Moderator: Mary K. Engle, Associate Director, Division of Advertising Practices, FTC
Examples of native ads: “sponsored” story, labeled as such in gray at the top of the headline, in the middle of news stories; story is that American eyesight is worse than you think; is it attributable to mobile devices? Advertiser is FourEyes, eyewear provider.
When you click you get the story:
Sid Holt, Chief Executive, American Society of Magazine Editors
If it’s not from the publisher, it should be disclosed. Journalistic ethics: who’s talking here? Good manners: someone talking to you should identify themselves before you buy.
Laura Brett, Staff Attorney, National Advertising Division of the Council of Better Business Bureaus
Depends on whether it leaves you with any impression of advertiser’s products or services. Content determines whether it needs disclosure.
Amy Ralph Mudge, Partner, Venable LLP
Agrees: you have to look at whether it’s about a specific product, otherwise §5 isn’t implicated.
Engle: suppose the article had nothing to do with eyewear and was about the natural wonders of the world. In that situation, would the eyewear manufacturer need to disclose?
Jon Steinberg, President and Chief Operating Officer, BuzzFeed Inc.
They wouldn’t get any benefit if they didn’t identify themselves. Brands can sometimes post content but they should ID themselves. Wants more than that the placement is paid—wants disclosure of who’s behind the content. There may not be a media relationship but there should be a statement of whose voice is being expressed.
Mike Zaneis, Senior Vice President, Public Policy and General Counsel, Interactive Advertising Bureau
Heart of FTC’s jurisdiction: this is a dynamic area. Is this an ad? That’s a legal issue, not a one size fits all notification requirement. We can all agree that the disclosure on the first page is really good. (We can’t. Interested parties can consult the slides.)
Holt: I don’t think this is good at all. I don’t know what sponsored means, who sponsored it, where it came from. Needs to be clear it’s advertising, who created the content, who paid for it.
Mudge: if it’s not about a product characteristic, no §5 problem.
Robert Weissman, President, Public Citizen
The first thing that consumers need to know is who produced this? They should know it’s not there because of the independent editorial judgment of the publisher.
Robin Riddle, Global Publisher of WSJ Custom Content Studios, The Wall Street Journal
Consumers’ trust is from trust in our editorial decisions. Once you can buy a place in our environment, that’s a completely different decision, even if legally it’s not a requirement. If you start asking “is it benefiting the brand?” that’s subjective. It’s there as the direct result of a commercial relationship.
Engle: suppose it doesn’t mention the brand but does advocate attention to eyewear?
Mudge: yes, that’s an ad.
Brett: NAD agrees. Even if it were fashion eyewear for fall, they’d need to disclose sponsorship.
Mudge: NAD said sponsorship disclosure was appropriate where advertiser was identifying other cool stuff like its product—she thinks that’s on the line. We’re here to talk about the FTC’s proper role—have to ask whether there’s a consumer protection harm in any of these scenarios.
Engle: publishers may have ethical reasons to disclose when the law doesn’t require.
What about when the publisher runs an article about problems with competitor’s technology?
Mudge: that’s an ad!
Steinberg: distinguish between an ad and where the content is from. Lots of places brands can post without paying—e.g., Tumblr. Competitor should have a byline, but wouldn’t necessarily call that an ad because they may be doing that without paid media. (Talking past each other just a tiny bit. Under the law, it’s still “advertising” because of the economic benefit to the speaker, but the website host isn’t responsible for it the way the NYT would be for stuff it published!)
Brett: if editor creates content without consultation then seeks sponsorship for it, that’s ordinary.
Weissman: if they wouldn’t run the article absent payment, then it’s an ad.
Brett: her view would change if they mentioned the sponsor of the article in the article—but if the article’s already written and they seek a sponsor.
Holt: very dangerous to suggest that there should be a market for specific articles to be run if paid for.
Brett: we look at it from consumer deception viewpoint: we’d look to whether consumers were confused about the independence of the article.
Mudge: should come down to content of the article. Not necessarily dispositive how much/when advertiser participated—the question is whether consumers are deceived. Brand will want some control of editorial content; if the journalist gets it wrong, the brand wouldn’t want to be associated with that.
Weissman: if the advertiser has that kind of authority, shouldn’t consumers have reason to know about it?
Mudge: §5 disclosure obligation is different from whether consumers are interested.
Mudge: §5 disclosure obligation is different from whether consumers are interested.
Engle: suppose WP reviews a new car and the reviewer loves it. The manufacturer wants to disseminate that far and wide.
Steinberg: as long as the payment of the ad placement is disclosed, I think that’s fine. This is an overarching question about labeling and whether or not the media is paid. You can sometimes see ads for products/movies where an actor/actress is interviewed in a subsequent TV segment. Why focus on online when this is a global labeling issue?
Zaneis: picks up on point that NYT reviewer doesn’t have to disclose that she gets books free, but blogger may have to.
Engle: defends FTC position.
Mudge: if 5 Guys wants to amplify a positive review that some random person gave them, doesn’t think they have to always disclose that it’s a 5 Guys ad—always have to disclose if there’s a material connection between them and the reviewer.
