FTC Issues Enforcement Policy Statement; Taking a Closer Look at Native Advertising
Headline: FTC Issues Enforcement Policy Statement; Taking a Closer Look at Native Advertising
In December 2015, the FTC released an enforcement policy statement and business guidance document further clarifying the appropriate use of native advertising the full enforcement policy statement and guidance document can be found at the following links here and here.
A native advertisement is an ad that utilizes the existing framework of where it is displayed to ‘blend in’ and look like part of whatever medium it utilizes. Many people see native ads as something that was invented by the internet, however, native advertising has been used as long as advertising has been around; in the early 1900’s publications contained ‘stories’ that were actually sponsored ads hidden in radio serials and ‘sponsored’ drama series weren’t uncommon in the early days of television. (Native Advertising: Everything You Ever Wanted to Know) Today, native ads include sponsored Facebook posts and tweets, ‘recommended for you’ articles on the side of a webpage, even entire Buzzfeed lists can be sponsored by a brand.
The FTC’s main concern is that native ads follow Section 5 of the FTC Act, which prohibits ‘unfair or deceptive acts or practices in or affecting commerce … a representation, omission, or practice is deceptive if it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers – that is, it would likely affect the consumer’s conduct or decisions with regard to a product or service.’ Since native advertisements ‘blend in’ they can be almost impossible to recognize as not part of the original site. Therefore, in most cases, advertisers must include a disclaimer in the ad that clearly labels that ad as an ‘advertisement’ the document even suggests how these disclosures should look and where they should live, in order to appropriately stand out.
Most native ads are already labeled to identify as advertisements. However, this new document is defining ‘clearly labeled’ a bit differently. A current common practice is to label ads as ‘sponsored by’ or ‘promoted by’. The thought is that these phrases, not including the actual word ‘advertisement’ may not clearly convey who is sponsoring or promoting the post and it could be cause consumers to mistakenly assume that the ads are from the publishing site – not an advertisement from a third party.
Where these stricter guidelines and presumed increased enforcement will lead the industry is not yet known. The IAB (Interactive Advertising Bureau) is currently reviewing the guidelines and a decision is yet to be made whether they will consider lobbying the FTC to change or clarify the language in the guidance document. ‘”While guidance serves great benefit to industry, it must also be technically feasible, creatively relevant, and not stifle innovation,” IAB VP of Public Policy Brad Weltman said in the IAB’s response. “To that end, we have reservations about some elements of the Commission’s Guidance.”’ (IAB Concerned About FTC Guidance On Native Advertising)
For now, we do not really know the full effect these new guidelines will have. In advertising, we are constantly pushing the limits and trying new things. We will have to wait and see how and if the FTC begins implementing penalties.