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Online Advertising and Marketing Marketers and publishers are using innovative methods to create, format, and deliver digital advertising. But as native advertising evolves, are consumers able to differentiate advertising from other content?
Marketers and publishers are using innovative methods to create, format, and deliver digital advertising. The Federal Trade Commission Act prohibits deceptive or unfair practices.
The FTC has issued an Enforcement Policy Statement on Deceptively Formatted Advertisements that explains how the agency applies established truth-in-advertising standards in this context. This Guide for Businesses supplements the Enforcement Policy Statement by offering informal guidance from FTC staff to help companies apply the Policy Statement in day-to-day contexts in digital media.
The first part of this Guide summarizes the consumer protection principles that serve as the foundation for the Enforcement Policy Statement. The second part includes examples to explain how effective disclosure can help prevent deception. The third part features staff guidance on how to make clear and conspicuous disclosures within the format of native advertising.
These examples are only general guidance for advertisers. In evaluating whether an ad is deceptive, the FTC considers the net impression the ad conveys to consumers. Because ads can communicate information through a variety of means — text, images, sounds, etc.
Put another way, both what the ad says and the format it uses to convey that information will be relevant. Any clarifying information necessary to prevent deception must be disclosed clearly and prominently to overcome any misleading impression.
Why would it be material to consumers to know the source of the information? Because knowing that something is an ad likely will affect whether consumers choose to interact with it and the weight or credibility consumers give the information it conveys.
Over the years, the FTC has brought many cases challenging the format of ads as deceptive. For example, the Commission has taken action against ads that deceptively mimicked the format of news programming or otherwise misrepresented their source.
The Commission has held that when the first contact between a seller and a buyer occurs through a deceptive practice, the law may be violated even if the consumer later finds out the truth.
The FTC considers misleadingly formatted ads to be deceptive regardless of whether the underlying product claims that are conveyed to consumers are truthful. In the context of native advertising, if the source of the content is clear, consumers can make informed decisions about whether to interact with the ad and the weight to give the information conveyed in the ad.
However, an ad is deceptive if it promotes the benefits and attributes of goods and services, but is not readily identifiable to consumers as an ad. What do businesses need to know to ensure that the format of native advertising is not deceptive?
The Enforcement Policy Statement explains the law in detail, but it boils down to this: Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure. In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising.
If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent.
Examples of when businesses should disclose that content is native advertising In digital media, native ads often resemble the design, style, and functionality of the media in which they are disseminated. Ads may appear on a page next to non-advertising content.
Examples include news or content aggregator sites, social media platforms, or messaging apps. Still other examples include native advertising in email, infographics, images, animations, and video games.
When a native ad appears on the main page of a publisher site or is republished in other media, it commonly consists of a headline, often combined with a thumbnail image and a short description, which, if clicked or tapped, leads to additional advertising content.
Thus, advertisers are responsible for ensuring that native ads are identifiable as advertising before consumers arrive at the main advertising page.
In addition, no matter how consumers arrive at advertising content, it must not mislead them about its commercial nature. In assessing whether a native ad presented on the main page of a publisher site is recognizable as advertising to consumers, advertisers should consider the ad as a whole, and not just focus on individual phrases, statements, or visual elements.
The same assessment applies to any click- or tap-into page — the page on which the complete ad appears.
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