1. Tom Frewen has made a broad complaint about the links to "recommended" or "promoted stories" provided by "content discovery platform" Outbrain on the Stuff and New Zealand Herald websites. The "stories" – also called sponsored content, branded content or native advertising – appear at the bottom of each article, linking readers to other sites which pay Outbrain – and the websites – to be featured on what Outbrain calls "the web's largest and most respected media properties".
2. Outbrain is a New York-headquartered multi-national that presents links to sponsored content on news websites around the world, including Time, the Guardian, the Telegraph, CNN, the BBC and many others.
3. Frewen points to multiple examples of sponsored content on the sites, but his complaint began with a 'promoted story' that appeared on Stuff on October 25, headlined "A Levin man is the new member of the Bitcoin Millionaires' club". The headline linked to the website www.investingdaily.me, which contains but a single story, headlined "If you bought $100 of bitcoin 7 years ago, you'd be sitting on $145.8 million now after new record high". The article goes on to lay out five steps for investing in Bitcoin.
4. This complaint raises questions that go beyond our usual determination as to whether an article meets the standards prescribed in the Press Council's principles. First, is the sponsored content in fact editorial content and therefore within the Press Council's mandate? Or is it advertising and so outside our jurisdiction? Second, does it also fall outside our jurisdiction on the grounds that the links go to content hosted on sites outside New Zealand.
5. Chair Sir John Hansen decided to accept the complaint for consideration by the Council on the grounds that the Outbrain 'stories' look like news stories, contain a mix of news and advertising, link to content both in and outside New Zealand, and, given their preponderance on modern websites, it's a significant industry issue that the Council should consider. At the very least, the Council's scope states that it covers "ethical considerations" while its preamble states that it is "concerned with… maintaining the press in accordance with the highest professional standards". In this case, both those conditions apply. We also point out that while some sponsored content links to ads, some links to news stories elsewhere on the same site or on other news sites.
6. The Council notes there is international precedent for this decision. In a position paper from May this year, Canada's National NewsMedia Council judged "that branded content [one type of sponsored content] is within its mandate… The NNC is aware that the intent of branded content lies with the interests of the sponsor, while the intent of news and opinion writing lies with the interest of public good. The NNC believes it has a role in reminding the industry and the public of that distinction". We take the same view regarding all sponsored content.
7. It should be acknowledged at the outset that both media companies strongly opposed the Council's decision to accept this complaint, saying that the content referred to was advertising and not under the control of its editorial staff. Stuff editor Patrick Crewdson wrote that the content Frewen complains about was "on another site entirely". He pointed out that the Advertising Standards Authority (ASA) has previously ruled on complaints about Outbrain. He cites complaint 16301, which dealt with sponsored content that linked to another story on Stuff. The ASA ruled it to be outside its jurisdiction because it constituted editorial content. In contrast, it did accept complaint 16287, which linked to content on a third party site, which it considered to be advertising.
8. On behalf of the NZ Herald, legal counsel Ashleigh Cropp agrees that "the public is entitled to know when it is reading advertising/advertorial content" and in this case says the stories are clearly displayed as advertising. She asks that we adopt the ASA's advertorial test (laid out in Appendix i) to determine this. Cropp points to a 2014 ruling by the UK ASA, which prompted Outbrain to more clearly label its content as advertising, and 2017 guidelines drafted by the Interactive Advertising Bureau. She argues the Herald follows those rules.
9. The Press Council is of the view that if material is being published in a way that makes it look as if it is genuine news it should, at least, be held to the same standards as news content. It is on this basis that the complaint was considered.
10. Frewen complains under Principle 1, Accuracy, Fairness and Balance and Principle 2, Privacy. He also raises a third broader ethical complaint.
11. Under Principle 1, Frewen argues that despite the Stuff headline, the story contained no mention of a Levin man and was clearly an advertisement for Bitcoin, not a story at all. The accompanying photo of "a young man wearing sunglasses in front of a mansion" was "fake" and was not of a Levin man. They were therefore inaccurate and in breach.
12. On the Herald site, he complains about two similar stories headlined "Paraparaumu kid becomes a millionaire after buying Bitcoin for 12 pounds" and "Christchurch taxi driver got paid $10 in Bitcoins in 2010, now he's a millionaire". Frewen found the links at least a week after he read the Stuff story. Both link to an ad for Bitcoins that doesn't mention Paraparaumu or Christchurch and so were also inaccurate.
14. Frewen finally raises the ethics of using "deception" to encourage him to look at an ad he would have otherwise ignored and, indeed, the ethics of sponsored content that he believes "attempts to trick readers". As discussed in par five, the Council has decided to consider this part of the complaint under our preamble's commitment to upholding "the highest professional standards" and its scope to adjudicate on ethical issues.
15. Both publications acknowledged to some degree that the Bitcoin headlines fell short of acceptable standards, although they argued that those should be advertising standards. The Herald says it has resolved this issue by blocking ads containing the word "bitcoin", while Stuff agreed "the headline did not accurately reflect the content it linked to", removed the link and apologised to Frewen.
16. For Stuff, Crewdson points out that the Bitcoin story Frewen complains about came from a section labelled "promoted stories", which is separate from the accompanying section 'more from stuff'. While 'more from stuff' carries links to news stories, 'promoted stories' is clearly distinguished as advertising.
17. Crewdson says, "it is true that Outbrain's formats mimic the style of editorial content. Like with sponsored content articles, this is done in the belief that advertising can [be] more effective if it is in a format that is 'native' to the medium". But Stuff uses "design cues" to alert readers this is not editorial content, including the word 'promoted' in the headline, "the name of the host site beneath each headline link" and the credit "recommended by Outbrain".
18. He also argues that Frewen has failed to distinguish between the "headline link" on Stuff and the content linked to, which is published elsewhere. "While it is fair to complain about the headline link that was present on our pages, Stuff cannot answer for the content of a story that we did not publish or host".
19. Crewdson also says that the Outbrain panels are handled by the "promoted stories" units, not editorial staff.
21. For the Herald, Cropp limits her arguments mostly to matters of jurisdiction. Contrary to Crewdson, she believes "the widget itself does not mimic the appearance of the editorial content feed". The Outbrain content is placed programmatically by Outbrain and so the Herald has no editorial control over it. They are third party ads, "not editorial content and not presented within the editorial framework".
22. Like Crewdson, she says the Herald uses "disclosure cues" to distinguish this sponsored content from news and opinion. The Herald's Outbrain content is headlined "'Recommended' in bold, centred and above the widget; cue 2, the destination website immediately following the headline link for third party website links; cue 3, 'Recommended by Outbrain' at the bottom of the widget; and cue 4, when hovering over cue 3, the words "content marketing" appear, identifying the nature of the widget". The Council notes that the photos that link to ads carry the word 'promoted' in small font on the image.
Discussion and decision
23. Dealing with the privacy complaint first, the Council accepts that cookies are common across the internet and used properly are usually not considered invasive. Given cookies are a universal technology and have nothing to do with media in particular, we consider the complaint under Principle 2 to be out of the Council's scope.
24. The broader question of sponsored content and where it sits on the spectrum between editorial and advertising is more complex. That is one of the reasons why the Council wants to wrestle with this complaint about what is now a common feature of most online news pages.
25. It's impossible – and indeed irresponsible – to consider this issue without appreciating the financial pressures under which newspaper companies are currently operating and which have driven the rise of sponsored content or native. News companies have been reluctant to blur the lines between editorial and advertising in the past, but are now under pressure to do so to make ends meet. Advertisers and other media are encouraged to pay for this sort of content (not least on the Outbrain website) precisely because it masquerades as editorial content, as Crewdson says.
26. The Council accepts the argument from the news companies that the content of the stories and ads is hosted on other sites, mostly offshore, and is a mix of journalism and ad copy. Those stories are beyond our jurisdiction due to their geography and content. While Frewen can reasonably feel frustrated that the Bitcoin story was in no way a reflection of the headline, the story is out of scope.
27. The headlines however appear in this country, and while some lead to ads and others to stories, member news organisations should be expected to take responsibility for the content they publish, sponsored or otherwise. In this case, that is the headlines and photos. To meet the highest professional standards, they should be seeking the utmost transparency with their readers and when content is created to mimic news stories, news organisations should stand ready to ensure they meet the Council's principles. Indeed, the freedom guaranteed editors under the Press Council's statement of principles – that "editors have the ultimate responsibility for what appears in their publications" – comes with an expectation to uphold those high professional standards, including transparency. In the Council's view, all news content – plus content masquerading as news – comes within the bounds of that ultimate responsibility. That the editors have lost control over content that includes news stories and mimics news to such a degree is of real concern to us, and we hope would also be of concern to the industry.
