How To Keep Your Native Advertising Legal

The FTC’s recent guidance on native advertising reinforces that transparency and disclosures are important for avoiding consumer deception. Consumers may be confused by advertising that feels and looks like an editorial platform. They cannot always tell who is responsible for the message. The FTC wants to make sure that consumers know when they are looking at advertising so they can evaluate its credibility.

Two years after its “Blurred Lines” workshop on native advertising, in December 2015, the FTC finally issued two new guidance documents: “Enforcement Policy Statement on Deceptively Formatted Advertisements” and “Native Advertising: A Guide for Businesses.” In these documents, the FTC reasserts long-standing advertising law principles governing unfair or deceptive practices that affect consumers. The agency starts with the presumption that the commercial nature of speech is of material concern to consumers since it is more likely to be biased: “Knowing the source of an advertisement or promotional message typically affects the weight or credibility consumers give it. Such knowledge also may influence whether and to what extent consumers choose to interact with content containing a promotional message.” To determine if the advertising is unfair or deceptive, the FTC considers the overall “net impression” on the reasonable consumer. Many factors influence that net impression, including format, delivery method, audience, and content.

For marketers trying to make sense of the new FTC guidance, their first step is to determine if a disclosure is required. This is a fact intensive inquiry that revolves around the nature of the content? Does it mention products or services? Or is really editorial content? Are you re-purposing independent favorable reviews? The review, itself, is not advertising but if the advertiser places it into third party media, that placement is an “ad” requiring disclosure. Are you sponsoring paid content in non-paid search results? Who is doing the “sharing” on social media? The reasonable consumer may not expect advertising in non-paid search results, and therefore brands will need disclosures to avoid deception.

 Disclosures are not a cure-all, even if they use unambiguous language. They must be done in a meaningful way that clears up reasonable consumer confusion. Per the FTC’s guidance, a disclosure must be clearly and conspicuously placed in relation to the native advertising. Again, the FTC relies on standards it has enforced consistently with print or television advertising to delineate what “clear and conspicuous means.” It is noteworthy that the FTC refers businesses to another business guidance document, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising,” for more details. That guide states that disclosures in digital media should be “unavoidable” to the consumer.

Practice Tips

• Err on side of transparency.
• Consumers must know content is commercial speech before they interact with it.
• Disclosures should change or clarify the meaning of the advertising message, making it crystal clear that this is commercial speech.
• Disclosures should be in simple language like “Ad”, “Advertisement,” or “Sponsored Advertising Content.” The FTC has questioned the following ambiguous labels: “Promoted,” “Sponsored,” “Presented by,” “Promoted/Sponsored Story,” or “More Content for You.”
• Disclosures should be placed in a clear and conspicuous location.
• In text disclosures may not be sufficient. They often should be proximate to the headline on the left side.
• If a focal point of the ad is graphic, perhaps the disclosure should be placed near that focal image.
• The disclosure should be as in font and color that is easy to read and contrasts with the background. In some instances, borders around the native advertising to offset it from editorial text may be appropriate.
• In videos, the disclosures should be on screen long enough to be noticed, read and understood. Audio disclosures should be read at a cadence and volume that allows consumers to understand their meaning.
• Click-through ads may require disclosures on both the originating page, even if it is a newsfeed, and the click-through itself.
• If reproducing an independent article as recommended content, the brand likely needs to include a disclosure if it is not clear that the recommendation came from the brand.
• Even if a customer shares an independent article, if the originating link came from the brand, the link likely requires a disclosure.
• Sponsored videos that look like non-sponsored content require disclosures.
• Paid content that appears in non-paid search results typically requires a disclosure.
• In entertainment formats, such as video games, product placements or clear advertising (e.g. billboard graphic) may not require disclosures, but click-throughs that look like the game and not advertising content would require a disclosure before the consumer clicks.

It is only a matter of time before FTC enforcement actions commence against the most aggressive proliferators of native advertising. (It is important to remember that the FTC’s guidance does not only apply to advertisers but also to their agencies.) Reviewing the FTC’s documents and understanding how its focus is always on vulnerable consumers, the FTC is likely to be most immediately concerned with native advertising that takes the form of news/feature content, product reviews, investigative or scientific reports, or phony government or business endorsements.