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BBB: Sponsored Content Needs Clear Labels

28 May, 2014 By: Doug McPherson

CHICAGO – The National Advertising Division (NAD) of the Better Business Bureau says third-party publishers of headlines and images at the bottom of news articles that link to "recommended stories" must be clearly labeled as sponsored content.

These links are part of a "recommendation widget," which adopts the look of the site where it appears, so the Interactive Advertising Bureau (IAB) considers such widgets a form of native advertising.

The NAD's recommendation focused on Taboola LLC, an online advertiser-content distributor, and one of several companies that place headlines and images on publishers' websites – usually below or next to news stories that link to ads and editorial content.

Companies like Taboola get paid when a reader clicks on a link, and they share that money with the publisher. Taboola's widget carries one of two labels in small, light gray font: "promoted content" when all the stories are editorial in nature and "sponsored content" when they're a mix of promotional and editorial.

Above the widgets, a bolder label might say "Recommended Videos," "More in the News," "We Recommend" or "You Might Also Like." Taboola competitor, Congoo, complained to the NAD that Taboola's labeling was too vague. The result is consumers may click on a link believing it is editorial content.

Taboola unsuccessfully contended that it isn't an “advertiser” and therefore isn't subject to the NAD's rules. But Taboola did prevail with a separate argument that it need not use the word “advertisement” in its disclosures. “NAD is reluctant to dictate the terms advertisers should use in future advertising,” the organization said.

NAD recommended that Taboola increase the size, font color and boldness of its "sponsored content" or "promoted content" labels, as well as their placement on the page. The NAD also urged Taboola to better explain the nature of the links inside its recommendation widget.

Taboola agreed to incorporate the NAD's recommendations on the size, color and boldness of its labeling in future version of its widgets. The company also said it will either stop linking to content that misappropriates itself as editorial in nature, or modify how it discloses that the links are ads.

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