“Native advertising” has become popular with advertisers and publishers, but it has raised concerns by the Federal Trade Commission and NAD, the advertising self-regulatory organization, and spawned lawsuits by content owners and persons referenced or depicted. It is important to understand the legal issues and risks before jumping on the bandwagon.

There are many definitions of native advertising. Essentially, it is content items paid for by an advertiser that relate to the brand or products or services and, as the Internet Advertising Bureau (IAB) puts it, “are so cohesive with the page content, assimilated into the design, and consistent with the platform behavior that the viewer simply feels that they belong.” For advertisers, there are two key issues of concern: (1) will the sponsored content be treated under advertising and consumer protection law, or advertising self-regulatory programs, as misleading or deceptive; and (2) is there uncleared content in the sponsored content (e.g., a reference to or picture of a celebrity) that, while protected by the First Amendment if true editorial speech, could be the basis of a right of publicity, false endorsement or intellectual property infringement claim by persons who are depicted or described or whose works are reproduced if the content is deemed commercial.

With respect to the issue of legal and self-regulatory compliance, a threshold question is whether the sponsored content is an advertisement. That is, does it make any product or services claims related to the advertiser or its competitors, or otherwise advertise, market or promote the advertiser or its products or services? If so, applicable law and self-regulatory rules require that consumers be made aware that the content is an ad by the advertiser, and is not objective editorial or consumer-generated content. This is so that the reader can properly evaluate the objectivity of the author or speaker. As the IAB has stated in its December 2013 Native Advertising Playbook’s disclosure principles, “Regardless of context, a reasonable consumer should be able to distinguish between what is paid advertising vs. what is publisher content.” In addition, federal law provides that “Whoever, being an editor or publisher, prints in a publication entered as second class mail, editorial or other reading matter for which he has been paid or promised a valuable consideration, without plainly marking the same ‘advertisement’ shall be fined under this title.” This provision on its face goes beyond content that is clearly an ad, but also content for which payment was made for publication. Although not a self-regulatory body in the true sense as is the National Advertising Division of the Advertising Self-Regulatory Council (which has brought several recent actions for blurring of ads and editorial), the American Society of Magazine Editors and Publishers has ethical guidelines that seek to draw clear and bright lines between truly objective and non-influenced editorial content and ads and sponsored content.

The second issue has to do with claims that the content infringes the rights of a person or other rights holder that is depicted or discussed, or whose intellectual property is reproduced. If the content were purely editorial, the publisher would have certain rights of fair use and free speech under the First Amendment and intellectual property law. These protections do not apply with anything close to the same vigor for commercial speech. Accordingly, content that is sponsored by an advertiser, even if it is of an editorial nature and does not make product or service claims or promote the sponsor or its products or services, is subject to claims that it is commercial speech and that the association with the sponsor creates a false endorsement, infringes on rights of privacy and publicity, and is an impermissible use of unlicensed third-party intellectual property. There are many, many cases parsing the lines. Frequently, the sponsor loses. Accordingly, it is recommended that if content is not purely editorial, without sponsor influence and branding, and is not presented in a manner that is clearly distinguishable from sponsored content or ads, all the rights related to the elements of that content should be licensed as if they were an ad.

Recommendations

  • Stay mindful of IAB and ASMP guidelines.
  • Clear all elements of content that includes, references, mentions or promotes a brand or its products or services explicitly or implicitly.
  • If there is true editorial content for which fair use and free speech will be relied upon rather than clearing all elements, then any sponsored content, even if such would not rise to the level of an ad, should be clearly separated from the editorial content and identified as sponsor-related. How this is done is a matter of risk tolerance and management.
  • As detailed in the IAB Native Advertising Playbook, there is no industry standard for disclosure language. However, to the extent disclosure notices are used, it is recommended that you use language that clearly and accurately conveys the relationship and the nature of the content. For instance, using “brought to you by” or “made possible by” conveys the message that the sponsor merely provided financial support, whereas “advertisement,” “ad,” “sponsor message” and “sponsored content” suggest much more brand involvement. “sponsored by,” “suggested post,” “feature partner” and similarly ambiguous terms are somewhere in between, and should be used with caution.
  • Minimize advertiser and sponsor input and involvement with editorial content.
  • Consult legal counsel knowledgeable on these issues on how to present and identify all native advertising and content that has any sponsor relationship.