IP, Disclosures and Consumer Expectations: Top Native Advertising Issues

This is Part IV of a blog series from Davis & Gilbert’s recent report, “Advertising Law: 2013 Lessons Learned & 2014 Practical Advice,” on the significant changes in the law relating to advertising, marketing and promotions in 2013, and suggestions for advertisers and agencies to think about and address in 2014.

By Vejay G. Lalla and Anne DiGiovanni

Native advertising has been around for decades in various forms, but in 2013, digital native content became a hot topic, as well as the subject of industry and regulatory discussion around how traditional advertising law principles apply to native advertising. The President of the Online Publishers Association recently stated that nearly ninety percent of its members are providing native solutions.

In early 2013, The Atlantic published an article sponsored by the Church of Scientology that, although properly disclosed as sponsored, created an outcry from readers because the Church’s message seemed to run counter to the magazine’s journalistic values. The incident has served as a cautionary tale to advertisers and publishers that native advertising needs to be mindful of both applicable laws and consumer expectations of the brand or publication. Since this time, the American Society of Magazine Editors and the Interactive Advertising Bureau both have issued guidelines on the use of native advertising.

The Federal Trade Commission (FTC) has begun to focus on native advertising as well. The FTC sent letters to the major search engines stating that they should delineate between search results that are paid placements and search results that are organic through the use of clear and conspicuous disclosures. In December, the FTC held a workshop on native advertising that facilitated industry, academic and government experts in a discussion over what level of disclosure the FTC should demand from advertisers and publishers that engage in native advertising practices. Although the FTC may issue further guidance, it likely also will continue to monitor native advertising through enforcement of Section 5 of the FTC Act for any unfair or deceptive acts or practices in or affecting commerce.

Looking Ahead to 2014:

Issues likely to dominate include:

• Agencies and advertisers typically bear the burden of responsibility for ensuring any content (including native advertising content) does not infringe third party intellectual property or other rights, so campaigns should be reviewed closely.
• Agencies and advertisers should ensure that any native advertising includes proper disclosures in accordance with current FTC regulations and its history of enforcement, including by placing a disclosure obligation in contracts with publishers and media.
• Media companies and publishers should tread carefully when taking on native advertising to make sure content is consistent with what the audience expects and consistent with their or their advertisers’ core brand messaging.