Advertisers must make disclosures clear and conspicuous in ads disseminated on social-media platforms or accessed via smartphones and other mobile devices, according to Federal Trade Commission guidelines.

On March 12, FTC published revised online advertising disclosure guidelines, initially issued in 2000. The updated guidelines detail the commission’s expectations for how disclosures should be made online, noting in particular that social-media content and ads accessed with mobile devices create new challenges for advertisers.

“If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures,” according to the guidance.

FTC published the original guidelines before Twitter, Facebook and other social networking and media platforms boomed, and before sponsors commonly compensated the sources of endorsements made on such platforms ([A#02121001002]).

Division of Advertising Practices Director Mary Engle says FTC needed to update the guidelines “to reflect this whole movement toward having … brand evangelists or ordinary consumers speaking on behalf of a company.”

“Given the passage of time and technology changes” since the initial online disclosures guidelines, the commission included information “specifically looking at the issue of disclosures on the small screen,” Engle said in an interview shortly before the guidelines were published.

Attorney Pedram Tabibi of Meltzer, Lippe, Goldstein & Breitstone in New York said that while this is FTC’s first guidance addressing ad content on mobile devices and how advertisers must make sure consumers see disclaimers on a small screen, such requirements should not take marketers aback or pose unheard-of challenges. Many firms already use social media and format their ads for mobile phones, he pointed out.

“If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.” – FTC updated online disclosure guidelines

“This shouldn’t be something that would flip your business model. … This might be a welcome time for it to come, because they can incorporate it into digital advertising now as opposed to two years from now,” Tabibi said.

FTC also advises advertisers to research whether and how consumers read disclaimers. The guidelines say firms should “keep abreast of empirical research about where consumers do and do not look on a screen” and review their own data about where consumers click through as they read ads.

Leonard Gordon, a former director for FTC’s Northeast Regional Office, underscores that the guidelines repeatedly direct marketers to monitor web traffic to tell who is clicking through a link to a disclosure. Common online analytics tools can accomplish this, he says.

“Analytics are getting more sophisticated, but [the data] could also come back to bite [advertisers] if it shows that a marketer points to a disclosure and FTC argues that no one looks at it,” said Gordon, now with law firm Venable’s Washington office.

According to the guidance, the real test of whether a claim is misleading is “not the size of the font or the location of the disclosure,” but “whether the information intended to be disclosed is actually conveyed to consumers.”

FTC expects advertisers to follow the revised guidelines without delay.

“It is intended to help businesses in making clear and conspicuous disclosures so that they comply with existing laws, and the advice is applicable now,” said Division of Advertising Practices attorney Michael Ostheimer.

Disclosure, Symbols And*

A common practice among firms in online ads – using an asterisk to refer readers to a related statement elsewhere on a web page – is not sufficient under the guidelines. “Symbols or icons by themselves are not likely to be effective as hyperlink labels leading to disclosures that are necessary to prevent deception,” FTC says.

Similarly, symbols intended to represent a disclaimer or a disclosure are not sufficient when an ad does not also include an explanation of a symbol’s meaning. The guidelines include an example of endorsement text followed by the letters “FS” in a circle, intended to disclose that the endorser received a free sample in exchange.

“Icons and symbols such as this are not adequate to prevent a claim from being misleading if they do not provide sufficient clues about why a claim is qualified or about the nature of the disclosure,” FTC says.

“Simply making the disclosure available somewhere in the ad, where some consumers might find it, does not meet the clear and conspicuous standard,” the agency adds.

An example shows a blogger putting a disclosure at the bottom of the page, away from the text of the endorsement. The disclosure also appears after several hyperlinks to unrelated information, a placement that “could distract readers and cause them to click away before they get to the end of the post,” FTC notes.

Attorney Ann Begley argues FTC might have difficulty enforcing against firms’ use of asterisks to refer to a disclosure. Consumers know the symbol means more information about a claim is included elsewhere in an ad, she says.

“It’s universal to suggest it’s an adequate indication to point to additional information because there’s some kind of qualifier,” said Begley of Morgan, Lewis & Bockius in Washington.

Gordon believes the entirety of an advertisement will have an impact on how much weight FTC will give to the prominence of disclosures and the clarity of symbols.

