FTC Updates Industry About Its Stance On Native Advertising

CRN’s Regulatory Summit

While at CRN’s May 5th Regulatory Summit, Richard L. Cleland, assistant director of the Division of Advertising Practices in the Bureau of Consumers Protection at the Federal Trade Commission (FTC), provided an update on FTC’s stance on native advertising and social media marketing opportunities.

The Endorsement and Testimonial Guides, which are “administrative interpretations intended to provide the basis for voluntary compliance with the law by advertisers and endorsers,” received an Enforcement Policy Statement on Deceptively Formatted Advertisements on Dec. 22, 2015, addressing the issue of native advertising.

“With the emergence of digital media and changes in the way publishers monetize content, online advertising known as ‘native advertising’ or ‘sponsored content,’ which is often indistinguishable from news, feature articles, product reviews, editorial, entertainment, and other regular content, has become more prevalent,” FTC stated. “In digital media, a publisher, or an authorized third party, can easily and inexpensively format an ad so it matches the style and layout of the content into which it is integrated in ways not previously available in traditional media. The effect is to mask the signals consumers customarily have relied upon to recognize an advertising or promotional message.”

The statement continued to explain that with consumers able to skip or block digital ads, many publishers have begun to integrate advertisements that are less distinguishable from regular content so that they are able to continue to obtain their audience attention. When a consumer is misled about the “nature or source and such misleading” affects their decisions, then this is when FTC will find an advertisement as being deceptive.

To help determine when a disclosure should be placed, advertisers and businesses should note “if the relationship or connection between the endorser and the marketer is not apparent from the context of the endorsement message,” then a disclosure should clearly be placed in the endorsement.

Revisions made to The Endorsement and Testimonial Guides included terms of employee endorsements, likes, contests and sweepstakes, affiliate marketing and online reviews. The revisions also included rules to platforms such as personal blogs, Twitter, Facebook, Pinterest, YouTube and Instagram.

A few tips Cleland laid out for attendees when using disclosures were to always:

  • Use clear and unambiguous language.
  • Place disclosures as close to the native ads as possible.
  • Use a font and color that’s easy to read.
  • Use a shade that standouts against the background.
  • For video ads, ensure that the disclosure is on the screen long enough to be noticed, read and understood.
  • For audio disclosures, read at a cadence that’s easy for consumers to follow and in words consumers can understand.

When disclosures are placed, to avoid misleading consumers, they must be presented clearly. Language such a “Presented by,” “Brought to you by,” “Promoted by,” and “Sponsored by” were deemed by Cleland as being unclear due to whether the content is being sponsored but not created or influenced by the content. “Promoted” and “Promoted Stories” were deemed as being ambiguous for its potential to mislead consumers into believing the advertising content is endorsed by the site. The clearest disclosures stated by Cleland were “Ad,” “Advertisement,” “Paid Advertisement” and “Sponsored Advertising Content.”

There are some exceptions where consumers are able to identify the forms of advertising and no disclosures are required. One particular example given by Cleland is if an ad for a company selling shoes is featured on a financial news site. The ad contains an image of a shoe, the headline, and a hyperlink to learn more about the shoes shock absorption. While the font, color and graphics are similar to those of the news site, the headline with the message to learn more about the shock absorption informs the consumer the nature of the content. The subject matter also differs from the format of the financial site; therefore a disclosure is probably not needed.

For a final thought, Cleland discussed with attendees how The Endorsement and Testimonial Guides do not apply only to advertisers. The FTC has also taken action against endorsers, agencies and businesses for taking part in helping to create deceptive advertising.

As a takeaway Cleland recommended that attendees:

  • Train their affiliates and monitor what they’re doing on your behalf.
  • Because advertisers are responsible for substantiating objective product claims, explain to your network the claims you can support.
  • Instruct them about their responsibilities for disclosing their connection to you.
  • Periodically search to make sure they’re following your instructions.
  • Follow up if you find questionable practices.

Posted on WholeFoods Magazine Online 5/18/2016