The video game market is growing every year. With indie developers able to publish their games on Steam or in mobile, the volume of games available to gamers is skyrocketing. This can make it hard for gamers to find your game.

Many video game developers and publishers frequently turn to "native advertising" to drive gamers to their video games. Native advertising is content delivered to consumers in-stream or as a more organic part of the user experience. Well-known early types of native advertising include magazine “advertorials†and infomercials. Native advertising can also be used to develop an in-game revenue stream. For anyone looking to use native advertising to drive traffic or revenue, there are some choices that can make the experience better for you and your gamer.

As with all advertising, there is a line to walk between clever, creative, and effective advertising and deceptive advertising. Native advertising is not immune from government actions against deceptive advertising, and according to the Federal Trade Commission (FTC), the federal watchdog tasked with protecting consumer interests against deceptive advertising, an advertisement can be deceptive if the consumer does not know it is an advertisement.

This article provides FTC guidance on native advertising, including when content needs to be identified as advertising and how to make appropriate disclosures, in the context of some of the more common uses of native advertising by video game companies. We also discuss certain third-party intellectual property considerations in connection with native advertising.

DRIVING TRAFFIC TO YOUR GAME ONLINE OR IN MOBILE

Native advertising may be taking on new forms with the advent of new technology, but the FTC's position is that it is nothing novel as far as the applicable legal analysis is concerned. The FTC has been addressing advertising that does not look like advertising since 1968, when a misleadingly sponsored restaurant review appeared in a newspaper. The FTC's current guidance on how to prevent consumer confusion is rooted in this long history. The basic question is whether the act or practice is likely to affect the consumer’s conduct or decision with regard to a product or service. The same principles undergird the FTC's view of native advertising.

In December 2015, the FTC issued an Enforcement Policy Statement on Deceptively Formatted Advertisements ("Enforcement Statement") specifically addressing native advertising, together with an informative guide called Native Advertising: A Guide for Businesses ("Business Guide") to help businesses understand the FTC's position and comply with its requirements. The Enforcement Statement and the Business Guide remind advertisers that, as in the past, advertisements must be clearly recognized as such by consumers and that any necessary disclosure identifying content as "advertising" must be made at the outset rather than later. Therefore, before clicking on a link or tapping on a tablet, consumers must know that they are accessing an advertisement.

With regard to its guidance on native advertising, the FTC also specifically addressed influencer marketing in digital media (i.e., a form of marketing that utilizes key individuals with influence over a particular demographic, such as individuals with a large social media following), and the advertiser’s (and influencers') obligations in engaging in such marketing to avoid deceptive advertising. In The FTC's Endorsement Guides: What People Are Asking ("Endorsement FAQs"), published in May 2015 and which answers a number of frequently asked questions related to the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising ("Endorsement Guides"), the FTC emphatically outlines the need for clear disclosure of any paid or other material relationship between the influencer and the advertiser.

Of course, in today's marketing world, there are a myriad of ways to design and deliver advertising. Technology affords so many new and different ways to interact with and connect to your target audience – gamers. Creative advertising, however, does not insulate you from the basic truth-in-advertising principle that you cannot mislead consumers about the commercial nature of content. Advertising content that rivals purely editorial content (i.e., content with no advertising message or editorial involvement from an advertiser) in entertainment value is considered "advertising" that requires disclosure of the commercial nature, if such content contains a product claim or a promotional message.

Such a distinction may be particularly difficult to make when the product that is being promoted is a video game. When the content you use to drive traffic or sale is a video of a well-known gamer whom you pay to play your game, the FTC will take the position (and has done so through an enforcement action against Machinima in March 2016) that such content is advertising that requires disclosure.

When determining whether an advertisement is clearly recognizable as such, the FTC will look to the overall impression conveyed by the material, including images and the interaction of all of the advertisement’s elements. The FTC will also evaluate the net impression of the advertisement from the perspective of reasonable members of its target audience.

Social Media

If you are using or thinking about using a social media campaign to drive traffic to your game, you need to be aware of the FTC's recommendations on required disclosure in social media to avoid a claim of deceptive advertising. If you're using influencers to promote your game through content that such gamers produce in social media, it is important that such content includes an explicit disclosure that the video is advertising or the nature of the incentive that the gamer was given to produce and disseminate such content (e.g., free product, payment).

Some sponsored content may not need to be explicitly disclosed when users will know, based on their customary use of the social media, that the content is sponsored. One example is a video sourced from a vendor that a user does not follow that shows up in that user’s regular feed. It is more likely that some sort of disclosure is required.

When content is not obviously sponsored, a disclosure will need to be made. For instance, if a video is sponsored, the game publisher sponsoring the video must ensure that when that video is posted by the gamer to social media, it includes a disclosure of the sponsorship. In the Business Guide, the FTC explains that "[a]dvertisers should ensure that the format of any link for posting in social media does not mislead consumers about its commercial nature." This is a sticky issue that the best-intentioned companies are still mired in.

