Brand journalism: sponsored content/the 1A

Brand Journalism,
Sponsored Content and the First Amendment
Moderator:   Scott Dailard, Cooley LLP
Mary K. Engle,
Federal Trade Commission, Associate Director, Division of Advertising Practices:
We’re going to proceed as if there is a commercial/noncommercial divide.  To hold otherwise would upend FTC, FDA, SEC,
USDA—lots of regulations regulate speech. FTC: most based on idea that false
and misleading commercial speech is not protected by the 1A.  RJR advertorial: “on cigarettes and science”—FTC
elaborated on Bolger factors: does it
promote demand for product/service; does it refer to specific product/service
(whether or not brand specific); does it include info about product/service
attributes such as price/quality/health effects. Means used to publish speech,
including whether paid-for ads; speaker’s economic or commercial
motivation.  Used this standard a few
years ago for Pom Wonderful for
claims made in media appearances by Pom executives.
Basic principle:
advertising should be intelligible to consumers as advertising.  Business Guide on Native Advertising—applies to
commercial speech; has examples of what is/isn’t commercial speech, as well as
commercial speech that nonetheless doesn’t require disclosures (b/c it’s
obviously advertising or it’s not material that it’s advertising).  Example: paid ad “20 Most Beautiful Places to
Vacation,” by shoe company—b/c has nothing to do w/company’s products, and is
just a branding exercise, this wouldn’t be commercial speech that needed to be
identified as such.  Of course it would
be presented by the company/have their logo—the company wants to be associated
w/it, but doesn’t need to have the label as far as the FTC is concerned.  Journalistic ethics will also dictate
disclosures, but FTC wasn’t going to intervene.
Likewise, when an ad
is obviously an ad (shoe promotion w/slogan on a financial news website) it
doesn’t need extra disclosures.
Video game virtual
world: We assume video games are fully protected.  Consumers will understand in-game billboards
as ads. To the extent that the ads are for actual products, consumers will
attribute them to sponsoring advertisers and no separate disclosure is required,
but sponsoring advertisers would be liable for any deceptive product claims.  Advertising content w/in nonadvertising
content.  (As I said, like ads
interleaved in the pages of a print magazine.) 
What if they aren’t billboards in the game, but products are quests that
you have to interact w/?  If the game
conveys no objective claims about the products, that doesn’t require disclosure
b/c whether it’s paid placement or video game artist’s artistic judgment is
unlikely to be material to consumers. 
Simple product placement is commercial speech, but doesn’t need to be
labeled as such b/c its commercial nature is not material to consumers.
Deirdre Sullivan,
The New York Times Company: If it comes from our creative agency studio, we
disclose it.  Our disclosure has been
iterated, and highly negotiated down to saturation of blue, and serifs on
font.  We’re trying to create enough
distinction.  Cole Haan paid post: CH
doesn’t make ballet shoes; post was about dancers and their relationship to
their shoes; we make clear it’s sponsored content, though we don’t use the word
“ad”; business decision as much as a regulatory one.  We make no material claims, just interviews
w/ballet dancers, so there’s a good argument we wouldn’t need to label by FTC
standards.  Our subscriptions can’t
decline b/c of our ad choices—need to keep both constituents happy. Journalists
protect core of our product and keep subscription revenue up.  Newsroom felt that to do that we needed clear
language at the bottom of every paid post.
Q: did they execute
model releases?
Sullivan: Yep.  It’s a huge deal, and related to labeling
everything that comes out of the studio. 
Every paid post shouldn’t come to me; as a matter of course, all of our
journalists—studio is populated by folks from editorial background—go through
painful learning process about rights of publicity in their new profession.
Q: does that chill
content production?
advertisers take care of some of that; most brands aren’t interested in coming
close to controversial subject matters. Some advocacy groups are more
interested in coming close.
Allison Lucas,
BuzzFeed, General Counsel: Similar approach. Almost everything we do falls into
the no material claims category, but we do put disclosures on everything b/c of
journalistic ethics and b/c brands want to say they’re doing it.  Publishers do a lot of mobile; can also talk
about social media and other platforms. 
Home page: we use “promoted by.” 
Story page: we put “brand publisher” for stories—brand had input into
it.  If it were commercial speech, that
might not be adequate for the FTC, but the content has nothing to do
w/Shutterfly, it’s just what children say they want to give their fathers for
Father’s Day.
Q: has FTC
considered requiring disclosure when consideration is paid, like FCC does?
Engle: No, we don’t
use that standard. We did take action against ADT when they hired spokespeople
to promote a new security system on Today
etc. and didn’t disclose they were working for ADT. That’s stealth advertising
that should have been disclosed; FCC didn’t take action [presumably b/c the
stations weren’t getting paid].  Even
when you see the “promotional consideration provided” disclosure squished and fast
in the end credits, we wouldn’t consider that adequate disclosure.
Almost all TV shows
for kids are effectively selling the characters; doesn’t want to go there.
Piety: what are the
reasons for doing native advertising? This has implications for whether
disclosure works. Ad Age asked: why would advertisers want to mimic content
when that’s so labor intensive and expensive and others can do it better?
Lucas: Clickthrough
is just infinitely higher.  B/c people
actually want to read and share it. 
Buzzfeed never did banner ads.
Sullivan: ads are
dying b/c of distraction, resistance, mobile; native advertising is a
lucrative, thoughtful way to do it. 
Advertisers like it b/c it resonates. 
One advertiser didn’t want it to be off the table for an advertiser to
win a Pulitzer.  Brand is just trying to
tell you something about who they are. 
Many advertisers have content studios in-house.
Piety: if you have
to disclose it, it’s partly b/c the concern about low levels of credibility for
advertising.  Maybe people don’t care so
much about Orange is the New Black, but for Scientology sponsoring they
do.  If skepticism increases, that’s a
absolutely: there’s an integrity you think you can rely on from the NYT, and we
have to be up front about the ad content—we think it’s good, but you should
know its origin. Business decision as much as anything.
Q: does FTC’s
content-sensitive approach reconcile w/Sorrell
and Reed and right of publicity case
Rick Kurnit,
Frankfurt Kurnit Klein + Selz PC: Maybe the message here is that the greatest
chilling effect on free speech will be from ROP concerns. Those concerns come
from the mess that is the ROP and the absence of commercial speech analysis for
ROP.  That’s why I want to move away from
Bolger.  My favorite false advertising case: NYT v. Sullivan.  An ad taken out by a corp. for the purpose of
raising money.  Individual claimed that
the context of what was described sufficiently identified him, anticipating White v. Samsung.  Unfortunately for him, he cast his claim as
defamation rather than ROP. 
Sullivan was a commercial/paid media insertion. SCt understood that there was
no such thing as advertising.  SCt understood
that it needed to deal w/ ability of wealthy individuals to use tort law in
Southern states to drive hated news organizations out of business b/c they
hated them. Then the worst decision ever: Zacchini,
which opened the floodgates.  9th
Cir. then embarrassed itself in Hoffman
v. Capital Cities
. Bounced around the circuit courts in search for some
kind of coherence; Rogers v. Grimaldi
is probably the best.  Cts are still
trying to say that almost everything is commercial for ROP purposes.  Jordan
v. Jewel Food Stores
: idiotic for a court in 2014 to believe that there is
still something to the notion that this (or anything) is an “ad.”  The ad was a free page in the publication for
putting up racks to distribute Sports
—not even a paid media insertion. “Ad” is created by SI +
Jewel.  [I don’t understand why he thinks
Rogers is good but there is no such
thing as an “ad.”  Maybe he means
artistic relevance should apply to everything, leaving zero space for a ROP
claim?  I could actually go for that.]
