At the end of December, we blogged about the FTC’s long-awaited Enforcement Policy Statement on Deceptively Formatted Advertisements. Along with the policy, the FTC issued a Guide for Businesses that contains seventeen real-world examples to help businesses understand why and when disclosures are necessary in native advertising and how to effectively make those disclosures.

Why

The answer is transparency.  The FTC introduced the Guide by noting that “a basic truth-in-advertising principle is that it’s deceptive to mislead consumers about the commercial nature of content.”  The Commission explained that disclosures may be necessary for many native ads because consumers want to know the source of the information they are being provided:   “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.”

When

The Guide offers seventeen detailed native advertising scenarios with commentary on whether and how disclosures should be made.  We’ve distilled five important lessons from the examples given:

1. Context is Key – When native ads look and feel like surrounding editorial content or the type of editorial content normally released by the publisher, a disclosure is likely necessary. Advertisers should consider whether the native ad is visually, stylistically and thematically similar.
2. Here, There and (Possibly) Everywhere – If a native ad can be reached in a number of different ways, the advertiser should consider placing a disclosure in each location, not just on the main ad page itself, also called the click-into page.  The FTC has long focused on preventing what it calls “deceptive door openers” because it 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.”  In the context of native ads, this means considering a disclosure on a site’s homepage where a native ad’s headline or thumbnail image may appear, in a publisher’s tweet providing a link to the ad and anywhere else that consumers can click to arrive at the click-into page.
3. Disclosures that Travel – Native ads that appear in non-paid search results, e.g., regular Google, Yahoo! or Bing search results, are not excused from disclosure.  If a disclosure is necessary on a promotional video, for example, a disclosure is also required on the thumbnail image that appears in the non-paid search results of your favorite search engine.
4. Disclosures are Meant to be Shared – Today, social sharing buttons are appearing everywhere. We’ve even got them on our blog (see below if you’d like to share this post on LinkedIn!). Advertisers should remember that disclosures must remain with native ads even when they are re-published on social media by consumers through use of social sharing buttons or shared via email by the reader with another individual. In short, if an advertiser (or its publisher partner) enables consumers to share a native ad, it should also enable sharing of an appropriate disclosure for that ad.
5. No Promotion, No Disclosure – In a helpful example (Example #2), the Guide notes that a disclosure is not necessary if an advertiser pays to sponsor an article that does not promote the advertiser’s products in any way, but simply says “Presented by X” with the advertiser’s logo on the article.

How

Building on its prior guidance from the .com Disclosures Guides:  How to Make Effective Disclosures in Digital Advertising, the FTC Native Advertising Guide reiterates the importance of the three P’s — Proximity, Placement and Prominence – and includes an additional guiding principle of Clarity of Meaning to help businesses determine how to make disclosures for native advertising.

Proximity:  At the Focal Point

As general rule, disclosures should be placed as close as possible to where consumers will look first, whether that location is adjacent to the headline of the article or on the thumbnail image of a video (as opposed to in the description below a video that consumers often skip).

Placement: Get Out In Front

While the FTC has never been a fan of one-size fits all rules for disclosures, the Guide all but directs advertisers to place disclosures on the left side of native ads when the website reads left to right.  Similarly, the Guide cautions that placing a disclosure below a native ad when the ad is featured in a vertical stream increases the likelihood that consumer will miss the disclosure entirely. For non-paid search results, the FTC noted that “consumers are more likely to notice a disclosure if it’s placed at the beginning of the title tag for a native ad’s search listing.”

Prominence:  Stand Out

The FTC couldn’t be more clear that “Advertising disclosures should stand out.”  Advertisers should consider font size and color as well as the different types of screens (big and small) that consumers will be using to view native advertising.  The Commission encourages the use of background shading or prominent borders to set off native ads from true editorial content.

Clarity of Meaning

To be understandable, disclosures must be clear, simple and straightforward. The Guide accordingly warns against use of technical jargon, different terminology to mean the same thing on the same website, the same terminology to mean different things on one site, using terminology outside its customary usage and use of unfamiliar logos, icon or abbreviations without explanatory text.

The FTC suggests the use of terms like:

• Ad
• Advertisement
• Paid Advertisement
• Sponsored Advertising Content

The Guide explicitly warns against use of “Promoted” and “Promoted Stories” or “Presented by X,” “Brought to you by X” or “Promoted by X” for use as native ad disclosures because all of these terms are ambiguous at best.

A Final Note from the FTC

In closing, the FTC warned in the Guide that “everyone who participates directly or indirectly in creating or presenting native ads should make sure that ads don’t mislead consumers about their commercial nature.”  Based on this final note, 2016 is likely to bring at least a handful of FTC enforcement actions against marketers, advertising agencies and publishers acting alone or collaboratively for failure to adequately disclose native ads to unsuspecting consumers.