Commentary

New FTC Digital Advertising Guidelines Impact Advertisers

What does the Federal Trade Commission’s recently updated guidelines for digital advertising to account for social media and mobile devices really mean?  Bottom line: the rules have not changed, the technology has. 

Advertisers were always required to disclose any caveats around their marketing offers. Now, they just have to incorporate the new consumer reality — customers on-the-go scanning mobile devices who don't have time to read small print, multiple disclosure pages, or research the validity of ads or claims by a celebrity endorser.  

The FTC’s updated guidelines come with a lengthy 26-page appendix that includes plenty of examples of do’s and don’ts in social media, blogs, online ads, sales Web sites and other potential trouble zones.  The necessary updates or changes will likely be very minor on several of the social media platforms. Facebook already labels all ads on its platform as sponsored messages.  The offers may need to be updated  – as in the case of the one below from Dell – to provide additional information within the ad rather than just an asterisk after the BEST PRICE*.

A great example of a Facebook ad that presents all disclaimers before a user can get the offer and click through purchase is one from L’Occitane. Once the user clicks through, a larger window opens with additional information about the promotion and what’s required for redemption.  

Similarly, official ads run through the Twitter advertising program are already labeled as sponsored messages, whether they are corporate messages like the one from Eldora Speedway or political ads labeled with a purple “promoted by” icon like those from the Romney campaign.

The issue on Twitter is that not all ads run through Twitter’s advertising program. Those types of ads or promos, however, still need to abide by FTC’s guidelines. The FTC recommends that simply adding the text “AD:” at the beginning of the tweet will provide enough clarity. Of course, the 140 character limit will challenge advertisers who also have to add a disclosure statement.

Even if there were an additional tweet with the disclosure statement, it is unlikely the consumer would necessarily see both tweets and connect the dots on a paid promotional message, though some can.

Despite the details within the FTC guidelines, there will likely still be some areas of confusion for the foreseeable future.   These include:

*Celebrity endorsers (or anyone with a large following). For example, an athlete who receives free samples of an energy drink and then sings its praises, which would be seen by a large list of followers or friends.  Though technically, the energy drink company is not advertising, the “celebrity endorser” has been compensated with free products and must disclose that information in his post. 

This disclosure would need to be made wherever the promotional message is being posted, whether that is on Twitter, Facebook, or a blog page.

*Lesser known individuals who “like” a brand but might have also been compensated. For example, in the ad for TYR, the person listed is someone who is indeed a friend but is also a serious amateur athlete; it is unclear if she has been compensated by TYR to appear in the ad. If she has, does she need to disclose any sponsorship or compensation from TYR? Or does TYR have to disclose that in their ad?  In this instance, Facebook might need to adjust their ad platform and enable advertisers to specify the relationship.

*Web sites that are not mobile-optimized: Most sites should be able to update disclosure statements and move them to a more viewable area of the offer page even if they are not able to completely re-design their sites to be responsive.  However, in the interim, there will likely still be many sites with marketing offers that are not systematically following the guidelines.  As in the example, a mobile user might miss the disclosure statement on the bottom left of the screen when they zoom in on the price in the middle of the page.

What’s the cost of non-compliance?

The FTC is not typically in the business of law enforcement, but that doesn’t mean that advertisers can ignore the guidelines. Companies that have violated these or similar guidelines in the past have faced enforcement actions and civil lawsuits. The FTC can seek civil penalties and reimbursement for consumers if a company engages in false advertising; it can separately seek $16,000 per violation per day if a company violates a previous court order or consent decree.

It is advisable to read through the FTC’s .com Disclosures guidelines for all of the details, including plenty of examples.

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