Technology: Regulatory guidance for digital advertising disclosures

The FTC’s new guide provides instruction on how the established rules apply on social media platforms

The Federal Trade Commission (FTC) recently released its updated guidance for online advertising disclosures titled .com Disclosures: How to Make Effective Disclosures in Digital Advertising (the “2013 Guide”). The prior version of this guidance was issued in May 2000 (before Twitter, Facebook, Instagram and other platforms existed). The 2013 Guide provides instruction and examples with regard to how the established rules apply to disclosures in advertisements on social media platforms or on devices with varying screen sizes and functionality, such as banners and Tweets (referred to in the 2013 Guide as “space-constrained ads”).

As discussed in our first column—advertising claims, whether express or implied and regardless of whether in a newspaper, on television or online—must be truthful and not misleading, substantiated and fair. The same holds true in the social media context. When a disclosure is necessary to limit an advertising claim or avoid a misleading understanding of an advertising claim, that disclosure must be clear and conspicuous. Whether a disclosure is clear and conspicuous “is measured by its performance—that is, how consumers actually perceive and understand the disclosure within the context of the entire ad.” The 2013 Guide reinforces the concept that “[t]he key is the overall net impression of the ad—that is, whether the claims consumers take from the ad are truthful and substantiated,” viewed under the “reasonable consumer” standard. 

The 2013 Guide highlights the factors to be evaluated when considering online disclosures, including (i) the placement and prominence of the disclosure; (ii) whether the disclosure is unavoidable; (iii) whether it addresses concerns about consumer distraction; (iv) whether the disclosure should or must be repeated; (v) whether the language used in the disclosure is understandable to the targeted audience; and (vi) other specific issues pertaining to audio and video advertisements (think YouTube and, soon, Facebook television-style commercials). 

Having an appreciation for the medium through which consumers will view advertisements, the 2013 Guide explains, with regard to placement and prominence, that when scrolling is required to identify a disclosure, advertisers “should use text or visual cues to encourage consumers to scroll and avoid formats that discourage scrolling.” Unspecific text or visual cues such as “details below,” scrolling and navigation bars on the side of the page, and unrelated visual clutter may, according to the 2013 Guide, make a disclosure insufficient. One way to help avoid these problems is to optimize the page for use on a mobile device so that a consumer can more easily identify a required disclosure on a smaller screen with different functionality. It is also important to place the disclosure in a location where it is unavoidable in those instances where a consumer is called to complete a transaction.

Recognizing that there may be circumstances where a full disclosure cannot be made on a “space-constrained ad,” the 2013 Guide provides instruction (and caution) regarding the use of hyperlinks. Hyperlinking to a disclosure may be acceptable, but only where the disclosure itself is not “integral” or “inseparable” from the advertised claim. According to the 2013 Guide, the most important considerations for evaluating the effectiveness of using a hyperlink to a disclosure are (i) the label or description of the hyperlink (although the hyperlink itself does not have to include the complete disclosure, make the hyperlink conspicuous and obvious); (ii) whether the hyperlink style used in the advertisement is consistent (is the hyperlink style for the disclosure different from other hyperlinks on the page, thereby increasing the possibility that a consumer will miss the hyperlink to the disclosure); (iii) whether the “placement and prominence” of the hyperlink will enable a consumer to appreciate the importance of following the link (is the hyperlink proximate to the claim requiring the disclosure); and (iv) whether clicking through the hyperlink takes the consumer to an adequate disclosure.

The 2013 Guide also makes clear that advertisers should consider other factors that could inhibit effective disclosures, such as using pop-ups for disclosures and variations in the way that disclosures appear in different browsers and on varying types of devices.

Understanding that “space-constrained ads” generally are teasers which link to the actual offer, the 2013 Guide states that “[i]f a space-constrained ad contains a claim that requires qualification, the advertiser disseminating it is not exempt from disclosure requirements,” and the advertiser should “disclose required information in the space-constrained ad itself or clearly and conspicuously on the website to which it links.” The more difficult analysis is making the call as to whether the disclosure needs to be included in the “space-constrained ads” or in the linked page.

In determining whether the disclosure should be placed in the space-constrained ad itself or on the website to which the ad links, advertisers should consider how important the information is to prevent deception, how much information needs to be disclosed, the burden of disclosing it in the ad itself, how much information the consumer may absorb from the ad, and how effective the disclosure would be if it were made on the website.

Where this analysis leads to the conclusion that the disclosure should be in the advertisement itself, but the appropriate disclosure does not fit in the “space-constrained ad,” the 2013 Guide provides that “the ad should be modified so it does not require such a disclosure or, if that is not possible, that space-constrained ad should not be used.” If an advertiser cannot modify the advertisement or make a required disclosure in a particular platform, that platform should not be used to disseminate the advertisement.

Placement and proximity, font and style, user experience, distractions and visual clutter – it all counts when making required disclosures in online advertising through social media and other “space-constrained ad” platforms. Keep in mind the consumer’s “overall net impression” of the advertisement, reference the 2013 Guide and its examples when embarking on a digital creative strategy, and be careful when using hyperlinks for disclosures. 

Contributing Author

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Christopher D. Mickus

Christopher D. Mickus is an attorney with Neal, Gerber & Eisenberg LLP (Chicago). He is a partner and leader of the firm’s recently-launched Advertising, Marketing...

Additional Contributors: Andrew G. May

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