The Federal Trade Commission hosted a day-long workshop on “native advertising” on December 4th in Washington, D.C. Native advertising, in which advertisements or sponsored content imitate the form and style of the editorial content in which they are featured, has been around for decades, but is drawing increasing scrutiny as it proliferates in digital media and on social networks, and takes on new and increasingly sophisticated forms. Under Section 5 of the FTC Act, the FTC is empowered to prohibit advertisements that are deceptive or misleading, however as the workshop made clear, there is considerable disagreement about when native advertisements become deceptive and whether further FTC guidance on the subject of native advertising is necessary.
Although the workshop largely consisted of discussion rather than specific advice, many of the day’s panelists agreed that clear and conspicuous disclosures are necessary when content has been sponsored by or created by an advertiser, including in circumstances in which an advertiser merely pays for content to appear. For example, if a “news” article about an advertiser’s product appears on an online publisher’s website that was written by the publisher but appears only because the advertiser has paid for it to appear, panelists generally agreed that the publisher should disclose that the content has been paid for. On the other hand, there was greater disagreement over whether such disclosures would be necessary, as well as the extent of disclosures that would be necessary, if the publisher wrote the article at its own initiative, but subsequently sought sponsorship of the article.
Throughout the workshop, panelists expressed significant disagreement with regards to the nature of disclosures that should be required for native advertisements. As the FTC has said in previous guidance, the “net impression” of an advertisement is important to determining whether the advertisement is deceptive, and the format of an advertisement can be the basis for a finding of deception. But as the lines between editorial content and advertising content blur, many publishers and advertisers have found it difficult to determine when and how to disclose that content has been sponsored. Key considerations include the language of disclosures, the visual cues that publishers provide to readers to distinguish paid content from editorial content, and the way that disclosures “follow” paid content that is shared through social media.
The workshop did not result in any formal advice or guidance, and the FTC noted that although it is continuing to study the issue of native advertising in digital media, it currently has no plans to issue additional guidance on the matter.