AdsbygravityIn two decisions issued last week, major native advertising players Gravity and Outbrain were found to have failed to comply with the online advertising industry’s self-regulatory principles for interest-based ads. The decisions, issued by the Better Business Bureau’s Online Interest-Based Advertising Accountability Program (OIBAAP), are the first to address whether native advertising targeted toward consumers’ interests must comply with the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising (the “Principles”). These decisions follow the OIBAAP’s Interest-Based Native Advertising Compliance Warning sent to advertisers last year.

Gravity and Outbrain both provide to online publishers what the IAB has dubbed “recommendation widgets,” which are a type of native advertising container that suggests third-party articles and other sponsored content tailored to a user’s specific interests. These recommendation widgets are typically placed adjacent to sites’ normal editorial content, but are boxed off and labeled with “Around the Web,” “You Might Also Like,” or similar.

For both Gravity and Outbrain’s recommendation widgets, the OIBAAP found that the companies did not meet their obligations to provide “enhanced notice” of their interest-based advertising (“IBA”) practices. As we’ve covered previously, the Principles require that advertisers and publishers engaging in interest-based advertising, and certain other data collection across third-party sites and apps, provide consumers disclosure of, and choice regarding, such practices. In its recent updates to its Frequently Asked Questions regarding Testimonials and Endorsements, the Federal Trade Commission has also warned advertisers and publishers about native advertising, there in the context of needing to give clear notice that it is advertising and not editorial content. For more information, see here.

In the Gravity decision, the OIBAAP found that while Gravity provided clear IBA disclosures on its own website, it did not provide a compliant enhanced notice link on the widget itself. Gravity did maintain an “Ads by Gravity” hyperlink adjacent to the native content, and clicking this would launch a pop-up explaining Gravity’s general role in providing sponsored content; however, the OIBAAP found that this was not sufficient. Most significantly, the “Ads by Gravity” pop-up did not disclose that Gravity was passively collecting data from consumers to tailor IBA inside the widget. Gravity initially objected to serving enhanced notice on its widget; however, it later voluntarily modified its widget to provide the AdChoices enhanced notice link and committed to full compliance with the Principles.

In the Outbrain decision, the OIBAAP similarly found that Outbrain did not provide a “clear, meaningful, and prominent” enhanced notice link in or around its recommendation widgets. However, Outbrain was quick to respond to the OIBAAP’s inquiry by providing evidence that it was already taking proactive steps to remedy any compliance issues, including contacting publishers to ensure the enhanced notice link was provided and testing its widget to ensure the enhanced disclosure link would remain prominent across all publishers’ sites. The OIBAAP noted that Outbrain is now in full compliance with the Principles.

Both cases make clear that the Principles’ requirements of transparency, choice, and enhanced notice apply as much to “native advertising” as they do to traditional online ad formats (e.g., banner ads). As native advertising continually evolves, it will be important for both publishers and advertisers to proactively consider the impact of new formats on their self-regulatory compliance obligations.

For those attending the Brand Activation Association / Association of National Advertisers Legal Conference on November 10, 2015, in Chicago, Baker & Hostetler partner Alan Friel will be discussing the DAA’s Guidelines for Mobile Advertising and also cross-device tracking and targeting on a panel with lawyers from Google and Spotify. Associate Alan Pate will also be participating in the Brand Activation Association Conference and co-hosting a roundtable discussion on native advertising with counsel from American Express.

For information on the FTC’s recent update to its FAQs, and how this may inform native advertising best practices, see “FTC’s Updated FAQ for Endorsements and Testimonials: Implications for Social Media Promotions and Sponsored Content,” by Alan Friel, Fernando Bohorquez, Jr., and Zachariah J. DeMeola.