Beyond free speech: the thin layer of regulation on native advertising

In the endless drive to get people’s attention, advertising is going ‘native’, creeping in to places formerly reserved for editorial content. In this Native Advertising series we find out what it looks like, if readers can tell the difference, and more importantly, whether they care.

Native advertising delivers marketing content in a form that mimics editorial content. But despite the blurring of the lines between advertising and editorial, there are currently no public guidelines on how native advertising should function or look.

Advertising in Australia is self-regulated, with guidelines administered by the Advertising Standards Bureau and Advertising Standards Board - both focus on community standards in advertising.

Consumers can make complaints to these bodies when advertising fails to reach the necessary standards, and ultimately it’s up to the agencies to provide a clear stance on standards for advertising labelling. In the US for instance, the voluntary advertising self-regulation body has castigated some media outlets for “blurring the line between advertising and editorial content in any way which would confuse consumers”.

But another regulatory regime comes into play in this context – misleading or deceptive conduct in the Australian Consumer Law (formerly Trade Practices Act). This law is used to punish commercial dishonesty, including in advertising.

If consumers believe they have been deceived by false advertising they can complain to the ACCC which may go after the advertiser. And while failing to label paid content is unlikely to be considered misleading or deceptive, especially if the content does not directly mention the advertisers’ goods or services, there are unique repercussions for native advertisement if it turns out the content of the ad itself is misleading or deceptive.

There is no express right of free speech in Australia, but parliament recognises unimpeded speech is generally desirable and restrictions on speech require justification. Laws prohibiting misleading or deceptive advertising conduct are such a restraint on free speech, and a desirable one. But forcing news providers to avoid publishing misleading advertisements is extremely onerous.

The advertiser produces the ad, and sends it to the publisher who publishes it for a fee. The truth of advertisements is generally beyond the concern of a publisher. Many media organisations pursue this business model, so parliament recognises we should not punish the model - the liability should apply only to the party that actually makes the deceptive claim.

The Australian High Court recently endorsed this approach even in the case of internet search advertisements that were produced through a combination of advertiser content and Google algorithms.

When the news misleads

In 1984, a court found an Australian media organisation liable for misleading conduct in relation to its news coverage. Unlike defamation, there are no defences for misleading conduct – any party engaging in it is liable, there are no excuses.

Parliament became concerned that liability for misleading conduct in news could have disastrous consequences for free speech. Mistakes are sometimes made and certain columns or opinion might be problematic. Parliament therefore exempted “information providers” from this type of liability when they were publishing genuine content with a media “safe harbour”. As a result the law protects media outlets in the provision of genuine content, as well as if they are simply publishing advertisements without specifically endorsing them. This law attempts to balance the freedom to discuss news and public affairs, publishers’ business needs, and people’s rights to be protected from misleading information.

But what happens when the lines between genuine content and advertising are blurred?

We think about native advertising as something new and unique to the digital environment, but in fact media outlets (in particular through programs like A Current Affair and Today/Tonight) have been embedding advertising in content for a long time. To avoid engaging in this practice without consequences, the law exempts media agencies when they are simply passing on advertising information without adopting or endorsing it (imagine a classic newspaper advertisement or during a television commercial break), but not when publishing a “news” item about a product in exchange for payment. That is, if they have been paid to produce or endorse the advertising content.

This video later appeared as an ad for GoPro, and received media coverage, despite the fact the kitten died.

The limits of free speech

The rationale behind the balance is explicit. Parliament is saying free speech is a sufficient public good, that we will protect media outlets when they communicate the news in a way that may be deceptive or misleading. However, media companies lose that exemption as soon as they are trying to sell you something.

News purveyors are not permitted to use their privileged position to gain a commercial advantage that involves a deception. In such a case they should be in the same position as a regular company engaging in deceptive advertising. While a very complex area of law, the consequences of misleading or deceptive conduct in native advertising could be shared liability between the advertiser and a publisher.

Mavens of native advertising defend the practice by claiming it could produce content that is as entertaining, informative or educational as the best journalism in the world. Many journalists are relishing the opportunity to write professionally in a media environment overwhelmed with amateurs and other writers willing to work without payment.

Using one’s talent in the service of marketing and PR instead of true journalism is an attractive option when struggling to find paid work. But it is worth thinking about the long-term consequences of native advertising’s expansion, not just for publishing and journalism but also for our lives as information consumers.

Beyond regulating misleading or deceptive advertisements, it might also be time to seriously consider the consequences of this insidious privileging of commercial speech within the general communications hierarchy.

This is the fourth piece in our Native Advertising series. Click on the links below to view the others.

Recommended for you? Don’t bet on it: the ‘native’ ad invasion

Tired of pop-up ads? The ‘native’ alternative could be worse

Academics on the payroll: the advertising you don’t see

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