United States: Native Advertising >> Regulators Continue To Focus On Native Advertising Practices

April 19, 2016

Native advertising is still on the rise, with marketers continuing to shift media buys into the sponsored content arena as a means of addressing issues such as ad fraud, viewability, and ad blocking – which are primarily issues for traditional display advertising. By way of context, native advertising spending rose from $4.7 billion in 2013 to $7.9 billion in 2014 and is projected to rocket beyond $20 billion by 2018, according to data reported by Business Insider.

The FTC has expressly taken the position that long-standing consumer protection principles apply to native advertising, and that native advertising disclosures are required and subject to enforcement under Section 5 of the FTC Act. In December 2015, the FTC issued an Enforcement Policy Statement on Deceptive Formatted Advertisements, supplemented by a Native Advertising Guide for Businesses (Native Advertising Guidelines), advising that, if consumers may be misled about the nature or source of an advertising message and if such misleading impression may affect the consumers' conduct regarding the advertised product or services, clear, proximate and prominent disclosures need to be included, such as "advertisement" rather than more ambiguous terms such as "promoted" (which could lead consumers to believe that advertising content is endorsed by a publisher site).

Moreover, the NAD has found (and the FTC reiterated the position in its Native Advertising Guidelines) that disclosures such as "You may like" or "More from the Web" may confuse consumers as to why the content is linked. Further, self-regulatory bodies such as the Mobile Marketing Association and the Interactive Advertising Bureau have released a number of guidelines and best practices and the Online Interest-Based Advertising Accountability Program recently published its first self-regulatory challenges requiring content recommendation and web publishing companies to display the Digital Advertising Alliance's "AdChoices" opt-out icon (or an equivalent opt-out icon) when native advertisements are targeted to consumers based on their browsing history or other online behavioral activities.

Looking Ahead

  • Native advertising should include clear and proximate disclosures in accordance with the NAD's recent decisions and the FTC's recent guidance, as well as traditional FTC regulations, the FTC's history of enforcement, and ongoing FTC developments. In particular, the FTC recently brought its first case against an advertiser, Lord & Taylor, for its deceptive use of native advertising practices.
  • Expect the FTC to continue to enforce the Native Advertising Guidelines and its core principles of transparency, disclosure and monitoring, and build these best practices and principles into marketers' and their agencies' approach on native advertising, especially if marketers and their agencies are engaging in behavioral advertising practices to target native advertisements to consumers.
  • Remember that in evaluating whether an ad's format is misleading, the FTC will examine the "net impression" of the ad – examining 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 such content.

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.

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