Last week, the Federal Trade Commission issued an enforcement policy statement regarding its views on native advertising. The recent proliferation of natively formatted digital advertising led the FTC to become concerned that consumers may be deceived by the blurring between advertising and non-commercial content. Although the particular facts of a case will always determine whether the advertising material is deceptive, the FTC sets forth the following factors it will consider in making this determination:

  • The FTC considers the net impression the advertisement conveys to reasonable consumers, not statements in isolation. Importantly, a reasonable interpretation need not be the only interpretation nor the interpretation shared by a majority of consumers. For example, if a natively formatted ad appearing as a news story is interested in a content stream of a publisher that customarily offers news and feature articles, reasonable consumers are unlikely to recognize it as an ad. The target audience of an ad may also affect whether it is likely to mislead consumers. In digital media, ads can be targeted to consumers based on their known preferences. Accordingly, the FTC will consider the effect of an ad’s format on the reasonable or ordinary members of the targeted group. Finally, the FTC will consider any qualifying information in the ad. Disclosures that inform consumers of the commercial nature of the ad, including text, audio disclosures, or visual cues, will be considered, but the rules about prominence and proximity of such disclosures still apply.
  • Misleading claims regarding the nature or source of the advertisement are likely material. The FTC believes that misleading representations or omissions about an ad’s true nature or source, including that a party other than the sponsoring advertiser is the source of the advertising, are likely to affect consumers’ behavior with regard to that ad. Additionally, false statements that an ad reflects the independent, impartial views, opinions, or experiences of ordinary consumers or experts are presumed to be material misrepresentations. Any misrepresentation that advertising content is a news or feature article, independent product review, investigative report, or scientific research is also presumed to be a material misrepresentation.

TIP: The FTC’s policy statement is consistent with well-established principles, but provides some examples and further insight into when the FTC believes that disclosures may be necessary for advertisers to avoid making a material misrepresentation about the source of native advertising.