FTC Issues Long-Awaited Native Advertising Guidance

By Vejay G. Lalla and Paavana L. Kumar

 As marketers continue to find ways to try and interact with ever more distracted consumers online, and new technologies such as ad blocking may make it even more difficult to reach consumers, native advertising is growing to comprise a more significant component of online advertising. Increasingly, native advertising is being tailored to appeal to certain audiences, key demographics, and even individual consumers. However, despite these advances in targeting techniques, native advertising still poses its own set of unique business and legal challenges to marketers, who must ensure against the potential to mislead consumers and subsequently lose their trust, or risk getting themselves into hot water with the regulators.

 FTC Enforcement Policy

In a very important recent development, the FTC reinforced its position that long-standing consumer protection principles apply to native advertising, and that disclosures are required and enforced under Section 5 of the FTC Act for native ads. In December 2015, the FTC issued an enforcement policy and business guidelines (“Native Advertising Guidelines”). These include several targeted examples, advising that clear, proximate and prominent disclosures are required wherever consumers may be misled about the nature or source of an advertising message and to the extent that such false impression affects the consumers’ conduct regarding the advertised product or services. For example, disclosures are likely required where an advertiser pays a publisher to write about its products or otherwise to create content, such as branded videos, that directly or even indirectly promote a particular advertiser.

This includes using fonts and colors that stand out from editorial or independently written content, or in video or audio content, including visual or audio disclosures that are in fact seen or heard long enough to be understandable and are easy to read or presented in simple cadence. Such disclosures need to be displayed in front of or above the headline of the content, and included in any lead-in or tap in pages. The FTC also states that such disclosures should remain where content is re-published or re-shared. The FTC explicitly recommends disclosures such as “Advertisement” or “Sponsored Advertising Content” rather than more ambiguous terms such as “Promoted” or “Promoted Stories.” 

What to Expect

Marketers (including agencies, brands and publishers) should expect the FTC to enforce the Native Advertising Guidelines in 2016, emphasizing its core principles of transparency, disclosure, and monitoring. The FTC has indicated responsibility will fall on all involved parties to ensure compliance. Remember that in evaluating whether disclosure is required, the FTC will examine the “net impression” of the ad – examining factors such as its overall appearance, the similarity of its written, spoken or visual style to non-advertising content offered, and the degree to which it is distinguishable from other editorial content.

Vejay G. Lalla is a partner in the Advertising, Marketing & Promotions, Technology & Privacy Practice Group of Davis & Gilbert. He may be reached at 212.468.4975 or vlalla@dglaw.com. Paavana L. Kumar is an associate in the Advertising, Marketing & Promotions Practice Group. She may be reached at 212.468.4988 or pkumar@dglaw.com.