NAD Reviews Taboola’s Native Ad Widget, Recommends Clearer Disclosures

New York, NY – May 20, 2014 – The National Advertising Division has recommended that Taboola LCC, modify its native advertising “recommendation widget” to better assure that consumers understand that clicking on links provided by Taboola will take them to “sponsored content.”

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

Taboola’s native advertising practices were challenged by Congoo, LLC., which contended that:

•  Taboola’s image-plus-text ad units carry labels such as, “Recommended Videos,” “More in the News, ” “From the Web,” “You May Like,” “Sponsored Content by Taboola,” “Promoted Stories by Taboola,” or similar designations. As a result, consumers might be unaware that they are viewing image-plus-text ad units on the publisher’s website and not editorial content.
•  Taboola’s image-plus-text ad units do not clearly and conspicuously disclose that consumers are being directed to advertisements.

In this case, NAD noted, the parties “compete for the same space on publisher websites but describe their business models differently.”

Congoo says it links consumers to advertisements and calls the links in its space “ad-plus-text” units. Taboola describes its business model as linking consumers to “content you may like and calls its link a “recommendation widget.”

Both parties customize their space to the site on which it appears so that links on the host site look “native” to the space, but link consumers either to further content on the host site or on a third-party site.

When a consumer clicks on a sponsored link on Taboola or Congoo’s service, both the host site and the “widget” provider earn revenue. The parties dispute the type of notice consumers should have before they click to sponsored links from the widget.

At the outset, Taboola argued that the challenge fell outside of NAD’s jurisdiction because, the company said, it is not an “advertiser” because it does not make advertising claims.

NAD disagreed and determined that to the extent Taboola places it widget on a publisher’s site and both provides revenue to the publisher and earns revenue from the links placed within its widget, it is engaged in national advertising as defined in NAD’s procedures.

Taboola noted that recommendation widgets use a variety of methods to disclose the fact that the content within the widget is a paid placement and that Taboola itself uses a variety of methods, including labeling the widget, attributing each link to its sponsor and using a pop-up box that explains that each link is a paid placement. Taboola also argued that the challenger has not provided any consumer perception evidence that consumers are misled by Taboola’s practices, nor has Congoo demonstrated that its own disclosure, which states “Trending Articles and Offers” above all links and states “advertisement” on the top right, provides a more accurate message to readers and consumers.

In its decision, NAD noted that the Federal Trade Commission’s (FTC) guidance to online advertisers encouraged companies to “consider several factors to ensure that any labels and visual cues used are sufficiently noticeable and understandable to consumers.”
Taboola’s disclosure is in a less visible, lighter typeface and smaller font than other text in the widget. Further, the disclosure sits in the upper right-hand corner of the widget, an area that the FTC has said consumers are less likely to notice and read. Taboola argued that it also includes the sponsor’s name below each content title, which NAD found insufficient to disclose to consumers that the links are paid links.

NAD rejected the challenger’s argument that Taboola needed to use the word “advertisement” to inform consumers that its links are sponsored. In the absence of consumer-perception evidence demonstrating that consumers do not understand the words “sponsored content” or “promoted content” to mean “paid content,” NAD said, it is reluctant to mandate specific words to use for disclosure.

However, NAD recommended that the advertiser modify its disclosures to increase the visibility of the “Sponsored Content” or “Promoted Content” disclosure in terms of font size, font color and boldness, as well as its placement on the page, to make clear that the linked content is sponsored.

Finally, NAD cautioned that the combination of the thumbnail photograph, article title, and name of the destination site on Taboola’s widget should convey a truthful and accurate message of the content to which consumers are linking. NAD recommended that to the extent Taboola may link consumers to site which must be labeled “advertisement” or links to a site that appears to be a news source but is maintained by an advertiser, that Taboola discontinue such links or modify its disclosures to disclose that the link is to an advertisement.

Taboola, in its advertiser’s statement, said it appreciated “NAD’s interest in ensuring that the disclosures be clear and conspicuous to readers.” Accordingly, with the goal of supporting advertising self-regulation, Taboola agreed that, though it believes that its current disclosure methods already far surpass those used by other recommendation companies, it will modify the appearance of its disclosures in future iterations of its widget, as recommended by NAD. In addition, Taboola agrees that in the unusual circumstance where it learns that the content linked to a thumbnail in its widget is labeled ‘advertisement’ or misleadingly purports to be a news source but is maintained by an advertiser instead, it will discontinue linking to such content or modify its disclosures. Taboola appreciates NAD’s thoughtful review of this matter.”