A guide to native advertising's legal issues

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Native advertising has by all accounts been the darling of the digital marketing world in 2013.  Although it comes in all shapes and sizes, the general consensus defines "native advertising" as the practice of designing ads to look like the natural editorial content of the website on which they appear. Native's proponents hail it as the second coming, while critics assail native ads as commercials masquerading as content -- whatever your view, most everyone seems to be doing it.

A guide to native advertising's legal issues

A recent study indicates that about 75 percent of advertisers have gone native and the rest intend to. Social giants like Facebook and Twitter have adopted it, and publishers like BuzzFeed, The Atlantic, and Forbes have embraced it -- each with varying approaches and levels of success.

For instance, in your average BuzzFeed native ad, the site will post advertising content dubbed as articles "Presented By" its featured partners and set up to appear like the rest of BuzzFeed's content, typically in its signature list-of style.

Using its wealth of demographic information to target the most relevant audience, Facebook places ads as "Suggested Posts" directly into user's news feeds. Twitter has a similar approach with "Promoted Tweets."

Lately it seems everyone is jumping on the native bandwagon. Instagram announced that its users will soon be seeing sponsored images shuffled into their photo streams. LinkedIn has recently shifted much of its advertising focus to native content, greatly increasing the number of sponsored stories in users' "Updates." Pandora has gone native with the introduction of sponsored playlists. Even The New York Times is beginning to implement a native content platform

But just because everyone is doing it, doesn't mean what everyone is doing is legal. Now we're not suggesting that native is not a legal form of advertising. Of course it is. But like any form of advertising, native needs to comply with certain laws, rules, and regulations. So native's breakout year begs an important question: How far can brands, advertisers, and publishers legally push it?

As we've written about before, there's a golden rule in advertising law: Don't deceive the consumer. And when it comes to native advertising, there may be a fundamental tension with this principle: Native blurs the line between editorial content and advertising content, and, when most effective, engages readers in the same way as the surrounding editorial content for a site. The more relevant and interesting native content is to the reader, the more effective the ad becomes. There is also the more critical and cynical school of thought that native advertising is simply the latest handle given to attempts to make online advertising look independent by presenting an ad in a look and feel similar to surrounding editorial content and persuading viewers to click through advertising content as effortlessly as editorial content.

The question then becomes: When do these blurred lines between content and advertising become unfair or deceptive in the eyes of the FTC or industry regulators?