FTC Guidelines on Native Advertising Could be Confusing

Demand for native and in-app advertising is expected to grow in 2016, and we’re sure that’s a good prediction, because other parts of the advertising business will be coping with the use of ad blockers. However the FTC issued new regulations around native ads just before Christmas 2015.  Our development team is already examining the new regs and making them part of our in-app and native strategies.

“A key thread in the guidelines is that the user needs to know if content is an ad before she clicks and/or consumes content. It outlines in detail the types of placement, size, contrast and language that avoids consumer confusion.”

This is pretty tricky, because in the words of the guidelines themselves,

an act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead the consumer acting reasonably in the circumstances.  A misrepresentation is material if it is likely to affect consumers’ choices or conduct regarding an advertised product or the advertising for the product.

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. – the FTC will look to the overall context of the interaction, not just to elements of the ad in isolation.  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.

Advertisers, ad tech companies, and publishers will probably be left to figure this out for themselves by trial and error, since the deception involved in nonverbal communication and formats cannot be easily measured.

 

The only other time the FTC has issued such guidelines was in regard to search advertising, in which sponsored or paid for results must be clearly indicated.  That’s why paid ads, while they come up first in Google search results, all have the small gold square marking them as ads.

It remains to be seen what will emerge from the latest guidelines as advertisers go further into native ads.

The FTC’s native advertising guide makes it clear that while the primary responsibility lies with the advertiser, it will hold accountable “everyone who participates directly or indirectly in creating or presenting native ads,” a group that would include ad tech companies and publishers, according to AdExchanger’s coverage.