NOVEMBER 2013 , & PROMOTIONS >> ALERT “NATIVE” ADVERTISING GROWS – AND SO DOES THE FTC’S INTEREST The Federal Trade Commission (FTC) will be holding a workshop in December on “native” advertising, highlighting its growth – and the growing amount of attention the FTC may potentially give to the subject.

WHAT IS “NATIVE” ADVERTISING? The terms “Native advertising,” or THE BOTTOM LINE “sponsored content,” are commonly As of now, the fact the FTC is holding a native advertising workshop indicates the FTC used to describe the practice of blending advertisements with news, is learning more about current native advertising practices, although it remains to be entertainment, and other editorial seen what, if any, further guidance or enforcement it may take in this area. Recent content in digital or other media. The NAD developments also show that the methods by which marketers approach native upcoming FTC workshop will “examine advertising need to be considered in light of the current regulatory framework and the the practice” and, in particular, the growing interest in the subject. “blurring” of digital ads with digital content on publishers’ websites and mobile applications. The workshop engine companies declaring that, That initiative came on the heels of the is intended to “explore changes in in recent years, paid or sponsored FTC’s updated “Dot Com Disclosures” how paid messages are presented search results have become less guidance for mobile and other online to consumers, and consumers’ distinguishable as advertising, and advertisers, in which the FTC explained recognition and understanding of these urging the search industry to make how advertisers can make effective, messages.” sure this distinction is clear when clear and conspicuous disclosures displaying advertisements alongside in digital advertising, including on THE FTC’S RECENT INITIATIVES natural search results. all mobile and online devices and platforms that consumers may use The FTC workshop on native The FTC emphasized that failing to to view an ad, to avoid potentially advertising is building on previous clearly and prominently distinguish deceptive practices. FTC initiatives in connection with the sponsored content or links from distinction between advertising and natural search results could be a Of course, these initiatives were not editorial or other organic content. deceptive practice. It pointed out the taken in isolation as they followed need for visual cues, labels, or other decades of law enforcement Recently, for example, the FTC’s display techniques to avoid misleading actions against publishers, including consumer protection staff updated consumers in this regard, and it infomercial producers and operators the agency’s guidelines for the search made recommendations for ensuring of websites that marketed engine industry to emphasize that disclosures commonly used to products. In these actions, the the need to distinguish between identify advertising were noticeable, FTC relied on Section 5 of the FTC paid advertisements and search recognizable, and understandable to Act, under which the omission of results. The FTC sent letters to search consumers. material facts with respect to an

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Attorney Advertising 1410 NOVEMBER 2013

ADVERTISING, MARKETING & PROMOTIONS >> ALERT

advertising claim is deceptive. Further, content with editorial content, since The NAD also emphasized the a longstanding source of guidance the content of the articles was not need in accordance with the FTC in the field, the FTC’s “Guides written to a commercial end and Endorsement Guides to advise paid Concerning the Use of Endorsements never directly addressed or promoted or incentivized contributing bloggers and in Advertising,” was any Snapdragon products. Thus, or reviewers of their own disclosure updated most recently in 2009 and the removing the labeling after the obligations when posting content FTC has enforced the guidance under conclusion of the sponsorship was about eSalon or its products, and Section 5 of the FTC Act on a number not found to be a deceptive practice. advised that eSalon not re-post or of occasions since then. publicize any content that did not Nevertheless, in a more recent case, include the appropriate sponsorship the NAD required an advertiser to disclosures. Finally, the NAD asked RECENT DEVELOPMENTS modify its practices to allow that eSalon discontinue its practice of The National Advertising Division consumers to better differentiate including celebrity images on its home (NAD), an investigative unit of the between sponsored and editorial site and in the sponsored blog posts, advertising industry’s system of self- content. The website in question, to avoid implying that these celebrities regulation, recently reviewed a series eSalon, a hair coloring and style endorsed eSalon or its style tips. of articles that were “sponsored by site for women, also operated an Snapdragon,” a of processor independent blog site titled chip designed for use in cell phones haircolorforwomen.com, which and tablets, and manufactured by provided further style tips and FOR MORE Qualcomm, Inc. and published by promoted eSalon in each post. Joseph J. Lewczak a prominent online news source. Partner The NAD found in this case that the The NAD concluded that the 212.468.4909 removal of sponsorship disclosures articles and posts on the blog site [email protected] by the online news source at required clearer labeling to identify Vejay G. Lalla the conclusion of the term of the to consumers that the content was Partner sponsored by eSalon. The NAD 212.468.4975 sponsorship was proper and that [email protected] these disclosures did not need also recommended that eSalon redesign its social media pages, or the D&G attorney with whom you to remain included as long as the have regular contact. articles were published. The NAD including Pinterest and Facebook, found that the sponsorship was among others, to clearly disclose its closer to the practice of running an sponsorship of the blog site, and to Davis & Gilbert LLP advertisement alongside an article for reiterate this disclosure each time T: 212.468.4800 content from the site was posted 1740 Broadway, New York, NY 10019 a specified period of time, rather than www.dglaw.com the practice of blending sponsored or reblogged via social media. © 2013 Davis & Gilbert LLP