Small businesses and multi-billion dollar companies alike are advertising online. As more consumers are using social media, blogging, or surfing the web than ever before, more of them are using mobile devices to do so. Savvy marketers know that digital advertising is where the action is. And so does the Federal Trade Commission.

In recognition of the fact that online advertising is exploding and that technological advances have changed the way consumers view and interact with ads in the digital space, the FTC recently published important new guidelines concerning online advertising.1 The purpose of the guidelines is to assist advertisers in making clear and conspicuous online disclosures. While these guidelines do not themselves have the binding effect of law, they do provide guidance on how the FTC interprets the laws it is tasked with administering, and noncompliance could result in an FTC investigation or worse, an enforcement action.

One of the primary missions of the FTC is to protect consumers from unfair or deceptive business practices.2 Historically, the FTC has advanced this mission by enforcing the three golden rules of advertising:

  • the advertisement must be truthful and not misleading;
  • any objective claim in the advertisement, whether explicit or implicit, must be substantiated; and
  • the advertisement cannot be unfair.3

One of the most important tools in the advertiser’s toolkit for ensuring compliance with these rules is the appropriate use of disclosures. Disclosures serve a vital purpose by providing consumers with information necessary to understand a factual representation and any exceptions, qualifications, or limitations thereto, and to prevent an ad from being deceptive or unfair. However, to be effective, the disclosure must be presented “clearly and conspicuously,” which is determined by evaluating whether consumers actually read and how they understand the disclosure when viewed in the context of the entire ad.4 Meeting this standard can be tricky, especially where social media ads and mobile ads are involved. The new guidelines help businesses navigate the digital terrain by providing concrete examples of acceptable and unacceptable disclosure practices.

Here are some considerations for ensuring that your digital advertising disclosures are clear and conspicuous:5

1. Location, location, location!

Proximity to the factual representation is critical when assessing the effectiveness of a disclosure. The disclosure and the claim it qualifies should appear on the same screen, even if that screen is on a mobile device, and preferably adjacent to one another. If possible, the disclosure can be incorporated into the text of the ad along with the claim. Where scrolling can’t be avoided, text or visual cues may be used to tell consumers where the disclosure can be found and provide information noting the claim to which it refers, e.g. “See below for important information on typical weigh loss results.” It should also be kept in mind that, where consumers may purchase the product or service online, the requisite disclosure must be displayed prior to completing the transaction, e.g., the consumer must be made aware of the disclosure prior to being able to click on the “add to cart” link. The FTC also strongly discourages the use of pop-ups to communicate disclosures.

2. Caution - Hyperlink Ahead.

While the FTC guidelines make clear that the preferred practice is to incorporate any disclosures into the ad, they also recognize that, in some situations, hyperlinks may be used appropriately to link to a disclosure. If you do use a hyperlink, it should be clearly labeled so that consumers understand the subject matter of the information found by clicking on that link. For example, simply saying “click here”, “more information”, or “disclaimer” is insufficient. Instead, language that conveys the subject matter and importance of the information provided in the disclosure should be used, e.g., “Restocking fee applies to all returns.” In addition, hyperlinks are not suitable for disclosures that contain critical information, for example serious health and safety information or information about a product’s actual cost. These disclosures should appear prominently directly next to the claim.

3. Understand the technology.

Advertisers need to be sensitive to the fact that their ads will likely be viewable on mobile devices, and should make sure that disclosures appear prominently on these devices as well. Disclosures that are too small to read, that are dwarfed in comparison to the representation to which they pertain, that require an unreasonable amount of scrolling, or that contain text that does not wrap around to fit on the screen will likely not pass muster. The guidelines advise advertisers to take into account how the ad is actually displayed on the screens of all of the devices on which it may be viewed to determine whether the placement of the disclosure is effective on each device. Moreover, the guidelines expressly state that technological limitations are no excuse for insufficient disclosures. If a platform does not allow the advertiser to present the disclosure in a clear and conspicuous manner, then the ad should not be run on that platform, and a different media should be selected.

4. Clarity is key.

Advertisers should review their ads the way a reasonable consumer of their product would. Disclosures should be in clear language, and should not be buried in terms of use or other legalese, even if consumers have to click that they “agree” to be bound by such terms. While short-form disclosures and abbreviations may be appealing given the space constraints of social media, these forms should be used with caution. “Ad” or “Sponsored” at the beginning of a tweet or social media post may adequately inform consumers that the message is an advertisement. However, other abbreviations like “#spon” or “bit.ly/d23” may not be sufficient to alert consumers that the post is sponsored by the seller of the products or services, or that certain disclosures may be found by clicking on the link. According to the guidelines, empirical evidence may be required to show that consumers understand the meaning of the short-form disclosure. In addition, republication raises special issues, and advertisers should take steps to ensure that disclosures are not lost if an ad is retweeted or reposted. For example, disclosures could be placed at the beginning of a message instead of at the end.

5. Do your homework.

One of the most attractive aspects of digital marketing is that it provides a wealth of information to advertisers. The FTC expects advertisers to use this information to confirm that their disclosures are being effectively communicated. The guidelines advise advertisers to use analytics to determine the efficacy of disclosures. For example, click through rates can let advertisers know how often consumers actually click on a hyperlink to view disclosure information. If the rate is low, the advertiser needs to find another method to communicate this information. In addition, advertisers should review and consider empirical research concerning where consumers look on a screen and where they do not look when deciding where disclosures should be placed.

There is no doubt that the golden rules of advertising still apply, with a few new wrinkles. Advertisers would do well to keep these guidelines in mind when crafting new campaigns, and to seek the advice of an experienced practitioner to ensure compliance with all applicable guidelines, rules and laws.