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A holiday gift from the FTC: Guidance on native advertising
Supplement and food companies should pay close attention to the FTC’s guidance when evaluating whether, when, where and how to effectively disclose to consumers that content is sponsored.
3 Min Read
We’ve all seen it. Web pages with aggregated news stories and articles, perhaps about health, foods, trends, etc., and interspersed, or perhaps in a separate section, are links to articles that look just a bit different. For example, on the Yahoo! home page the other day, sandwiched in between links to articles on Donald Trump and Al-Qaeda in Syria, is an link to an article titled: “The Root of All Stomach Problems? (Avoid 4 foods).” However, unlike other articles on the page, the “teaser” for this article prominently includes the word "Sponsored.” Ah-ha! Something’s up.
On Dec. 22, 2015, the Federal Trade Commission issued long-awaited guidance on “native advertising,” which is commercial content designed with the look and feel of editorial content. It published two documents: (1) Enforcement Policy Statement on Deceptively Formatted Advertisements and (2) Native Advertising: Guide for Business. The FTC stated that it “has long held the view that advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.”
Infomercials on television and “advertorials” in print publications have long been required to disclose that they are paid advertisements. The FTC has clarified in the internet context that consumers must know before they choose to view an ad that the content is commercial in nature, and that failure to clearly disclose the commercial nature (such as by a disclaimer) is presumptively deceptive.
The FTC provides detailed recommendations as to when and how disclaimers must appear. Some key recommendations include:
The more a native ad has a similar format appearance, format and topic to surrounding editorial content, the more necessary a disclosure will be.
Whether a disclosure is necessary may vary depending on the platform. Consider how consumers customarily interact with each website or program in which the content appears. While it may be obvious on some platforms that content is sponsored, consumers may be misled on other platforms or in other media.
It must be clear to consumers before they choose to view an ad that content is commercial.
Paid dissemination of an independent article by a company may require disclosure.
Disclaimers must be placed where consumers look first. For example, if a webpage is read from left to right, consumers are less likely to notice disclosures placed to the right of the native ads.
Advertisers must account for the effectiveness of disclosures when content is republished by others. The location of the disclosure may need to change, depending on how the content is shared.
While the FTC thinks the disclaimer statements “Ad,” “Advertisement,” “Sponsored Advertising Content” or similar are effective, the FTC states that “Promoted” or “Promoted Stories” are too ambiguous.
Disclosures may be required for branded product placements in entertainment programming – including video games, apps, social media videos and television shows.
As supplement and food companies think about native advertising going forward, they should pay close attention to the FTC’s guidance when evaluating whether, when, where and how to effectively disclose to consumers that content is sponsored.
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