In a significant new Decision, NAD has declined jurisdiction over content in Buzzfeed's "Shopping Guide" because of its determination that it does not constitute "national advertising." This Decision provides important guidance to advertisers and publishers, particularly with respect to the increasingly important issue of distinguishing editorial content and advertising for purposes of regulatory and self-regulatory compliance.
As part of its routine monitoring, NAD requested substantiation for statements about a skincare product contained in a BuzzFeed shopping guide. BuzzFeed's shopping guides are lists of product recommendations from its editorial staff. The content includes purchasing links and some, though not all, of those links are monetized: if a reader clicks on the link and makes a purchase of the product, BuzzFeed is compensated. BuzzFeed discloses this affiliate relationship with the following statement on each shopping guide page: "We hope you love the products we recommend! Just so you know, BuzzFeed may collect a share of sales or other compensation from the links on this page. Oh, and FYI—prices are accurate and items in stock as of time of publication."
The article at issue in NAD's inquiry was titled "35 Skincare Products That Actually Do What They Say They Will." NAD focused on statements in the article about one of the products and its ability to reduce the appearance of fine lines and wrinkles. BuzzFeed argued that NAD did not have jurisdiction over these statements because NAD's jurisdiction is limited to "national advertising" and the statements in the article are not national advertising: BuzzFeed argued that it was not paid to recommend the product, but rather recommended the product based on its own writing staff's editorial choice, and that the product manufacturer and retailer had no input in or control over what was said about the product.
BuzzFeed further defended the content as purely editorial, outside NAD's jurisdiction, notwithstanding the presence of the monetized purchasing links. It argued that the decision as to which products to include in the content was made without influence by the potential for affiliate link revenue and that the editorial staff "is not beholden to the business teams that add affiliate links to content." It pointed out that if affiliate links are available for a recommended product, they are added by a separate team at BuzzFeed after the article is done. Thus, BuzzFeed argued, "[t]he creation of the content is done editorially and independently without the impetus of a monetary transaction, and the affiliate link is subsequently added without influencing the content of the shopping guide."
BuzzFeed also argued that, even if NAD were to determine that the product statements constituted "advertising" because of the affiliate links, BuzzFeed would not be responsible for treating that content any differently than it treats other editorial content. BuzzFeed argued that, while the FTC imposes an obligation on advertisers and publishers to be transparent about affiliate relationships, it does not impose a claim substantiation obligation on the editorial content published by a publisher using affiliate links and such links "[do] not transform the editorial content into advertising."
NAD agreed...at least as to BuzzFeed's shopping guide itself, if not as to the use of affiliate links generally.
Significantly, NAD determined that "[i]f the primary economic motivation driving the content is the same as other digital editorial content—to attract page views and develop a readership—the content would not be advertising and would fall outside of NAD's jurisdiction. However, if a publisher creates content with the purpose of directly influencing readers to purchase products through its affiliate links, the economic motivation would match that of an advertiser's commercial speech. In such a case, the content may be 'advertising' within NAD's jurisdiction."
Here, because (i) the product content in BuzzFeed's guide was selected by the editors without the input of the business team regarding the potential for affiliate link revenue; (ii) the retailer and brand did not have any say in the content – before or after its publication – and; (iii) the affiliate links were added to the "shopping guide" after the editorial content was completed, NAD concluded that the content was not tied to the "economic or commercial motivation" that "could, under different circumstances, be introduced by the presence of affiliate links." Thus, NAD found that BuzzFeed's shopping guide content regarding the skincare product was not a "paid commercial message" and, therefore, not national advertising as defined by NAD's procedures.
And in a companion Decision, NAD closed another matter involving BuzzFeed content, this one about Unilever products. (It is not clear from the Decision whether or not the article contained shopping links for Unilever products, monetized or otherwise.) Unilever advised NAD that it had not paid for, approved, or sponsored the article and that it had not reposted or promoted it. Accordingly, NAD determined that the article did not constitute Unilever's "advertising" and administratively closed the matter, holding that when "statements about a product or service are made by a third party with no material connection to the company purveying that product or service, those statements are, by definition, not that company's advertising."
Key learnings: If you're a publisher and want to ensure that your editorial content is always considered as such, even if monetized with affiliate links, or if you're a brand and want to ensure that the editorial content you're sponsoring or advertising against is not treated as your advertising, especially if you're providing affiliate revenue to a publisher, make sure to implement policies and practices that demonstrate and support the traditional separation of "church and state." And make sure that your affiliate relationships are clearly and conspicuously disclosed.
...the issue at hand is whether the presence and influence of the affiliate link transforms the publisher's own content into advertising for the product it promotes. Thus, the question at the center of this matter is whether embedding affiliate links into content, particularly content that reviews products for sale, renders it "national advertising" that requires substantiation.
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