Two recent decisions by the National Advertising Division (NAD) provide a helpful reminder to companies that material connections must be disclosed on their seemingly independent websites — so-called native advertisements. Notably, one of the cases arose from the NAD’s routine monitoring program, but both serve as a good reminder that without proper disclosures, consumers may not be aware that they are reading a potential advertisement as opposed to editorial content.
Last month, Amerisleep, LLC was challenged by Casper Sleep, Inc. for failing to adequately disclose that two mattress-ranking and review websites, SleepJunkie.org and SavvySleeper.org, were owned by Amerisleep. According to the NAD, the websites conveyed the message that the sites were independent through their use of a “.org” domain name, zero Amerisleep branding, and text and images that implied an unbiased and independent site. The NAD found Amerisleep’s contradictory disclosure inadequate to negate that impression. The disclosure merely stated that “we may receive financial compensation” and the websites are “owned by Healthy Sleep, LLC, which is affiliated with Amerisleep, LLC.” Furthermore, according to the NAD, the disclosure was obscured when a consumer clicked on a drop-down menu, was in very small type size, and was occasionally sandwiched between prominent large-type headlines and a prominent header displaying the site’s name.
As was the case above, the NAD is often used to adjudicate advertising-related competitor challenges (a tool recently made quicker with the launch of the NAD Fast-Track SWIFT process); however, the NAD also independently reviews advertisements and brings challenges on its own. Such was the case last week when the NAD, based on its independent review, determined that L’Oréal-owned websites Makeup.com, Skincare.com, and Hair.com failed to make clear that the sites’ content was written by or on behalf of L’Oréal. The websites provide general information on makeup, skin care, and hair, and each sells various products relating to its content, but the NAD found that the references to L’Oréal generally appeared at the bottom of the webpages, too far from the website logos and content.
According to the NAD, advertisers have an obligation to inform consumers when they are advertising — an obligation that is particularly important when advertising appears in editorial-like formats. Both Amerisleep and L’Oréal agreed to modify their disclosures to better convey the material connection to consumers, but the L’Oréal decision highlights that challenges may come not just from competitors. Advertisers will undoubtedly sleep better knowing that their material connections are disclosed in a clear and conspicuous manner.