At a recent Federal Trade Commission (FTC) workshop, the focus was squarely on how advertisers and marketers should ensure the effectiveness of consumer disclosures, particularly on new digital platforms. Terming the topic one of “exceptional importance” that has been under study for more than one hundred years, FTC Chairwoman Edith Ramirez opened the workshop by emphasizing the agency’s focus on how best to evaluate the effectiveness of disclosures. The workshop sessions highlighted a variety of issues related to and research regarding disclosures, including the following five key takeaways:
- Disclosures need to be “clear and conspicuous,” a requirement that takes on added dimensions when dealing with a tiny mobile screen or a 140-character-limited twitter post. In evaluating whether disclosures stack up to this standard, the FTC uses the “4Ps,” which, as we explained when they were first announced, consist of prominence, presentation, placement, and proximity. It matters not that space is limited; the FTC’s disclosure guidance from 2000 and 2014 makes clear that it expects effective disclosures even on tiny screens and regardless of the inherent limitations of a particular medium.
- The words used to disclose that content is advertising are of the utmost importance. Consumers have no difficulty understanding words like “Paid” and “Sponsored.” Phrases like “Brand Publisher,” “Brand Voice,” or “Partner” are far less understood. This research has particular significance for paid content within broadcast programming – whether in ads or other types of sponsored content – because of the sponsorship identification requirements administered by the Federal Communications Commission (FCC). Under those rules, which require disclosure of the fact that content is sponsored and the identity of the sponsor, the only terms that the FCC has specifically approved are “paid for” and “sponsored.”
- Disclosures in native ads must appear where consumers will look (even if this undermines the whole purpose of using native advertising in the first place). The FTC continues to focus on native advertising issues, including by referencing the guidance provided in late 2015 to aid marketers in ensuring transparency with consumers. Native ads attempt to reach consumers with marketing messages through a much less disruptive advertising experience, which has shown to be an effective way to increase consumer response rates. But they are still subject to the same disclosure requirements as other ads, and the disclosures within them must be easily seen and understood by consumers. In particular, disclosures need to appear “where consumers will look” – specifically “in front of or above a headline.” And, if an image forms the focal point of a native ad, the disclosure needs to appear on top of the image.
- Disclosures are particularly important in social media marketing and other marketing methods that involve the use of endorsers and influencers. The FTC has long concentrated on the unique issues surrounding endorsers. Recently, the agency has stepped up its focus on these matters as social media and other new digital platforms have increased in popularity, taking action against endorsements for products ranging from video games to women’s apparel. The bottom line rule is that if there is a material connection between a marketer and someone who is commenting on the marketer’s goods, products, or services, it needs to be disclosed, and it needs to be disclosed clearly.
- Disclosures need to be “just in time” in order to be effective, and may need to be presented in multiple ways to ensure that consumers understand them. A disclosure that is distant in time from the issue it relates to is less likely to be considered effective. For instance, if an advertiser intends to use consumer information in a particular way, it needs to disclose that fact before collecting the sensitive content. Moreover, consumers tend to forget disclosures that are made in an app store or in the process of application install permissions, which may support additional disclosures within an app interface itself. At the end of the day, the FTC expects disclosures on all platforms to be “difficult to miss.”
Although the FTC has historically focused on advertisers rather than media outlets, the agency has previously indicated that it retains authority to prosecute broadcast stations, newspapers, and others that carry ads containing false or deceptive claims. Accordingly, these takeaways are important not only for advertisers and marketers, but for the media outlets that must decide how to deal with ads that may not include necessary disclosures.