“If everything else about the advertising is O.K., and it’s just that the disclaimer isn’t prominent enough, that would be a harder case, versus if there are a lot of issues – and then the symbol issue,” said Gordon.

Attorney Barry Cutler maintains, though, that a significant minority of consumers – 10% to 15% – would not understand the meaning of an asterisk or other symbol in an ad, which means the ad fails to comply with FTC standards.

“If you’re doing a symbol and only people in the trade will understand, then you’re going got have to find a better way to do it, or maybe it could be clearer,” said Cutler, a former director of the FTC’s Bureau of Consumer Protection now with Baker Hostetler in Washington.

Limited Space Is #NoExcuse

The guidelines state that a Twitter post from an endorser of a product must provide a disclosure within the 140-character tweet, and not make the disclosure only in a linked document or fail to make it clear that the tweet is sponsored.

In one example included in the guidance, FTC says a sponsored Twitter post endorsement might state, “Shooting movie beach scene. Had to lose 30lb in 6 wks. Thanks Fat-away Pills for making it easy. [link]”

Despite the limited space, the agency says, the advertiser must include an indication that the Twitter source is paid and that the weight-loss claim is not typical. The advertiser can make the hypothetical sponsored tweet compliant by starting the content with “Ad” and by including a disclaimer at the end, such as “Typical loss: 1lb/wk.”

Ivan Wasserman, partner at law firm Manatt, Phelps & Phillips, said the revised guidelines clarify what FTC looks for from firms using Twitter for advertising.

“I think industry has been struggling with Twitter and how to let consumers know it’s a sponsored ad, and/or material connections between endorser and the speaker in the social media,” Wasserman said.

Acknowledging the limits of mobile device screens, FTC suggests that marketers also consider formatting their online ads for mobile viewing. Technology allows websites to identify when access is from a mobile device and then transmit mobile-formatted content to the device.

“I think that is where companies will go,” Begley said. “They will develop modified visuals because it’s a smaller space and they can convey less information.”

Some firms, though, could be deterred by the additional costs of formatting ad content for mobile access. In those cases, firms are better off not using online ads that should include disclosures because chances are consumers will read the ad on mobile devices.

“If the cost is prohibitive, then you can’t make the claim. If there isn’t enough space, then maybe it’s the wrong space to be advertising,” Begley said.

Endorsement Rules

The online disclosure guidelines build on FTC’s 2009 Guidance Concerning the Use of Endorsements and Testimonials in Advertising, which made it clear that bloggers must clearly state any relationship with a brand and whether they received compensation for a post, including free products. The endorsement guidelines also say any information the bloggers present must not be misleading Also see "FTC Testimonial Guide Moves Past "Results Not Typical," Enters Blog Era" - Pink Sheet, 12 October, 2009..

As FTC has previously stated, Ostheimer said the commission is not monitoring blogs. “We have no plans to. If concerns about possible violations of the FTC Act come to our attention, we’ll evaluate them case by case,” he said.

“Incremental Change”

Detail regarding the commission’s expectations for social media and mobile web ads is the most significant difference between the 2000 and current guidance.

“For most marketers, this is not a radical departure, it’s an incremental change,” Gordon said. With technology constantly changing, updated advertising guidelines will be an ongoing process.

Cutler also said the guidance is not changed much from 2000, and instinct will come into play in interpreting the guidance and advising advertisers on whether disclosures are needed or are sufficient.

“It’s not easy to get an answer, even if they had more information. There are so many different ways that this applies. I trust my instincts and say, ‘Does this look like it was designed so people would see it in a variety of platforms?’ And then you have the question of what they would do if they wanted to get the information across versus having to,” Cutler said.

Begley observed that the guidelines reinforce FTC’s expectations for advertising while addressing different media platforms and making clear that ad content on all media platforms is subject to the commission’s standards.

“I think it showed a level of rigidity that they’re not going to bend. They’re saying the law is the law and it’s your job to comply with FTC,” she said.

Within a year, FTC will test cases based on the guidelines, she added. The commission will look for problem disclosures, and “we know they’re out there.”

FTC Brings Dot-Com Disclosure Guide To Social Media, Mobile Era

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