Monday, February 24, 2014

Editorial “Native” Ads May Confuse Consumers

Q:       What is native advertising?
A:        It is usually easy to identify advertising when you pick up a magazine or watch a television program because the ads are clearly differentiated from the magazine article or TV program. Native advertising is a form of paid media that may be harder to identify as advertising because it “looks and feels” like editorial content and is integrated with whatever a consumer may be reading or viewing.  

Q:       What’s the big deal?
A:        The issue is whether you, the consumer, realize the content is advertising.  Most of us approach advertising expecting that the advertiser isn’t objective and is trying to sell us something. But we tend to approach editorial content from a different perspective, and may be more likely to accept as “truth” advertising that is merged with content. Blurring the lines between editorial content and advertising could lead to confusion if not deception.

Q:       Is native advertising regulated?
A:        No, in the sense that there are no regulations set out in the Code of Federal Regulations that expressly address this. But yes in the sense that Section 5 of the Federal Trade Commission Act gives the Federal Trade Commission broad authority to prohibit “unfair or deceptive acts or practices in or affecting commerce.”  The FTC has enforcement power if it deems a piece of native advertising “deceptive,” even without clear cut guidelines. So, if the FTC finds a native ad to be “deceptive,” it can file a court injunction and apply “corrective practices” against the advertiser.

Q:       I run a small business, and wonder if the FTC might find my native advertising to be deceptive. How can I avoid an enforcement action by the FTC?
A:        Be as transparent and conspicuous as possible within the framework of the editorial content you offer. For example, some websites feature a “blog roll” with boxes running down the page showing a thumbnail photo and a snippet of the blog post. If the blog roll contains posts that are purely editorial and others that are native advertising, you should clearly identify the “native ad” posts. Use some background shading along with some text to indicate that the “native ad” content is paid advertising.
In addition, make sure your readers/viewers know what they are getting. Just using the words “sponsored by” may not be clear enough. For example, does “sponsored by” mean someone paid the website to write the content or does it mean that the sponsor actually wrote the piece? If the latter is true, you should consider providing additional text such as “sponsor-generated content,” which may be a more accurate description.

Q:       What should I keep in mind when developing native ads for my business?
A:        Native advertising potentially offers you two advantages.  First, it is less disruptive than traditional advertising. The advertising content flows more naturally with the editorial content. Second, it allows you to present interesting, engaging content that readers enjoy. You can easily make sure the reader knows that what you’re providing is advertising by offering transparency and clear disclosure.

This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by Cincinnati attorney John C. Greiner, partner at Graydon Head & Ritchey LLP.  Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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