Advertising Law Alerts

January 31st, 2014

In Newest Native Advertising Case, NAD tells Shape Magazine to Shape Up!

A recent decision from the National Advertising Division of the Better Business Bureau ("NAD") highlights the increasing interest in native advertising by regulatory and self-regulatory bodies. As the Interactive Advertising Bureau noted in its recently released Native Advertising Playbook, native advertising is hard to define because it can take many different forms, and the main questions it poses - how publishers and advertisers should distinguish between "purely editorial" and "sponsored content" and whether consumers attach different significance to the two - are far from settled.

As part of its routine monitoring program, NAD opened its most recent native advertising case based on its concern that SHAPE Magazine, known for providing information related to health and fitness, had potentially confused readers by blurring the lines between its editorial content and content designed to promote its own products. American Media, Inc. (Shape water Boosters), Case #5665, NAD/CARU Case Reports (December 2013). SHAPE, in recent months, introduced its own SHAPE-branded consumer products, including Water Boosters. In an issue of SHAPE magazine, which included news articles reporting on developments in health and fitness technologies, SHAPE included an article under the caption "News" that discussed the importance of staying hydrated and recommended the Water Boosters product. NAD concluded that SHAPE should "clearly and conspicuously designate content as advertising when it advertises SHAPE-branded products."

The SHAPE case is the latest in a series of NAD cases on the practice of native advertising. As we recently reported, the first of such cases was Qualcomm, Inc. (Snapdragon Processors), NAD Case Reports, Case #5633 (September 2013), in which NAD determined that consumers have a right to know who authors "sponsored content." The second NAD native advertising case involved eSalon, a manufacturer of custom hair coloring products, and a website that they hosted called haircolorforwomen.com. eSalon (Custom Formulated Hair Color), Case #5645, NAD/CARU Case Reports (October 2013). NAD discovered that the haircolorforwomen.com website was an eSalon-branded website, but featured articles and blog posts that looked like content submitted directly by consumers and/or unbiased third parties. NAD required eSalon to clearly disclose that haircolorforwomen.com was an eSalon-controlled site that featured branded content, and also recommended that eSalon disclose its connection to haircolorforwomen.com on its social media pages.

While we wait to see whether the FTC will take action on native advertising, it seems clear that self-regulatory bodies like NAD are closely monitoring and bringing cases on the practice. And of course, there could be FTC enforcement actions based on existing law. Advertisers and agencies that use native advertising formats should, again, take note of regulators' interest in ensuring that consumers are aware of the origin of digital content that they read and whether such content is a paid placement.

If you have any questions about Native Advertising, or about any other advertising law issues, please contact Terri Seligman at (212) 826 5580 or tseligman@fkks.com, Hannah Taylor at (212) 705 4849 or htaylor@fkks.com, or any other member of the Frankfurt Kurnit Advertising, Marketing and Public Relations Group.