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5 Ways to Ensure Your Native Ads Comply With FTC Guidelines

Maximus | 5 Ways to Ensure Your Native Ads Comply With FTC Guidelines

April 16, 2018

5 Ways to Ensure Your Native Ads Comply With FTC Guidelines

As of 2017, 37 percent of publishers remained non-compliant to FTC standards.

Native advertising has been growing in popularity with advertisers over the past several years because it is more engaging and less disruptive than traditional ads. The format has raised some transparency issues, leading the Federal Trade Commission to develop an overhaul on native ad guidelines.

The FTC rolled out guidelines on native advertising in 2015. However, more than a third of publishers remained non-compliant with these guidelines in 2017.

The FTC considers an ad non-compliant if it is misleading. This is determined based on two factors. The first is if the ad construes a misrepresentation of the material. The second factor is if the ad omits information that is likely to mislead users. A material misrepresentation occurs when the presented information could affect consumers’ choices regarding a product or its advertising.

The other determining factor is whether or not the ad is deceptive. To make this determination, the FTC analyzes the ad’s text, image, and other components to understand the overall context of how people interact with it. Both the ad’s explicit message and its implied message are relevant in making this judgment.

Advertisers who don’t comply with with guidelines face hefty fines. The reasoning behind this is that knowing something is an ad will likely affect whether consumers choose to interact with it. This knowledge also allows the consumer to individually assign the information weight and credibility.

The new crackdown comes after a landmark lawsuit in 2016, in which the FTC accused department store Lord & Taylor of misusing native advertising. The company launched a “product bomb” campaign on Instagram and online fashion magazine Nylon. However, Lord & Taylor did not require Nylon or the influencers in their product bomb campaign to disclose that the posts were sponsored.

The FTC filed complaint charges against Lord & Taylor, stating that the company failed to accurately disclose that the posts were part of a paid advertising campaign. The FTC also said Lord & Taylor falsely represented the posts as individual opinions and the relationship between the brand and the influencers.

Lord & Taylor ended up settling the case, but it isn’t the first company to experience this type of punishment, and it likely won’t be the last.

A study conducted by MediaRadar found that, as of 2017, 37 percent — more than one third — of publisher websites failed to comply with FTC guidelines.

Native advertising content works well for both advertisers and publishers because it’s more engaging than traditional ads. Native ads also contextually match the surrounding content, meaning they’re also less disruptive than traditional ads. However, because native ads are relevant to the site, users might have a difficult time distinguishing ads from site content.

With native advertising spend set to increase to $21 billion in 2018, it’s imperative that companies assess their native strategies to ensure they’re compliant with FTC ad standards. Here are five ways to make sure your ads are FTC compliant.

  1. VMake sure ads read as ads. Native ads don’t always sound like advertisements. Advertisers need to make sure to use language that indicates sponsored content. Additionally, each ad should feature a disclosure. This is an important feature to have in native content because it’s what distinguishes ads from other content.
  2. Make disclosures in clear, unambiguous language. Using a phrase such as “presented by” or “promoted by” is insufficient on its own. The FTC recommends using “ad,” “advertisement,” “paid advertisement,” or “sponsored ad” to denote ads. Phrases like “paid by” and “advertiser post” are acceptable as well.
  3. Denote sponsorship as closely as possible to ads. Just as location matters in ad placement, it also matters in disclosure placement. Disclosures should be placed as closely as possible to ad text or images to make this material connection clear.
  4. Optimize the viewability. Advertisers should prominently place ad disclosures in a font large enough to easily read. They should also appear in a font that’s easy to read. The font color should contrast with the ad’s background color. Videos must also contain disclosures. Publishers should include disclosures in the captions of videos, images, and social media posts for optimum visibility.
  5. For video ads, make sure an advertising disclosure is on screen long enough to be noticed and read. Placement and visibility are important factors to consider in video ads, just as they are in image or text ads. If the ad is sound only, as in the case of a radio or podcast ad, make sure the content is read at a pace and volume that is easy for listeners to follow.

For more information on what the FTC considers appropriate disclosures, check out the FTC Guide For Businesses published on its government website.