Buzzfeed deemed to have misled readers

Britain’s advertising watchdog has ruled that BuzzFeed, the fast-growing US media group, misled its readers by showing them paid advertisements that looked like news stories.

The ruling is part of a crackdown on “native advertising” and comes two weeks after the regulator ordered the Daily Telegraph to stop running “advertorials” that were not “obviously identifiable as marketing communications”.

BuzzFeed, which last year raised funds at a reported valuation of $1.5 billion, specialises in creating bespoke “branded content” for advertisers keen to reach its young audience. In doing so, the company and its many imitators have blurred the lines between advertising and editorial content.

The Advertising Standards Authority (ASA) ruled on Tuesday that an advertorial on BuzzFeed's website, headed "14 Laundry Fails We've All Experienced", was in breach of its code and must not appear again in its original form.

The ad, promoting a product called Dylon Colour Catcher, was styled as an ordinary BuzzFeed article and featured a list of photos of laundry “fails”.

BuzzFeed said in its defence that the Dylon logo and the text “Dylon Brand Publisher” appeared at the top of the web page and, at the bottom of the advertorial, text stated “It’s at times like these we are thankful that Dylon Colour Catcher is there to save us from ourselves. You lose, little red sock!”

But the ASA ruled that the references to Dylon were not sufficient to make clear to readers that the web page was under the control of the advertiser. The regulator did not specify what would be sufficiently clear, although its guidelines say it would accept prominently-positioned labels such as “advertisement feature”.

The ruling against BuzzFeed comes as US regulators also crack down on “deceptively formatted advertising”.

The Federal Trade Commission last month issued new guidelines for marketers and online publishers, including the requirement that "disclosures should be in plain language that is as straightforward as possible".

“Native advertising” has become one of the fastest-growing sources of revenue for the news industry. Although the advertorial has existed in print for many decades, in recent years publishers have reinvented the concept for the digital age.

Mail Online, The Guardian and The New York Times are among the newspaper groups that have set up divisions to create sponsored content for advertisers including Goldman Sachs and Netflix.

Many brands have jumped at the chance to communicate their commercial messages in the style and language of a popular and trusted news publisher.

Publishers label native ads in many ways, some more subtle than others. Commonly-used labels include “sponsored”, “promoted”, “brought to you by” and “in association with”.

Brinsley Dresden, head of advertising at the law firm Lewis Silkin, said BuzzFeed was more transparent than many other media companies in the way that it labelled native ads.

The “average consumer with a bit of common sense and intelligence” would understand that the BuzzFeed advertorials were marketing communications, he said.

He warned the regulatory crackdown could have big effects on advertisers and publishers. “The fear of advertisers is that if you end up in a world where you have to label all these pieces of content advertisement or advertorial, people would be less inclined to engage with them,” he said.

- Copyright The Financial Times Limited 2016