Gov’t regulation should
be of false or deceptive content material to a consumer purchasing
decision.  Commercial speech regulation
is dependent on deception. Fear that people would make bad decisions if given
truthful information is insufficient; shouldn’t use truthful info to define
something as advertising.  Reed suggests that gov’t shouldn’t be
regulating based on who the speaker is or what the nature of the speech is
advertising. [So, no FDA then?]  FTC
policy statement is all about protecting consumers against deception, and he
doesn’t think anyone will have a problem recognizing that this benefits all
commerce, including legit publications. 
One departure: FTC embraced the notion that it could regulate not just the
integrity of the content (brand influence, false claims) but also the publisher’s
effort to distinguish themselves by maintaining value of their curation; should
not have required disclosure for curation. 
Chilling effect of burdening speech bears on the question of whether FTC’s
effort to provide consumers w/ a heads-up is ok; agrees that people would like
to know more about the content, but it’s virtually impossible to give consumers
all the relevant info about the author and what their biases are. So it’s
always only partial information [and thus I take it disclosure is unjustified].  While it would be nice to know when the NYT
is not pure editorial speech, it never is.
If disclosure is
limited only to when there are claims about the product or service, then maybe
that’s ok.  Then all the brand content
doesn’t need to be labeled as ads.  Right
now, people are still using labels disfavored by FTC; hard to get clients to be
the first one to accept a change.  FTC
policy statement in support of requiring disclosure that they’re moving from
editorial to brands is defended based on the precedent of the misleading
door-opener. But a high-powered salesman in your living room is more deserving
of regulation than a click where you only see it’s advertising once you’ve landed
on the page.
Engle: what about a
spam email? CAN-SPAM says ad has to be labeled as such.
Kurnit: Consumers
like it, but questions whether it holds up to 1A scrutiny. Should not be
treated as ad even if topic/interest is related to brand if it doesn’t make
claims about the brand. Chasm between what consumers are engaged w/online—celebrities,
excitement, Gawker—and what you do in advertising; this runs a risk of driving
the good players out of business and leaving us w/just the Darknet where the
FTC can’t ID the source of content.
Q: what’s the gap
b/t your approach and Engle’s?
Kurnit: the labeling
that you’re about to click on a brand’s site. 
If that site is mix of editorial and selling, I shouldn’t have to warn
people away.  Right now, there’s a
disconnect that I don’t need to label the ad b/c it makes no claims but I do
need to label the website.
Engle: that’s a
Q: Reed?
Engle: Reed isn’t a commercial speech case; we’re
looking at Zauderer in commercial
speech.  You could question whether we’ve
made the right choice about what’s misleading; we’d have to defend that line,
but we do contend it’s misleading if it’s not identifiable as an ad.
Q: Reed is a billboard advertising case,
though. [Um.]
Engle: subsequent
cases have distinguished commercial speech. Can’t imagine SCt would overturn 40
years of doctrine w/o mentioning Central
; even Sorrell says it isn’t
talking about false/misleading speech.
Q: Kurnit’s argument
that there’s no such thing as advertising is that paying for space isn’t enough
and that saying nice things about your brand isn’t enough (in an op-ed by the
head of Exxon), but it sure seems like the combination ought to be enough.
Kurnit: Speech by
someone with a motivation to influence you to purchase a product who is telling
you something about the product likely to influence consumer decision—that’s
the heart of commercial speech. But there’s trouble finding a simple label.
Efforts to make a bright line, particularly in Bolger (ad format), are not helpful.  Bolger
isn’t consistent w/NYT v. Sullivan which
made clear that ads are within the 1A—a holding that’s gone ignored. [That’s
b/c it’s a misdescription of the holding, which was that this issue ad, which was not commercial speech, was fully protected
by the 1A, not that all ads were.]  FTC wants you to say “ad” but that’s like a
mandated skull and crossbones; it’s a stay-away label.  FTC has told everyone that “presented by” and
“powered by” and “brought to you by” are ok for editorial, but the world [to
wit, advertisers] wants something between pure editorial and pure advertising,
where brands get more “engagement” with the content. 

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