The NAD's First Native Ad Case Since Issuance of FTC Native Ad Guides

Just five months after the Federal Trade Commission (“FTC”) released its Native Ads Policy Statement, the National Advertising Division of the Better Business Bureau (“NAD”) has followed suit and issued a decision in its investigation of Joyous Inc.’s (“Joyous”) native advertising practices (NAD Case #5956, 05/19/16). In its routine monitoring, the NAD explored the formatting and placement of Joyous ads in the Style Watch section of the online version of People Magazine, as well as claims about the efficacy of its products. While Joyous discontinued the efficacy claims at issue, the NAD conducted a complete analysis of the native advertising content on People.com.

Joyous featured products in the “Stuff We Love” section of People’s website.  This section included a list of videos about Joyous products, and the videos were accessible via a link labelled “Watch.” People’s editors choose which products were featured and helped to create the descriptions of the products. The videos allowed consumers to shop directly for the featured products via Joyous’s e-commerce platform. Thus, while the material did contain some editorial aspect, the featured products were also being promoted for sale via the Joyous/People partnership. The NAD was concerned that the ads blurred the line between advertising and editorial content.

Joyous argued that it was clear that the content of the video was advertising in nature because:

• The video included the Joyous logo in the upper left corner of the video player frame throughout the entire video,
• A discount offer, in a bright distinguishable font, appeared directly below the logo in the frame throughout the entire video,
• The price for the featured products was readily visible in the videos,
• There was an “add to bag” button that consumers could click to add the product to their shopping cart, and
• There was a visible shopping bag icon in the upper right corner of the

The NAD agreed that these visual cues were sufficient to tell consumers that the videos were advertising content. As numerous examples in the FTC’s Native Advertising Guide for Businesses (“Business Guide”) make clear, Joyous was correct to include disclosures within the video itself, but this was not enough. The NAD found that most other aspects of the Stuff We Love feature conveyed the message that the section was editorial in nature. Specifically:

• The Style Watch page link to Stuff We Love did not disclose that the section was a partnership between People and Joyous to promote Joyous’s products for sale,
• The descriptions of the products on the Stuff We Love page did not disclose the promotional nature or that the items were for sale, and
• The “Watch” links did not disclose that the products within the videos were for sale in the video links.

Simply put, consumers had no way of knowing that the content promoted the sale of the products until they viewed the video.

The NAD explained that the lack of upfront disclosures may lead consumers to interact with the Stuff We Love page or, in turn, the videos because they believed them to be editorial. This is an example of what the FTC refers to as a “deceptive door opener” in the Policy Statement and the Business Guide.  FTC principles have long prohibited deceptive door openers and required that advertisements are identifiable as such before consumers arrive at the main advertising page.

As such, NAD recommended that:

• Joyous disclose that the “Stuff We Love” page is a shopping page and the linked videos are shopping videos before consumers reach the “Stuff We Love” page and before the video begins running.
• The links themselves or text surrounding the links make clear that the linked content is an ad (or a “shopping” link).

KEY TAKEAWAY

As we have noted previously, native advertising is going to be a focal point for the FTC, as well as the NAD. Advertisers must take care in crafting clear and conspicuous disclosures throughout their advertising. Joyous conspicuously labeled a portion of its advertising on People.com. But, perhaps even with the best of intentions, this was not enough. Advertising campaigns must make clear in every stage of the advertisement that the content is advertising content. Both the content itself and all lead-ins to that content must contain clear and conspicuous disclosures.