Native advertising could see brands in court

By David Blight | 5 December 2013

Australian brands could be in court in 2014 for misleading consumers via native advertising. That's the verdict of a Sydney law firm as US regulators seek to redefine the lines between paid for content and editorial.

Some say it's just advertorial, others call it content marketing, but native advertising – paid-for content that resembles editorial – has been praised as a powerful new revenue stream for both online and offline media. The idea is that consumers will respond more favourably to useful content rather than invasive advertising.

Newspapers, both locally and internationally, are piling in. Fairfax has a native advertising platform, News Corp has run some native advertising, and the MailOnline has said it will "definitely" use native when it launches in Australia next year.

MailOnline publisher Martin Clarke stressed the need for "transparency" in native advertising and newspapers are well versed in the need to clearly label advertorial. But if brands and other emerging media owners are not careful to clearly differentiate between advertising and editorial, they could be treading dangerously close to illegal misleading and deceptive conduct.

Yesterday the US Federal Trade Commission warned that native advertising could be illegal if consumers are not properly informed that content is sponsor-generated.

The same would hold true in Australia. Pod Legal solicitor director Jamie White told AdNews that the Australian Consumer Law currently in place is strict when it comes to misleading and deceptive conduct.

“Some forms of native ads will be misleading, because it won't be clear that the content is a marketing message,” White said. “Just because native advertising is becoming popular among brands, it doesn't [always] mean it is legal, and advertisers need to consider the legal consequences before doing anything."

White said that the first legal case could be just around the corner.

“With the popularity of native advertising increasing, we are probably going to see the first court case in the next year or two. Of course, this must be judged on a case-by-case basis, but advertisers need to make sure it is made clear that the content is advertising.”

White said there is a low threshold that needs to be satisfied for a brand's communications to be considered misleading or deceptive. “There does not need to be an intention to deceive or mislead.”

“This is highly relevant at the moment, and brands need to be very cautious,” White said.

Native advertising has been a hot topic of late, and has been quite divisive. Some pundits, such as Sound Alliance chief executive Neil Ackland, regard it as the future of advertising, at least in the digital space. Meanwhile, in the US The Washington Post has adopted a native advertising strategy.

But many have taken issue with the blurring of lines between advertising and editorial. Howard Parry-Husbands, chief executive of Pollenate and director of Social Soup, said native advertising should be renamed “feral advertising”.

“It's all about trust. If I'm looking at content and I don't realise it's an endorsement, this creates major trust issues. And this not only affects the integrity of advertisers, but also of media and journalism.”

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