Native advertising has been the subject of increased attention since the Federal Trade Commission (“FTC”) issued its native ad guidelines several months ago. The FTC has held that it is absolutely essential for advertisers to distinguish between advertising messages and editorial ones so consumers are able to easily identify advertisements when they are in non-traditional formats. Yet, many advertisers and influencers, alike, have been extremely lax in their application of such legally binding rules.
On the heels of the Lord & Taylor decision by the FTC, the National Advertising Division (“NAD”) of the Council of Better Business Bureaus has issued a ruling against People Magazine and fashion site, Joyus that stands to have a significant impact on fashion publications (and their websites) and advertisers, alike.
According to NAD’s recent decision, People Magazine and Joyus – an e-commerce platform that embeds various lifestyle products into the content of other sites, including People’s – blurred the line between editorial content and advertising in a way that may prove confusing for consumers. The embedded advertising in question was featured in the "Style Watch" section of People’s website, in a regular feature, entitled, "Stuff We Love.” The section contains a list of items for sale through the Joyus platform and amounts to native advertising (a form of paid media where the ad experience replicates the natural form and function of the website/section in which it is placed). Along with the description of products, consumers can watch videos, which are produced jointly by Joyus and People Magazine and that promote the products for sale.
Joyus argued that because its logo is constantly displayed throughout the videos, such content would be easily identifiable to consumers as sponsored/commercial content. NAD agreed that while the Joyus videos themselves do contain visual and audio cues that make it clear that consumers are viewing a shopping video advertisement, the webpages and links that consumers see before the viewing the videos do not contain sufficient disclosures. It held that consumers very well may view the products (as well as their descriptions and corresponding links) in the "Stuff We Love” section with the expectation that it represents independent editorial selections by People Magazine editors and staff, and not as paid-for advertising.
In particular, NAD held that the "Style Watch" page that links to the "Stuff We Love" page did not disclose that the "Stuff We Love" feature is a paid-for partnership between People Magazine and Joyus, and recommended that Joyus and People Magazine both take steps to revise the presentation of the links to ensure that it is clear that by clicking on the "Stuff We Love" link, a consumer will be taken to a list of items for sale by Joyus.
This is likely just one of many similar decisions to follow in the coming months, particularly as NAD and the FTC increasingly turn their focus to the deceptive ways of advertising and influencers.