FTC on Native Ads: Seller Beware

WASHINGTON — Native advertisers be forewarned: The government has its eyes on you.

The Federal Trade Commission late last month issued new guidelines for “native” advertising meant to help advertisers and media outlets figure out what kind of disclosures they need to put on such ads, which resemble the news or entertainment content in which they are placed.

But it also served as a warning that native ads that deceive by failing to adequately disclose their nature are in the agency’s crosshairs.

“A basic truth-in-advertising principle is that it’s deceptive to mislead consumers about the commercial nature of content,” the FTC said. And the truth of a claim is no defense if it is an ad masquerading as an independent endorsement, according to the agency.

“The FTC considers misleadingly formatted ads to be deceptive regardless of whether the underlying product claims that are conveyed to consumers are truthful,” it said.

The agency put out revised guidelines on green-marketing claims, then followed those up with a raft of actions targeting environmental marketing. It also updated its endorsement guidelines, then brought enforcement actions.

The guidance on native ads could follow the same pattern.

An FTC source speaking on background said the agency puts out such guidelines for a reason — in this case, so marketers can read them and make sure they are complying.

There’s no guarantee the guidance would be followed by actions against marketers, the agency source said, while noting that the FTC is an enforcement agency. The commission has not brought any cases related to online native ads, but that’s because it is a relatively new category, the source pointed out.

The FTC boiled down its advice to three main points:

• “From the FTC’s perspective, the watchword is transparency. An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.”

• “Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure. In other instances, a disclosure may be necessary to ensure that consumers understand that the content is advertising.”

• “If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.