Native Advertising: The Blurred Line Between Editorial and Sponsored Claims

The act of using editorial content for promotional and marketing purposes, or what has come to be known as “native advertising,” is a burgeoning and profitable area of advertising.  And not surprisingly, the practice has caught the eye of regulators as a potentially deceptive trade practice. In recent weeks, the National Advertising Division (NAD), a division of the Advertising Self-Regulatory Council that is administered by the Council of Better Business Bureaus, issued two rulings on the practice of native advertising.  Typically, NAD cases address complaints brought by one competitor against another.  Here, in contrast, the NAD brought the two complaints itself as a result of the NAD’s regular monitoring of national advertising claims.

In the first case, the NAD analyzed articles made available on the technology website http://mashable.com/.  Qualcomm paid for the articles to advertise its Snapdragon microprocessors, which are designed for use in cell phones and tablets.  It turns out that Mashable employees wrote the majority of the articles posted on Mashable.  The main issue in the case was whether the articles should have retained the Qualcomm sponsorship label after the Mashable sponsorship terminated.

Qualcomm responded that it did not direct the creation or subject matter of the articles and that the articles did not address devices that contain Snapdragon or other Qualcomm products.  Additionally, Qualcomm stated that the articles existed independently, without mention of Qualcomm, before the articles were published and continued to exist on the Mashable website after the sponsorship period concluded. Therefore, Qualcomm argued there was no continuing obligation to disclose that the articles were sponsored.

The NAD began by pointing out that consumers could be misled when an advertiser conveys a commercial message without disclosing that it is the author of the message. This is because sponsored content can convey an explicit or implicit message about a product, the benefits of using the product, or the disadvantages of a competing product.

Here, the NAD determined that the sponsored content was independently created before the sponsorship began and was controlled by Mashable.  The NAD found that Qualcomm’s sponsorship was more akin to an advertisement that ran alongside an article for a period of time, rather than content written to further an advertiser’s commercial purpose.  Therefore, the NAD found that it was appropriate for Qualcomm to disclose itself as the sponsor of the articles when its advertisements ran in conjunction with the articles.  But the NAD determined it was not necessary for Qualcomm to continue to identify itself as the sponsor after the sponsorship period ended and its advertisements ceased.

In the second recent native advertising case, the NAD analyzed advertising claims made by eSalon on http://www.esalon.com/, a hair coloring website for women, a secondary website eSalon runs called http://www.haircolorforwomen.com/, and online content eSalon published on its social media channels, including Facebook, Twitter, and Pinterest.  The NAD had requested eSalon provide substantiation for several express advertising claims.  After its review of the submitted evidence, the NAD found that eSalon could substantiate several of the claims at issue.

With respect to the other challenged claims, the NAD found that several articles and blog posts on http://www.haircolorforwomen.com/, which included hair styling tips, necessitated more conspicuous disclaimers to put consumers on notice of that fact that the articles and blog posts were sponsored by eSalon.  Specifically, the NAD recommended that eSalon:

Disclose, clearly and conspicuously, at the top of www.haircolorforwomen.com  and on each page or post, that eSalon maintains the blog.

• Advise reviewers of their disclosure obligations when it provides incentives for posting online reviews or content about eSalon, and eSalon disclose any incentives it provides for posts about eSalon when eSalon promotes or otherwise redistributes such posts.
• Disclose its connection to the blog, www.haircolorforwomen, when it posts content from the blog on Pinterest or other social media.
• Discontinue its use of non-endorser celebrity photos on its website or in social media, because such use implies an endorsement of eSalon by the depicted celebrity.

What This All Means:

 These cases highlight the increasingly blurred line between online advertising and pure editorial content as a growing number of advertisers embrace the practice of native advertising to create additional online revenue.  In recognition of the trend, on December 4th, the Federal Trade Commission plans to host a roundtable on native advertising.  See http://www.ftc.gov/opa/2013/09/nativeads.shtm.  Whether the resulting discussions will lead to regulations and enforcement actions remains to be seen.  In the interim, advertisers need to pay particular attention to native advertising and its placement online to ensure that the distinction between editorial and sponsored content is made clear and conspicuous to the consumer.