United States: Three Recent Developments In Native Advertising From The FTC, MMA & OBA

Most recently, the Federal Trade Commission (FTC) released an Enforcement Policy Statement on Deceptive Formatted Advertisements, and the FTC's policy was supplemented by a Native Advertising Guide for Businesses (Native Advertising Guidelines) outlining why, when and how disclosures should be made when disseminating native advertising and sponsored content. In addition, the Mobile Marketing Association (MMA), issued best practice guidelines for native advertisers, and the Online Interest-Based Advertising Accountability Program (OBA), a self regulatory enforcement regime of the Digital Advertising Alliance, published its first cases requiring the AdChoices icon or its equivalent when native advertisements are geared to consumers' personal interests based on their browsing history.

Background

The terms "native advertising" and "sponsored content" are commonly used to describe the practice of blending advertisements with news, entertainment, and other editorial content in digital or other media.

Native advertising continues to experience remarkable growth. Business Insider reports that native advertising spending has jumped from $4.7 billion in 2013 to $7.9 billion in 2014, and is expected to surpass $20 billion by 2018.

Naturally, this has attracted the attention of government agencies and the industry's self-regulatory groups and trade associations. Two years ago, the Federal Trade Commission (FTC) held a workshop on native advertising, indicating that it has historically and will continue to review native advertising as part of its general enforcement under Section 5 of the FTC Act – an approach confirmed by its recent release of official guidelines on the topic. Recently, the National Advertising Division of the Better Business Bureau (NAD) has issued a number of decisions exploring the prominence and transparency of native advertising disclosures and has found (and the FTC reiterated the position in its Native Advertising Guidelines) that suggested content appearing with statements such as "You may like" or "More from the Web" may confuse consumers as to why the content is linked, so, the disclosure must be made more appropriately and more prominently – for example, in terms of font size, color, boldness, and placement on the page distinguishing editorial from advertorial content.

FTC Issues Guidelines

The FTC's recent Native Advertising Guidelines spell out its current stance with respect to native advertising and shed light on its renewed approach going forward. The Enforcement Policy Statement tracks closely the FTC's key principles of transparency, disclosure and monitoring, advising that consumers may be misled about the nature or source of an advertising message. If a misleading impression may affect the consumers' conduct regarding the advertised product or services, clear and prominent disclosures need to be included, such as "advertisement" or "sponsored advertising content" (as opposed to 'ambiguous' terms such as "promoted," which could lead consumers to believe that content is endorsed by a publisher site). The FTC echoed the NAD's position that disclosures such as "More from the Web" may mislead consumers about the source of the content. In addition, the FTC also stated that disclosures such as "Presented by [Advertiser]" should be evaluated for appropriateness given the context, the advertiser's role in the content creation, and the extent to which advertiser products or services are promoted, as consumers may interpret these disclosures to mean that a sponsoring advertiser funded the post but did not actually create or influence the content. These disclosures need to appear in close proximity to (in front of or above) the native advertising headline, accompanied by visual cues such as shading or borders, and not buried in an end link. The FTC's Native Advertising Guidelines provide detailed examples of when disclosures may or may not be required (and the form those disclosures should take). For example, if the advertising content has the potential to mislead consumers about the commercial source of the message, regardless of medium, a clear and unambiguous disclosure would be required (including in audio or video formats). If the source of advertising content is clear, consumers can make informed decisions about whether to interact with the advertising and the weight to give the information conveyed in the ad (including the decision to purchase a product or service). The more similar a native ad is to its surroundings (e.g., a sponsored DIY video placed on a home improvement TV show website or an in-app ad such as a sponsored game icon), the more crucial the disclosure. Further, echoing recent NAD decisions including ESalon (ESalon.com LLC, NAD Case Report No. 5645 (Oct. 17, 2013), the FTC has stated that disclosures should be re-posted whenever native ads are republished via social media, email, search results or other media.

In evaluating whether an advertisement's format is misleading, the FTC will examine the "net impression" of the ad – reviewing factors such as:

  • Its overall appearance. The similarity of its written, spoken or visual style to non-advertising content offered on a publisher's site, and;
  • The degree to which it is distinguishable from other content – for example, by using different fonts, colors, and shades.

The FTC is only more likely to scrutinize these practices and bring enforcement actions related to the Native Advertising Guidelines moving forward into 2016.

The MMA Speaks

The MMA's newest guide on best practices for native advertising is the third of a three-part series on native advertising. It follows on the heels of its guidelines for mobile native ad formats and its white paper on the effectiveness of native advertising.

After offering some suggestions for publishers (e.g., native advertising should complement a publisher's organic content), the MMA paper proposes four steps for advertisers to take to improve the efficacy of their native ad campaigns:

  • Identify the environments and publisher contexts that are most relevant for their campaign and customize the messaging and format accordingly;
  • Spice up the ad and headline to catch the eye of the user with creative content;
  • Maximize exposure by leveraging social and viral trends for advertising in social feeds; and
  • Identify the direct response metrics and the end conversion metrics that impact their business and optimize campaigns towards achieving them.

OBA Cases

The key principle related to native advertising to be derived from the OBA cases, which involved Gravity, Inc., and Outbrain, Inc., two companies specializing in native advertising, is that advertisers must tell consumers when sponsored content is tailored to their specific interests.

Gravity had disclosures on its website regarding its interest-based advertising (IBA) technology practices but it did not provide an enhanced notice link to alert consumers about Gravity's data collection and use practices or its IBA opt out. After Gravity learned of the OBA's concerns, it voluntarily came into compliance with the Digital Advertising Alliance's Self-Regulatory Principles for Online Behavioral Advertising, or the "DAA Principles."

Similarly, the OBA said, Outbrain was not fully compliant with the DAA Principles because it did not have the required enhanced notice link on any page where data was collected by third parties engaging in IBA. The OBA also said that it could not find a disclosure of third-party IBA activity on the Outbrain website or a compliant opt-out link or links.

Because Outbrain had begun to bring its operations into compliance before the OBA's formal inquiry, the OBA closed this case as an administrative disposition rather than a decision.

Bottom Line

As native advertising continues to grow in importance, we will likely continue to see both more self regulatory guidance including possible further clarifications based on the recent FTC guidance, more self regulatory enforcement by organizations such as the NAD and OVA, and likely enforcement actions by the FTC where advertising or marketing communication agencies, brands, or publishers fail to clearly and conspicuously disclose that native advertising is in fact advertising.

Best practices include separating native advertising from editorial content in a manner that clearly distinguishes each (with reference to the specific examples and practices recommended by the FTC), clearly disclosing and ensuring your partners are disclosing native advertising as paid advertising or sponsored content, and, as, the recent OBA enforcement cases provide, ensuring that proper notices and opt-out mechanisms are included from a privacy perspective when targeting consumers with native ads.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Frankfurt Kurnit Klein & Selz
Klein Moynihan Turco LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Frankfurt Kurnit Klein & Selz
Klein Moynihan Turco LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions