The Federal Trade Commission recently updated its online advertising guidelines to accommodate the growth of mobile and social media marketing. Going forward, paid tweets must begin with the word “Advertisement” and all commercial statements must carry clear disclosure. Is the link you're tweeting from your employer? Or a client? You need to state that. The new rule is, if money is being exchanged, disclose it.
If the screen cannot process the additional language required in the disclosure, “the device or platform should not be used,” the FTC said.
The language sounds prescriptive and the threat of enforcement is imminent and powerful, but the Commission says there is no need for alarm.
“This is not regulation,” Richard Cleland, assistant director of the FTC's advertising practices division, told E-Commerce Times. “These new guidelines are pure guidance, more like a how-to for self-help.”
But it would be a mistake to view these guidelines as an impotent wish list from the FTC.
“The guidelines help you understand what we're thinking — where we stand when it comes to evaluating whether your disclosures are sufficient,” Cleland added. “So you can see what we're looking at when making decisions.”
The issuance of these guidelines continues the FTC's trend of cracking down on unethical behavior in new media. Three years ago, it imposed rules on bloggers requiring them to disclose if they received compensation from brands to review or endorse products.
If the FTC is already cracking down on dodgy bloggers, why is it releasing these new guidelines now?
Where is the beef?
Opportunities for bad marketing practices online are increasing. According to a 2013 Pew media study, native advertising, advertorials, and content marketing are on the rise. Much of this content is distributed through Facebook, Twitter, and Pinterest, and will continue to expand into the mobile environment.
What makes this growth even more alarming is that marketing messages are spreading to places readers never expect.
A prime example is The Atlantic's recent misstep with native advertising for the Church of Scientology, which is essentially what in the print news industry are called “advertorials” — articles generated by the advertiser.
Although there was a small box in the article indicating that it was “sponsored content,” readers could easily have overlooked it, and it's doubtful that most people would have understood what it meant even if they saw it. Even fewer would have moused over the “What's this?” question near the box to see an explanation that the article was, in fact, an advertisement.
To make matters worse, despite the uproar over the article elsewhere on the internet, comments on the piece were initially entirely positive: It turns out that The Atlantic's marketing team, at least initially, was scrubbing negative or alarmist comments from its comments page, further confusing readers about the value and reliability of the content.
“In the case of the post about Scientology, our marketing team monitored some of the comments,” Atlantic spokesperson Natalie Rabe said in the magazine's official explanation of the blunder to The Washington Post.
The incident “clarified our policy on how we police sponsored content,” she added.
“The Atlantic quickly removed an ad from its website that vaguely identified the Church of Scientology, and later explained, 'As we explore new forms of digital advertising, we now realize that we did not update the policies that inform the decisions we make along the way. It is fair to say that after running this ad, we have given these policies more thought than we have before,'” the Pew report noted.
One cannot help but wonder whether policing comments so that only positive mentions appear under a particular article was an acceptable practice under any policy.
To meet 24/7 news demand and generate revenue, cash-strapped news organizations are turning to native advertising as supplemental content. At first glance, this seems like an understandable move: after all, news has always been funded by advertising, and ad-supported articles are nothing new.
The difference is that the once insurmountable walls between journalists and advertisers, between news content and advertising content, have now been torn down: native advertising is rarely sufficiently distinct from news content across all new media, including mobile, and it is no longer limited to traditionally respected news publications like The Atlantic.
Will the new FTC guidelines work?
“We think these rules are a step in the right direction, but they are by no means a way for unethical marketers to get away with it,” Jameson Brandon, CEO of Digital Centrix, told E-Commerce Times. “Overall, most ethical marketers feel that unethical marketers are undermining their bottom line.”
There is certainly some unhappiness among the online advertising community over these new guidelines.
“The enforcement issue is still open at this point,” Sarah Hudgins, director of public policy at the Interactive Advertising Alliance, told E-Commerce Times.
“There is precedent for existing discovery enforcement,” she said, “but enforcement will probably continue to be handled on a case-by-case basis. There is a lot of fear because no one wants to be the first test case for something new.”
The FTC recognizes the fear and confusion but is unsure how to address it.
“We wish we could give clear answers for every situation, but this is a complex issue,” Cleland said, “so the best we can do is just be transparent about our decision-making process.”
A look back at enforcement actions taken under previous blogger rules gives some insight into how aggressively the new FTC guidelines will be enforced. Four companies have received what amounts to minor penalties to date: Ann Taylor, HP, Nordstrom, and Hyundai. Two have actually received enforcement actions: Legacy Learning and Reverb. A total of six actions is hardly excessive.
“We've tried to take an educational rather than regulatory stance,” said the FTC's Cleland, “trying to get people to understand that full disclosure is needed in tweets, blogs and so on.”
However, the FTC will act aggressively if it determines that an advertiser is knowingly distributing false advertising. The FTC's goal appears to be to weed out the worst advertisers and educate the rest.
“We're doing everything we can to get the word out,” said the FTC's Cleland.
However, it is virtually impossible to check for every possible criminal on the Internet and on mobile.
“We can’t look at all the downstream influencers, so we focus on advertisers,” Cleland said.
Burden or blessing?
So how do marketers view these new guidelines? Do they represent a burden or a boon to the online advertising industry?
“What the FTC has announced should come as no surprise or burden to companies that are doing things 'right,'” said digital marketing consultant Ted Szynzynski.
“Transparency has always been key on social media, and the more effort a company makes to set the stage, the better the response tends to be,” he told E-Commerce Times.
“Even if the new regulations are only marginally successful, the change will be positive,” said James Delaney, chief operating officer at DMi Partners.
“It will allow for a better match between potential customers and advertisers,” he told E-Commerce Times.
The IAB also acknowledged the efforts the FTC had made and the difficulties it had in carrying out its mission, although it had a few reservations.
“The FTC has had a tremendous task in terms of expanding its guidelines,” Hudgins said.
“That being said, while some of the guidelines make sense, others are shortsighted, but that's a common tendency among many government agencies and legislatures as they try to regulate technologies that are still evolving,” she noted.
“The guidelines for development in this space are inflexible,” Hudgins said. “They are light on what can be done in this space, and they're vague and confusing in places, especially in the mobile space.”
Still, in Hudgins' view, the guidelines are “almost there, but not quite there yet.”
So what can marketers do to avoid run-ins with the FTC?
“We advise everyone to read the guidelines carefully, consider their campaign carefully, and ask themselves if they are acting honestly in their campaign or if they are trying to hide,” Hudgins said. “Instead of limiting your creativity, work with your legal counsel to make sure you are completely honest about the fact that your campaign is a marketing campaign.”
However, please refrain from using lawyer jargon as this will not help your case and may actually make it worse.
“Sometimes it almost amounts to over-disclosure,” Cleland says. “You need to do that. It's actually better to communicate in plain English.”
The FTC isn’t the only one policing marketing practices, so be vigilant in being transparent.
“Bloggers and social media people frequently report violators,” the FTC's Cleland said, “or they read media reports or newspaper articles about people who aren't following the rules.”
Journalists are not a subject of interest to the FTC, at least when it comes to their posts and tweets. I asked Mr. Cleland for his opinion on the Muck Rack social media disclaimer he linked to. My Twitter profile And it has influenced the opinions of many journalists I know.
“We don't consider journalists' tweets or posts to be commercial speech, so they are not of concern to us,” he said. “But to answer the question of whether a disclaimer link in a Twitter profile is sufficient, I would say that it is a very questionable way of conveying information to followers.”
While journalism is not commercial speech, increased transparency across the web, and on social media in particular, will likely cause journalists, editors, and their publications to rethink how they handle disclosures as well.
