Practical Ecommerce

‘Native’ Advertising Subject to New F.T.C. Regulations

The U.S. Federal Trade Commissions recently released rules on native, digital advertising.

The U.S. Federal Trade Commissions recently released rules on native, digital advertising.

The rise of so-called “native” advertising on websites has prompted the U.S. Federal Trade Commission to issue standards on the presentation and content of that advertising. After almost two years of meetings, commenting, and discussion, the F.T.C. released its Enforcement Policy Statement on Deceptively Formatted Advertising on December 22, 2015.

This has resulted in a change in the way content-based online advertisements are required to be presented, with advertisers and publishers being required to ensure that consumers can quickly determine what is native or non-paid content and what is paid content. The days of paid content being undistinguishable from unpaid content that is supplied by the publisher are coming to a close.

Paid Editorial Not New

The F.T.C. has long had rules regarding advertisements that are in the form of content on traditional sources, such as newspapers, magazines, and television infomercials. For example, in 1968 the F.T.C. published an advisory opinion on newspaper advertisements in the form of what appeared to be restaurant reviews that were undistinguishable from the news articles.

However prior to December 22, while the F.T.C. had commented on advertisements in search engine results, some specific issues such as the online advertisement of dietary supplements and some forms of online endorsements, the F.T.C. had not issued a full policy to deal with content-based advertisements that looked like native content. As more comments and complaints arose that consumers may have difficultly distinguishing between non-paid and paid content, the F.T.C. started to investigate the issue.

With the new Enforcement Policy, advertisers now have a set of rules and regulations to follow to ensure that consumers can make educated choices for content-based advertisements. With the new rules, the F.T.C. has laid out fairly specific guidelines, with examples, of when advertisements need to have disclosures and what those disclosures must say.

Publishers and Advertisers Must Comply

The two main areas that the F.T.C. has looked at are what disclosures are required by publishers and advertisers to ensure consumers know the content is paid for and what disclosures are required if the advertiser rather than the publisher supplied the content. In regards to disclosures for all content-based advertisements (whether the content is supplied by the publisher or advertiser), the F.T.C. has stated that disclosures for paid-content-based advertisements should be:

  • In clear and unambiguous language;
  • As close as possible to the advertisement to which they relate;
  • In a font and color that’s easy to read and in a shade that stands out against the background;
  • For video ads, on the screen long enough to be noticed, read, and understood; and
  • For audio disclosures, read at a cadence that’s easy for consumers to follow and in words consumers will understand.

In addition, the F.T.C. has stated that disclosures must be displayed on all devices — i.e., phones, tablets and desktops must have disclosure statements for the same advertisement. Additionally, all platforms should have disclosure statements — whether a consumer views an advertisement using Chrome or Safari, each must show the disclosure statement. Further, the F.T.C. has stated that advertisements must have disclosure statements that are understandable to the audience the advertisement is targeted to. For example, advertisements to children may require different disclosure statements than those targeted to doctors possessing medical degrees.

Uniform Disclosures

In regards to content-based advertisements where the advertiser supplies the content, the F.T.C. has also stated that publishers must have uniformity on a site to distinguish between provided content and non-provided content, where all provided-content advertisements are labeled one way and all non-provided-content is labeled another way.

For example, a site cannot say “sponsored content” in some places and “paid content” in others and refer to provided content advertisements for both. Advertisers and publishers of those advertisements cannot use language to identify advertisements that is misleading. The F.T.C. has stated advertisers and publishers should not use terms such as “promoted” or “promoted story” for provided content stories as that can be misleading to consumers and doesn’t clearly identify that the content is being provided and the placement of the content is being paid for.

Another change is that advertisers and publishers should make clear who wrote the content — an article, video, presentation, or similar type of media format — if the publisher did not write it and if it is at all unclear who wrote it.

Advertisers and publishers must ensure that all advertisements do not mislead “reasonable consumers as to its nature or source, including that a party other than the sponsoring advertiser is its source.” To do this, advertisers and publishers should always err on the side of caution and make sure that advertisements clearly state that they are paid advertisements. If the advertiser provides the content, it should clearly state the advertiser provided the content.

Advertisers and publishers can see the examples listed in “Native Advertising: A Guide for Businesses” to determine if their advertisements are up to the F.T.C.’s standards and speak with their attorneys if any questions arise.

Elizabeth Lewis
Elizabeth Lewis
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Comment ( 1 )

  1. Carlos Rivera January 12, 2016 Reply

    Fascinating! I had no idea the FTC was working on this. I agree with the FTC’s actions. Some advertisers are too slick for their own good.

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