Last week, the National Advertising Division (“NAD”) issued a decision in the realm of online native advertising.  In the action against Joyus, Inc., the NAD was concerned that the company’s advertising for certain products appeared in a format that blurred the line between editorial content and advertising in a way that may confuse consumers.  Joyus is an e-commerce platform that embeds advertising for certain products within editorial content on People Magazine’s online articles.  The embedded advertising in question was featured on the website’s “Style Watch” section in a regular feature called “Stuff We Love,” which contains a list of items for sale through the Joyus platform, with descriptions of the items.  Along with the description of products, consumers can click to watch a list of videos, produced jointly by Joyus and People Magazine, which advertise products for sale.

Joyus argued that by including its logo in the beginning of the video and on the frame throughout the video, the company made it clear to consumers that this was an ad for Joyus products and not editorial content.  Joyus also contended that many of its videos include text describing discounts for its website, in addition to featuring product prices and a shopping bag icon.  Thus, Joyus argued that, when evaluated as a whole and in context, the company is disclosing a material connection between People Magazine and Joyus.

In its decision, however, the NAD expressed its concern that consumers may review the products on “Stuff We Love,” with the expectation that it represents independent editorial selections by People Magazine editors and staff, rather than paid-for advertising for Joyus.  The NAD agreed with Joyus that the videos themselves contain visual and audio cues that sufficiently make it clear that consumers are viewing a shopping video advertisement.  However, the NAD took issue with the pages and links the consumers see before the viewing a Joyus video because they reasonably convey the message that the linked content is editorial content.  Specifically, the “Style Watch” page that links to the “Stuff We Love” page did not disclose that the “Stuff We Love” feature is a partnership between People Magazine and Joyus, and promotes products for purchase.  Thus, the NAD recommended that Joyus (in collaboration with People Magazine) revise the link so 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.  In addition to the implied claim, Joyus made express claims in the promotional videos that the NAD alleged lacked adequate substantiation.  These claims were discontinued by the company after commencement of the NAD challenge.

Why this matters:  If anyone was wondering how the FTC’s Policy Statement might be enforced, the wait is over.  The NAD has indicated that it is prepared to bring actions on its own, if necessary, to give life to the notions floated by the FTC in the Policy Statement.