Weissman: but if it appears on the front page of the WSJ not because the WSJ decided to put it there, but because 5 Guys paid for it to be there, then you should know that someone paid to post it.
Riddle: that’s where the relationship changes and it becomes commercial.
Engle: how about best practices when disclosure is desired?
Brett: contextual. Thought that “sponsored by” denotes placement, though see last panel; “promoted by” or “you may also like” are less clear.
Zaneis: “promoted” works on Twitter; shading and other indications work. May not work on different platform. (Okay, why are we asking these people, who while talented, intelligent and experienced clearly are not well positioned to answer “what actually works” as opposed to “what seems reasonable to me from my position”?)
Weissman: people in this room may know, but we are not a representative sample.
Steinberg: sometimes it’s not “sponsored”—they’re actually creating the content. There needs to be a statement, but sponsored is the wrong English word.
Riddle: sponsored is a term we reserve for when the brand hasn’t had editorial input—they just paid for it. Where they had input, we call it sponsor-generated, and we feel that more clearly represents that sponsor’s involvement. Byline: WSJ Custom Content Studios for Brand [X].
Steinberg: we use brand logo, “presented by.” We want people to know that it’s coming from the brand, create “lift” before they consume the content.
Engle: why not use the term “advertisement” or “commercial advertisement”?
Mudge: if it’s talking about the brand it’s an ad, but it’s not necessarily an ad—see the four wonders of the world isn’t an ad for FourEyes—struggled with this in the context of sponsored tweets. Sometimes this is an ad, and sometimes it’s content.
Holt: look, if it’s paid media, it’s an ad. The key isn’t the language/nature of the label, though it would be great if all words meant the same thing across publications. But the key is special signalling. There are reasons why people don’t use ad/advertisement—disruptive to reader experience from marketer perspective. You can use any word you want as long as you explain it (e.g., roll over).
Weissman: Disruptive cuts both ways. Understands why advertiser doesn’t want that, but another way to understand that is that the consumer actually received the message “this is an ad.” Consumer interest in knowing that is the disruption.
Zaneis: one label assumes a well-curated site, which isn’t necessarily the case. One size fits all works really well for consumers, but then consumers grow blind to it.
Holt: my understanding of native ads is that the intention is to not disrupt the reader experience with ads.
Zaneis: it’s to be part of the experience—to engage the consumer as the content engages them.
Steinberg: these products arose because they create a better experience—consumers complain lots more about “welcome” screens than they do about other ads. When you have an ethical publisher, the consumer sees what it is, and if they like it they click and share. This works better for the advertiser and the consumer; needs to be clearly labeled, but solves a problem of a broken ad economy.
Engle: how important is ID at the headline level versus disclosure once you’ve already clicked?
Brett: deceptive door-opening. If you need to label, you need to tell consumers that they’re headed to ad content.
Riddle: if there as a result of commercial relationship, it should be called out.
Mudge: there’s a difference between clicking on something and having someone enter your home. The consumer harm is less.
Engle: If consumers don’t know it’s an ad they won’t necessarily look for the signals that it is an ad once they arrive.
Holt: we can only provide the information; we can’t make them consume it.
Brett: we need to safeguard that the disclosure is clear and conspicuous; not our issue if consumers disregard it or don’t care.
Steinberg: if a brand creates content that’s clearly labeled, and the consumer gets there through paid placement or whatever, and the consumer chooses to share that, that’s not a paid action so that shouldn’t need to be labeled paid. Needs to be clear that Coca Cola is the creator, but it’s not a paid media relationship. FB won’t allow publishers to put in the name of a brand when content is shared out; we would gladly do that with our content shared onto FB if that were allowed.
Riddle: I make an editorial decision when I share the Five Guys review. We’re editors of our own social media channels. We have to think about our own brands. If we care about people in our communities and want to remain credible, we think about what we want to share. Should we be paid? Maybe, but in this instance it’s organic decision, so that doesn’t need to be disclosed.
Engle: suggests that’s important for original content to be labeled in a way that carries through. So that recipients know the source.
Holt: all they need to know is that it came from their friend.
Weissman: if it ultimately came from Coke, you should know that.
Engle: if the advertiser pays for placement in the Post Gazette, what should happen when it’s shared?
Zaneis: the original publisher doesn’t have control over how it’s shared; we all use link shorteners when we tweet. There’s no mechanism, and a different relationship with the consumer—probably comes from the friends.
Mudge: if my mom wants to share the article with me, when I go back to the article, I can see it comes from Four Eyes. If it’s a dancing cat video holding a can of Coke, that’s product placement. We have clear guidance on that: not all product placements require disclosure.
Holt: again, that’s something to take up with your friend sharing cat dancing videos.
Weissman: if Coke produced the dancing cat video, maybe the tweet doesn’t have to tell you, but when you get there you need to be told.
Mudge: but we don’t need to disclose product placement on TV. (Again, a bit of talking past—might depend on whether it’s actually full-on paid for by Coke, or they just gave free product.)
Steinberg: if I get my ideas about what’s a good car from TV ads, I don’t have to disclose that when I tell my friends.
