As publishers increasingly rely on more modern methods of native advertising – that is, ads designed to look and feel similar to a platform’s editorial content – as a source of revenue, the FTC has taken steps to clarify when native advertising may cross the line and become deceptive to consumers. Recently, the FTC published two documents that address the Commission’s position on the use of native advertising – an Enforcement and Policy Statement on Deceptively Formatted Advertisements (“Policy Statement”) and a business guide entitled Native Advertising: A Guide for Business (“Business Guide”). Under the Policy Statement, advertising that misleads consumers in a material respect, including with regard to its commercial nature, is deceptive under section 5 of the FTC Act. Under FTC law, advertisers cannot use “deceptive door openers” to induce consumers to view advertising content. Thus, advertisers are responsible for ensuring that native ads are identifiable as advertising (typically, through some sort of disclosure) before consumers arrive at the main advertising page. In addition, no matter how consumers arrive at advertising content, it must not mislead them about its commercial nature.

In its Business Guide, the FTC offers 17 specific examples that seek to touch upon many of the most common forms of natively formatted advertising. The most notable takeaways from those examples are set forth below:

  1. Is it a native ad? In assessing whether the content in question is a native ad, consider whether it is commercial in nature and serves the purpose of advertising or promoting a product or service.
  2. Is the native ad distinguishable to consumers?  In assessing whether a native ad is distinguishable as advertising to consumers, consider the ad as a whole. Factors to consider include an ad’s overall appearance; the similarity of its written, spoken, or visual style or subject matter to non-advertising content on the publisher site on which it appears; and the degree to which it is distinguishable from other content on the publisher site.
    1. Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure.
    2. In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising.
  3. Is the native ad deceptive? The native ad is deceptive if it conveys to consumers expressly or by implication that the content is independent, impartial, or from a source other than the sponsoring advertiser – in other words, that the content is something other than an ad (e.g., editorial content) and is likely to affect consumers’ choices or conduct regarding an advertised product (i.e., materiality). In this case, a disclosure is required to avoid deception.
  4. What is an adequate disclosure? A disclosure that the content is an ad must be clear and prominent. The location and frequency of the disclosure depends on the context of the native ad. As a general rule, disclosures must appear wherever it is necessary to inform consumers of the commercial nature of an ad.
    1. Because consumers can navigate to the advertising without first going to the publisher site, a disclosure just on the publisher’s site may not be sufficient. In this instance, disclosures are needed on both the publisher’s site and the click-into site on which the complete ad appears.
    2. In other instances, however, disclosures may only be required on the click-into site. For example, if an advertiser’s photo is featured in an editorial article and is not deemed commercial in nature, but the featured photo links to the advertising that is commercial in nature, then a clear and prominent disclosure of the photo’s paid nature on the click-into site is likely necessary.
  5. What about alternative forms of advertising? The same principles of transparency and disclosure apply to alternative forms of advertising, such as in news feeds, content recommendation widgets, social media, viral videos, emails, non-paid search engine results and integrated content (e.g., entertainment programming and video games).
    1. For example, a paid-for billboard ad promoting real-life products featured in a virtual video game is a native ad. Although no disclosure may be necessary because consumers are likely to attribute the ads to the sponsoring advertisers, the sponsoring advertisers would still be liable for any deceptive product claims on the billboards.
    2. If a mobile app game features a clickable item in the course of the game that takes the consumer out of the game and into an advertiser’s branded game app, a clear and prominent disclosure informing consumers of the icon’s commercial nature is necessary before they click on it.