Download FTC Regulation of Native Advertising

How FTC Regulation of
Native Advertising
Impacts PR Practice
Cayce Myers, Ph.D., LL.M., J.D.
Legal Research Editor Institute for Public Relations
Assistant Professor, Virginia Tech, Department of Communication
[email protected]
March 30, 2017
Native Advertising: Definitions
Seamless integration of promotional messages into
unpaid/non-promotional content
• Native advertising can take varying technological forms
such as recommendations, promotions, and search
results.
• Note that content marketing and native advertising are
viewed differently within industry (especially in
measurement), but may not be under the law.
Process and Cost
• Native advertising is about
placement and creating
awareness through traffic
• Placement needs to be made
in a way that provides
integration with other content
• Estimated 74 percent of
advertising expenditures will
be for native advertising by
2021
Benefits to Practitioners
• Native advertising is a regular part of
public relations practice
• It blends advertising and public
relations techniques and delivery
• It is extremely effective (high ROI), but
it is a practice that is increasingly
regulated. This may ultimately
affected ROI for native advertising.
Native Advertising and
First Amendment Issues
Native Advertising is Commercial Speech under the First
Amendment
• That means there’s less protection for its content under the
First Amendment (intermediate scrutiny)
• Practical effect: Federal agencies can regulate this type of
speech
• PR practitioners have (justifiably) been concerned over PR
being categorized as commercial speech
• However this categorization is not about self-identification. It is
about purpose of the speech.
FTC Regulations
• Federal agencies give two types of
guidance on their regulations
• Rules: similar to a statute; law of
the agency that is passed using a
notice and comment procedure
• Guidelines: interpretation of the
rule and how they will be applied by
the agency (sometimes this shows
more insight into agency mindset)
FTC Regulation of Deception
FTC has a policy statement on what is deception that states
deception must meet three requirements:
1) “There must be a representation, omission or practice
that is likely to mislead the consumer”
2) “The consumer using the product must do so
reasonably”
3) “The representation, omission, or practice must be a
material one”
(Federal Trade Commission, 1983, p. 1)
Evolving FTC Guidelines
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FTC Policy Statement on Deception (1983)
FTC Policy Statement Regarding Advertising Substantiation (1983)
Dot.Com Disclosures (2000)
Federal Trade Commission Advertising Enforcement (2008)
Blurred Lines: Advertising or Content? An FTC Workshop on Native Advertising (2013)
.com Disclosures (2013)
Enforcement Policy Statement on Deceptively Formatted Advertisements (2015)
FTC Issues Enforcement Policy Statement Addressing “Native” Advertising and Deceptively
Formatted Advertisement (2015)
Native Advertising: A Guide for Business (2015)
The FTC’s Endorsement Guides: What People are Asking (2015)
**Note: these guidelines and memos are cited in the IPR Signature Study: FTC Regulation of
Native Advertising: How New Federal Rules Impact Public Relations Practice
http://www.instituteforpr.org/ftc-regulation-native-advertising-new-federal-rules-impact-prpractice/
Deceptive Advertising &
Endorsement
• Honesty is the best policy
• No “special language” that needs
to be used
• Placement of disclosure is
important (cannot be hidden)
• For example social media may use
disclosures such as: #ad,
#sponsored, #promotion, #paid
ad
What Does FTC Look For in
Disclosures?
FTC states that it looks at 5 things when evaluating a disclosure:
1) Close to the claims to which they relate;
2) In a font that is easy to read;
3) In a shade that stands out against the background;
4) For video ads, on the screen long enough to be noticed, read,
and understood;
5) For audio disclosure, read at a cadence that is easy for
consumers to follow in words consumers will understand.
(FTC, 2015, p. 12)
What Does the FTC Look
for in Third Party
Endorsements?
FTC Endorsement Guidelines State that Organization Should Look at Four Things
When Determining Proper Endorsement:
1)
2)
3)
4)
Given an advertiser’s responsibility for substantiating objective product claims,
explain to member of your network what they can (and can’t) say about the
products—for example, a list of health claims they can make for your products;
Instruct members of the network on their responsibilities for disclosing their
connections to you;
Periodically search for what your people are saying; and
Follow up if you find questionable practice
(FTC, 2015, p. 16)
Native Advertising
Regulations
• Disclosure in a native advertisement depends on if the
advertisement is obviously an ad (if it’s obvious, then no
disclosure required)
• Transparency is the key element in evaluating whether
something is deceptive (when in doubt disclose)
• Note that native advertising transparency relates to
technology; sometimes technology allows for greater or less
deception (Example: social media disclosures need to remain
when shared)
• Context of the native advertisement matters (Example: a
disclosure at the end of a video is not as transparent as a
disclosure at the beginning)
Things to Avoid When
Making Disclosures
1) Technical of industry jargon;
2) Different terminology to mean the same thing in different
places on a publisher site;
3) The same terminology to mean different things on a
publisher site;
4) Terms that customarily have different meanings to
consumers in other situations;
5) Unfamiliar icons or abbreviations;
6) Company logos or brand names unaccompanied by a clear
text disclosure.
(FTC, 2015, section III (C), para. 1)
Implications for
Public Relations
1)
2)
3)
Public relations is subject to some advertising
laws. Native advertising is subject to laws
governing commercial speech. PR is subject
to government regulations.
Native advertising regulations will change
based on consumer awareness. Some
consumers are savvy, some aren’t. As
technology evolves so do consumers’
expectations.
When in doubt, disclose and be honest. No
one will be sanctioned for over-disclosure.
The FTC guidelines make that clear.
Questions?
References
• Federal Trade Commission. (1983a). FTC Policy Statement on
Deception. Retrieved from:
https://www.ftc.gov/system/files/documents/public_statements/410
531/831014deceptionstmt.pdf.
• Federal Trade Commission. (2015a). Native Advertising: A Guide For
Business. Retrieved from: https://www.ftc.gov/tips-advice/businesscenter/guidance/native-advertising-guide-businesses.
• Federal Trade Commission. (2015b). The FTC’s Endorsement Guides:
What People Are Asking. Retrieved from:
https://www.ftc.gov/system/files/documents/plain-language/pdf0205-endorsement-guides-faqs_0.pdf.
Thank You!
Cayce Myers, Ph.D., LL.M., J.D.
Legal Research Editor, Institute for Public Relations
Assistant Professor
Department of Communication
Virginia Tech
[email protected]
@CayceMyers