Engle: Another example: content from around the web:
Brett: disclosure that some content is sponsored is hard to read; placed in places consumers aren’t likely to look. Goes to clear and conspicuous.
Zaneis: looks fine to him! If there’s a sponsored link in the gray box that’s ok.
Weissman: those disclosures are awful, almost unidentifiable unless you’re in the business of knowing that these things are ads. The “what is this?” statement is unhelpful in the extreme.
Riddle: we look for graceful transparency—not telling people not to read it, but clearly calling it out.
Brett: if it’s on “most read” the question arises whether it’s actually there because it’s most read or because someone paid for it.
Holt: if it’s not really most read, then disclosure is substandard just from the consumer’s perspective.
Engle: if it’s under the most read heading, it ought to be most read, agree?
Mudge: not going to disagree, but Bureau of Economics would say that the market will take care of this. Trust is important, and don’t want to make consumers suspicious. This wouldn’t happen. (Buh? How are consumers supposed to verify whether that was really “most read”?)
Steinberg: sites that did popunders and installed toolbars are no longer around; the market worked.
Engle: please note that the FTC took action there as well, not just the market.
Mudge: keep eyes on the prize—can’t have too many disclosures. If one of the pieces in a column will take me to sponsored content, I’ll find that out when I’m there; don’t muddle the page.
Weissman: then you’ve got too many ads on the page. How does your responsibility change because you’ve got a lot of ads on the page?
Mudge: consider what you can do clearly and conspicuously.
Weissman: but if you need to disclose if you’re doing X, that’s a constraint. If you say you’re recommending it but don’t disclose your paid relationship, that’s deceptive.
Mudge: not anti disclosure but we need to think clearly. Too much disclosure can muddle. Balancing disclosure and native feel. Users should be comfortable.
Zaneis: some content is labeled as advertising. If you have an unlabeled ad next to it, that’s not a hard question.
Engle: the question of mobile. “Powered by TotSmart”—what does that banner mean?
Panelists thought that the links below that wouldn’t be TotSmart-paid/generated content. Confusing if it was. What can be done?
If the article below the banner is custom content for TotSmart, but other articles aren’t: Riddle says put visual cues, clearly demarcated area; “sponsor-generated content”; byline should be clear that it’s written for TotSmart.
Steinberg: you really need two indications: disclosure that advertiser is behind the section on the website; they need a disclosure that the content in a specific article is sponsored by TotSmart
Engle: what about when some of the articles have nothing to do with TotSmart?
Steinberg: if TotSmart is sponsoring a section of the website, they should have to label the native ad—the part of the content they’re responsible for. Otherwise it’s just a sponsorship. (Note here the use of “sponsor” in a way completely different than you see on many sites.)
Mudge: when it’s about their product.
Q: two separate discussions—whether something is advertising and who it’s from. In print media/TV, I know when something is advertising even if I don’t know who’s doing the advertising. Why should it be any different in the online space?
Brett: again, depends on what the content is. If it’s “help your child learn to read” and you’re recommending your own product, consumers need to know that to understand the context of the recommendation. Conflicts come because article may discuss more product attributes than a 15-second commercial.
Q: but is there an obligation, regardless of context, to disclose—why isn’t that just a business call?
[because you’re asking people to click, which is different than presenting them with the ad as they turn the page/change the channel.]
Steinberg: it’s a matter of where you are in the cycle. When you turn the TV on, are you watching an ad? There is a type of ad campaign, the teaser, which doesn’t disclose its full source—you just see Tom Cruise twisting in space. We’d love to do those campaigns on Buzzfeed. We think they can be done ethically and legally, but there’s so much confusion now. It’s a hot button for online.
Zaneis: but you can certainly tease out the message.
Steinberg: discussed using “this is a teaser campaign.”
Zaneis: legally speaking, it can’t be the standard that you must label it with the sponsor’s name. (How would labeling it “Warner Bros.” interfere with the tease? Just asking.)
Mudge: ask when the omission of the brand would be material to the consumer. Would be in a disparagement context.
Brett: editorial/publisher’s perspective has an interest in protecting itself different from whether consumers are being misled.
Q from audience: is the publisher potentially liable if the content of the ad is misleading, like an ad agency can be? FTC holds ad agencies liable if they participate in creating/disseminating and knew or should’ve known that it was misleading.
Riddle: we wouldn’t get into the level of detail of endorsing specific products. But we hold custom content to the same standard as news. Completely separate buildings, but we write to the same standard to maintain trust.
Brett: If publisher is acting like an advertiser, we’d want to hold them responsible, but we try not to get into First Amendment issues.
Mudge: the FTC will certainly attempt to hold you liable if the conduct is egregious enough—health claims, curing cancer. Be careful.
Q from audience: where do we go from here? How is the FTC thinking about enforcement?
Engle: we have an open mind.
Jessica Rich, Director, Bureau of Consumer Protection, FTC
These issues aren’t new; the basic concepts have been addressed again and again over the years. But today the interest in native advertising is stronger than ever and we expect billions in revenue shortly. Offer more than traditional internet advertising models; reaches more targeted and tracked audience responses; offers possibilities of realtime interactions; can be shared and seen more places; it gets better real estate; could be more interesting for consumers.