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Here's How to Avoid FTC Scrutiny of Your Clients' Native Ads

New guidelines detail disclosure requirements

Cole Haan used 'Grit & Grace,' as a native ad on the NYT's site in late 2014. New York Times

The Federal Trade Commission has new guidelines for native ads—and a new commitment to cracking down on violators, which could include brands, agencies or others involved with creating branded content.

"In appropriate circumstances, the FTC has taken action against other parties who helped create deceptive advertising content – for example, ad agencies and operators of affiliate advertising networks," according to the guidelines. "Everyone who participates directly or indirectly in creating or presenting native ads should make sure that ads don't mislead consumers about their commercial nature. Marketers who use native advertising have a particular interest in ensuring that anyone participating in the promotion of their products is familiar with the basic-truth-in-advertising principle that an ad should be identifiable as an ad to consumers."

The native advertising business guidelines were released Tuesday along with policy enforcement details surrounding their use. With this long-awaited guidance, the FTC, historically the watchdog for deceptive or unfair advertising practices, now clarifies its stance in the digital realm involving ads that are designed to resemble surrounding editorial content.

"In evaluating whether an ad is deceptive, the FTC considers the net impression the ad conveys to consumers. Because ads can communicate information through a variety of means – text, images, sounds, etc. – the FTC will look to the overall context of the interaction, not just to elements of the ad in isolation," according to the government agency. "Both what the ad says and the format it uses to convey that information will be relevant. Any clarifying information necessary to prevent deception must be disclosed clearly and prominently to overcome any misleading impression."

The more similar a native ad is to the format and subject matter of a publisher's site, the more likely a disclosure will be required and the FTC considers misleading formatted ads to be deceptive regardless of whether the underlying product claims are truthful.

With the new guideleines, the government agency offers advice in how to handle disclosures in digital advertising: They should be in clear and unambiguous language and as close as possible to the native ads to which they relate.They should use a font and color that's easy to read and in a shade that stands out against the background. For video ads, the disclosures need to be on the screen long enough to be noticed, read, and understood and for audio disclosures, they need to be read at a cadence that's easy for consumers to follow and in words consumers will understand.

What's more, the FTC warns that disclosures must be clear and prominent on all devices and platforms used to viewing native ads. In assessing "effectiveness," disclosures should be considered from the perspective of a reasonable consumer and when ads are specifically targeted, the relevant perspective is that of a reasonable or ordinary member of the targeted audience.

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