Your Own Repurposing and Reuse

A cousin to social media, generally, is determining when and how you can repurpose or reuse content on social media. This may prove to be your most successful form of driving traffic to your game – a fan loves your game and organically posts a video online showing their gameplay that you now want to reuse on your own Twitter account, for example. Can you?

The FTC has also provided several examples involving the repurposing of content. In the first example, an advertiser wants to republish an independent favorable review. Because the advertiser did not solicit the review, the review itself does not need to be labeled as an ad, but its placement by the advertiser in other third-party media is an ad and should be disclosed.

Similarly, advertisers sometimes want content to appear in a consumer’s social media feeds. If the link appears in a manner that is not typical for an advertisement (e.g., if it looks like a user’s friend has just posted a link to an article in a magazine), then you must be certain that the reposting conveys that the link will take the user to advertising content. The same advice holds true if the article can be found through nonpaid search engine results.

IN-GAME ADVERTISING

An issue that is separate from driving traffic to your game is using in-game advertising to generate revenue. A common format in mobile, for example, is to serve sponsored videos that reward the player with in-game currency or tokens after watching. Problems can arise when the integration of the advertising and the game is so clever that the consumer has no idea that he or she is viewing marketing material.

The trick is still the same: making sure that consumers understand when they are seeing an advertisement in the context of that game and the specific advertising. Thus, in-game native advertising will sometimes, but not always, require a disclosure to a consumer that there is an advertisement. Whether disclosure is required will turn on the user experience. For example, games directed at children likely require different disclosures than games directed at adults.

The FTC has explained that disclosure is not required if the game format is a virtual world that incorporates traditional advertising, such as billboards, into that virtual world. If the billboards in that virtual world advertise actual products, consumers are likely to know that the virtual billboard represents an actual advertisement.

Similarly, if in that same virtual world the characters use representations of actual products (such as sunglasses, hats, drinks, etc.) or patronize representations of actual restaurants, gamers will understand that the real brand paid to be featured in that way in the game.

On the other hand, disclosures will be required if, in that same virtual world, a gamer interacts with one of the actual products and is then taken outside of the game to the actual brand website. The game needs to inform the gamer, before he or she is taken outside of the game, about what is about to happen and why. Depending on how this is deployed, context may be enough.

As games continue to evolve, we can expect the rules about whether and when to disclose an advertisement to evolve as well. For instance, it can be expected that for some augmented reality games, brands will pay to have the geolocation feature in the game take the gamer to the brand’s physical storefront to complete certain tasks. If brands are paying games to direct consumers to these physical stores, we can expect some debate over whether and how games must disclose the relationship between the brand, the game, and the consumer.

Right now, the majority of gameplay is not virtual reality. That may change. VR will offer different, even more immersive ways to advertise to gamers. Disclosures may be audible or sensory, and not just (or, perhaps, at all) visual. The rule of thumb will remain the same – make sure your gamers know when they are seeing advertising.

Thus, there is not necessarily any one-size-fits-all approach to successfully implementing native advertising into a video game. The key is context – within the context of a specific game consumers should know when they are viewing an advertisement.

THIRD-PARTY INTELLECTUAL PROPERTY CONSIDERATIONS

It is important to remember that compliance with FTC guidelines does not mean you have the right to repurpose content for advertising or make in-game advertisements. To continue with the previous example, if a fan loves your game and organically posts a video online showing their gameplay, you do not necessarily have the right to use the video. The fan probably has a copyright in the video even though it features your game, and it cannot be reproduced without his or her permission. Likewise, there could be rights of publicity involved in the video if it includes identifiable personal elements, like a person’s name or likeness. While it seems logical that a fan would not be bothered by the use of his or her video for promotion of the game, and should even be flattered by it, that is not always the case. Likewise, the fan who posted the video may not have permission from any others who appear in the video. If you want to repurpose content, the best practice is to reach out to the maker of the video for permission to use it and to confirm permission in writing.

Similarly, if a game includes in-game advertisements, they should be used only with permission from the company that is being advertised. Most companies own a trademark in their name and/or logo. Accordingly, they cannot be used for commercial purposes, or in some circumstances for any purpose, without permission of the trademark holder. Any trademark holder has an obligation to enforce its trademarks or run the risk that the trademarks will be weakened. Accordingly, while it may seem like an in-game advertisement that may increase sales of a product is only benefiting the company that owns the trademark, that will not necessarily prevent them from enforcing their rights against video game creators and owners. Here, too, the best practice is to obtain permission before including in-game advertisements.

CONCLUSION

Native advertising is not new, although current modes of delivery may be. The rules are evolving and adapting to new media as we learn more about how consumers view native advertising and what they understand about disclosures. As the video game industry encounters more opportunities to use native advertising, the lines may become clearer. But as long as technology stays ahead of the law, video game companies will need to continue to rely on the decades-old principle that they should not mislead their consumers, and context is everything.