Regulation of Native Advertising
The Federal Trade Commission (“FTC”) is the government agency that is tasked with promoting consumer protection, and eliminating and preventing anticompetitive business practices. In this role, the FTC issues guidelines (which are legally binding) that govern “Endorsements and Testimonials in Advertising,” “DotCom Disclosures,” and most recently, Native Advertising, among other things. According to the FTC’s Guides Concerning the Use of Native Advertising, publishers taking the role of an ad agency by creating content for marketers should make sure they’re not creating misleading native advertising. “For us, the concern is whether consumers recognize what they’re seeing is advertising or not,” Mary Engle, the FTC’s associate director of advertising practices said recently.
So, what exactly does acceptable native advertising look like? Well, Engle indicated that the FTC will focus less on the content of native advertising, and more on how such advertising is displayed and labeled on a website. We know that just having a “sponsored” label is not enough, and that sizing matters. The FTC has won cases where “advertorial” was presented in such a tiny font as to be misleading. As for what amounts to a deceptive ad: “An ad is deceptive if it misleads a significant percentage of consumers,” Engle said. That usually means 15% of consumers, and sometimes as few as 10% of consumers.
Some of the key do’s and don’ts that the FTC suggested for advertisers are: