New BBB guidelines on native advertising

The Better Business Bureau (BBB) of the United States and Canada was founded in 1912 on a foundation of truth in advertising. A century later, BBB is updating its mandate and has issued guidelines to advertisers that call for clear labeling when the design, style and functionality of commercial messages mimic editorial content. The addition to the BBB Code of Advertising brings it in line to Canada’s Competition Bureau and U.S. Federal Trade Commission regulations. The new rules impact advertising, marketing and public relations, in all print, broadcast and social media channels.

According to Phil Norris, senior communications advisor of Ottawa, Ont.-based Competition Bureau Canada, “the BBB is stating that their new code aligns with the pre-existing false or misleading representations provisions under the (Canadian) Competition Act, which apply to any type of false or misleading representations made to the public.”

Disguised sponsored content promoting a product or service must be “clearly and conspicuously” labeled as an ad. Besides penalties for violations that can be issued by the BBB, the Competition Bureau states on its website that anyone who violates the criminal portion of the code is liable for fines up to $200,000 and imprisonment up to 14 years. Anyone who violates the civil portion is subject to penalties up to $750,000 for individuals and $10 million for corporations. In addition, the court has the power to freeze assets.

The nature of native advertising is to disguise itself from independently researched and authored editorial content. “Native advertising, sometimes called sponsored content, has become ubiquitous as a marketing tool,” says Katherine Hutt, Arlington, Va.-based BBB national spokesperson. “These ads are often indistinguishable from editorial content, embedded into entertainment programming, incorporated into games, graphics, and social media. An ad that’s designed to fool consumers is — plain and simple — a bad ad, and violates our standards.”

The Atlantic sold a native advertising campaign to the Church of Scientology in 2013; within a week it pulled the material with an apology.

The Atlantic sold a native advertising campaign to the Church of Scientology in 2013; within a week it pulled the material with an apology.

For example, Hutt explains, if a blogger is contracted by a vendor to talk about its product, that blogger has to disclose payment. This could be by labelling his web post as “Sponsored Content,” or, if tweeted, marked “#Ad.” In magazines, she adds, vendor-supplied editorial — either directly or through an agency — that is part of advertising agreement, needs to have a descriptive byline and be labeled as paid sponsored content.

The new section #39 of the Code provides, in part: “Advertisers must not mislead consumers as to the nature or source of native ads they place, or cause to be placed, in any medium, including social media.

“Where an advertiser promotes its products and services with sponsored content that consumers would not recognize as an ad, it must ensure that such content is clearly and conspicuously labeled as a ‘paid ad,’ ‘paid advertisement,’ ‘sponsored advertising content’ or other similar words that state expressly that the material is an advertisement;

“Where an advertiser sponsors content that does not promote its own product or service, it should consider including a disclosure such as ‘sponsored by’ or ‘brought to you by’ to avoid confusion; and,

“Advertisers should maintain disclosures when native ads are republished by others in non-paid search results, social media, email, or other media.”

This addition to the Code applies these principles to all advertisers, large and small, and BBBs across North America will begin enforcing the new section immediately. Businesses that fail to comply with the new provisions might not qualify for BBB Accreditation and face the possibility of a lower rating with BBB, with the most egregious cases losing enough to merit an F. When companies fail to make changes to questionable business practices, BBB often turns the cases over to state, provincial, or federal government agencies for enforcement.

Last year, BBB challenged nearly 8,300 national and local advertisements, from Fortune 500 companies to mom-and-pop shops, and educated millions of consumers about detecting bad ads (bbb.org/adtruth). 

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