By Ann Ford, James Stewart and Naomi Abraham (Washington D.C.)

Native advertising, which is an advertisement that follows the natural function and form of the user experience in which it is placed, has captured the attention of the US Federal Trade Commission (FTC) and marketers alike for its ability to blur the lines between editorial and commercial content.

Native advertising is paid media fashioned to mimic the look and feel of the news reports, feature stories, product and entertainment reviews, and other material on the online platform where it is placed.  As consumers become increasingly adept at avoiding advertisements online, native advertising offers marketers an engaging, effective and flexible way to reach them.

The FTC considers advertising content that could mislead consumers about its commercial nature or its source to be deceptive.  Native advertising’s flexibility and its insertion alongside editorial content makes it more difficult for consumers to recognize the advertising message within the content.  As a result of the popularity of native advertising among marketers, it has become an increasingly popular enforcement target for the FTC.

Here are five tips for in-house counsel to consider when reviewing native advertising for FTC compliance:

  • Is the format misleading? Consider the overall appearance of the advertisement and the similarity of its written or visual style to the content on the site where it will be published.  If unrecognizable as an advertisement, it may be misleading.
  • Would a reasonable consumer recognize the content as an advertisement? Even if the advertisement could mislead a significant minority of consumers, further revisions to clarify the nature of the content may be required.
  • Who is the target audience? An ad may be recognizable as such by one group of consumers, but may be indistinguishable from editorial content to another – consider the impact of the format on the particular target group.
  • Simple, conspicuous disclosures. Use simple terms to disclose that the content is an advertisement to ensure that consumers will understand. Whether the disclosure is conspicuous will vary depending on the type of content and will be judged on a reasonableness standard.
  • Ask for a second opinion. Seek a second review from colleagues or outside counsel.

Advertisements must be identifiable as such by consumers to avoid being classified as misleading.  An advertisement should not sell to consumers without their awareness that the message contained in the content is commercial in nature.  If there is a reasonable possibility that consumers may interact with the native advertising content without understanding the commercial nature of its message, the advertisement should be revised to clarify that it is an advertisement and not impartial or independent.