sponsorcontent The Federal Trade Commission has opened a review of the exploding field of “sponsored content” online. One of the initial problems is that the label “sponsored content” is itself vague, perhaps meaningless, and does not sufficient impart to the reader any biases or commercial nature of the story.

Three examples of different types of sponsored content:

A company pays a writer to write stories. Hopefully, but not required, the stories are favorable to the company.

A company pays for a story to be written. This will always be favorable to the company as it is an advertorial, or advertisement masquerading as a news story.

A company pays a website to print a story. This can be complex. The story may obviously be an ad for a company. A story “The Toyota Prius Sets New MPG Benchmarks” even if true, and even if newsworthy, is an and for Toyota being couched as a story. But what of this article – “5 Tips to Keeping Your Pet Cool on Hot Summer Days” with a byline at the bottom for Toyota. In this situation the company is either engaged in direct reputation management, or indirect by associating itself with a popular cause or story. In this way the company gains something favorable even if the story is not at all about the company or its products.

Quality and original content can be a hot commodity online. So is trying to make money as websites struggle to turn a profit from advertising.

Companies paying websites to run news stories has become an enticing profit center from some websites.

For these reasons the FTC is now opening an inquiry to evaluate the types of sponsored content being used and whether current disclosures are sufficient to inform readers about the nature of what they are reading.

Filed under: Internet Law

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