28. While Cropp denies sponsored content mimics editorial content, the Council (like Crewdson) believes it does. The very definition of native advertising is that it "matches the form and function of the platform upon which it appears" and is "produced by an advertiser with the specific intent to promote a product, while matching the form and style which would otherwise be seen in the work of the platform's editorial staff" (Wikipedia).
29. Outbrain's own promotion of its content as "non-disruptive" and "editorial-based content recommendations" acknowledges the effort it makes to ensure its content doesn't look like advertising. The combination of a photo and headline is clearly designed to mimic a typical news layout, rather than the typical ad layout. That means the line isn't at all clear and readers could easily be confused.
30. It's fair to say the sites go some way to distinguishing this content. Cropp lists the "disclosure cues" as outlined in par 21, while Crewdson outlines Stuff's efforts in par 16. The Council would add that this content is positioned at the bottom of the page, as it is around the world, and it only takes a few clicks for a reader to realise what they are dealing with. The question becomes whether that amounts to a clear declaration to readers that this is not standard editorial content. As it stands, the Council does not believe it amounts to international best practice.
31. It's notable that neither New Zealand site goes as far as CNN or the Telegraph in clearly labelling the panel "Paid Content", nor do they shade the area as recommended by the IAB.
32. In the Herald, news stories, stories from other news sites and ads are in fact melded together under the 'Recommended' banner, as Cropp concedes. Therefore when Cropp asks if the sponsored content is "part of an editorial framework or advertising framework?" the answer can only be: both. 'Recommended' as a headline does next to nothing to alert readers to the fact that much of the content below is paid and not independent journalism; quite to the contrary, it implies that the content linked to is somehow special and is endorsed by the Herald. Given that this content is paid and includes either advertising or stories from sites of dubious merit, including the made-up Bitcoin headlines, such an endorsement sends a worrying message to readers.
33. Stuff does more to assist its readers, separating the ads and paid content from other sites [promoted stories] from its links to its own stories [more from stuff]. It also has a thin border above and below the content, which the Herald does not. Yet it's disturbing that it still labels the native ad content as "stories".
34. On Frewen's complaint under Principle 1, the headlines employed on both sites are clearly inaccurate. There is no Levin man, Paraparaumu kid or Christchurch taxi driver. They are figments of an algorithm's imagination and are deliberately designed to deceive and dress up advertising as news. In fact, the headlines are total fiction.
35. While the Council operates only according to its own principles, Outbrain failed even by its own standards. Its guidelines prohibit "inaccurate, misleading or overly sensational headlines". While Outbrain moved quickly to remove the Bitcoin content from Stuff, the same deceit was still being used on the Herald days later. There's nothing to indicate either Stuff or the Herald would have removed the inaccurate link if it had not been for this complaint. The complaint under Principle 1 is upheld.
36. On the wider ethical point of sponsored content, the complaint under the Preamble is also upheld. While the sites' 'cues' arguably sit just inside or at the bottom end of industry norms internationally, they are far from being of the highest professional standards. The Herald in particular. Contrary to the argument put forward by Stuff and the Herald, the visual cues are clearly designed to confuse and present editorial content of various standards and advertising all as news.
37. To achieve the "highest professional standards" in the handling of sponsored content, the sites must be more transparent and earn the trust of their readers. That may include the use of borders, shading and more accurate headlines. It should undoubtedly include a much clearer distinction between the look of independent news and sponsored content, and a clear and unmistakable statement to readers that this content is paid content.
38. If it becomes unmistakable that this sponsored content is paid content, not independent journalism, then the Council will be happy to leave further action to the ASA. But if the lines remained blurred, we would anticipate more confusion and complaints from the public that may need to be considered and resolved by either – or both - us and the ASA.
Press Council members considering this complaint were Sir John Hansen, Liz Brown, Jo Cribb, Tiumalu Peter Fa'afiu, Hank Schouten, Marie Shroff, Christina Tay and Tim Watkin.
The Chairman ruled that John Roughan could take part in the discussion but not vote on the outcome.