTC and other advertising law on disclosures. In general:

  • Disclosures must be clear and conspicuous.
  • Disclosures must be in close proximity to the main claim.
  • Disclosures must be easy to notice, read and understand.

It can be argued that the small yellow label "Sponsor Content" at the top of the article may not have been sufficiently clear and conspicuous. In addition, it might not have been easy to notice, read and understand by readers that the content was not editorial but advertising. The possibility that readers would be misled is increased because, aside from the small label, the article blended seamlessly into the Atlantic site with formatting that mirrored the editorial content on the site.

Another question is whether the advertiser and publisher have obligations with respect to comment logs. Content presented as generated independently by consumers should be authentic and unfiltered or marketers may face an NAD challenge or action from the FTC or state attorney general's office. In a 2009 decision, the NAD reviewed content that appeared to be an independent blog. The content, however, was posted exclusively by a dietary-supplement maker. The NAD noted that if an advertiser creates and disseminates information on a blog, the advertiser has to clearly and conspicuously disclose that the blog is advertising, as consumers expect blog content to be genuine and unfiltered.

The New York attorney general's office has cracked down on the practice of posting fake favorable comments and reviews on websites, sometimes called "astroturfing," including a 2009 settlement with a plastic-surgery company that it alleged had employees post positive reviews of the company in reviews and comment logs on internet sites.

FTC Guidelines on Testimonials and Endorsements make clear that when a blog or editorial content includes endorsements -- particularly in a context where consumers would not expect a connection between the blogger or writer and the advertiser -- then the blogger and the advertiser are obligated to disclose that connection. Comment logs posted below native-advertising articles might be scrutinized similarly to determine whether, in context, readers expect the comments to be consumer-generated and unfiltered. Consumers could be misled if the comments are filtered and the comment log itself could be viewed as running afoul of the FTC endorsement guidelines or that the comment log itself is undisclosed advertising.

Put simply, native advertising is governed by well-settled principles. Marketers and publishers should be vigilant in ensuring readers are aware they are viewing advertising. If native advertising blends seamlessly into the actual publication, it runs the risk of deceiving the consumer in a way that creates challenges for publishers and marketers.

Laura Brett is staff attorney at the National Advertising Division.
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