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 self-regulation system, 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," and "You May Like," - as well as "Sponsored Content by Taboola," "Promoted Stories by Taboola," or similar designations. Taboola's image-plus-text ad units do not clearly and conspicuously disclose that consumers are being directed to advertisements.
NAD noted, the parties in this case "compete for the same space on publisher websites but describe their business models differently." At the outset, Taboola argued that the challenge fell outside of NAD's jurisdiction becauseTaboola is not an advertiser because it does not make advertising claims. NAD disagreed and determined that to the extent Taboola places its widget on a publisher's site and both provides revenue to the publisher and earns revenue, 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 the challenger has not provided any evidence that consumers are misled by Taboola's practices, nor has Congoo demonstrated that its own disclosure 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."