Mobile and social media marketing are on the rise.1 With that in mind, the Federal Trade Commission issued new guidance for advertisers on how to make effective mobile and other online disclosures. Entitled “.com Disclosures: How to Make Effective Disclosures in Digital Advertising,”2 the guidance provides an update to the FTC’s 2000 publication on the same topic. The revised guidance is intended to address the expanding use of smart phones and social media marketing, where small screens and character limitations pose challenges for companies making advertising claims.3 Although the guidance itself is not law, the FTC cautions that these disclosures are required by the laws it enforces.
The new guidance reiterates that the rules that apply in the consumer protection space as a whole, including the FTC Act’s prohibition on “unfair or deceptive acts and practices,” apply equally online and in the mobile marketplace.4 Although the revised guidance includes specifics such as size, font, and locations of disclosures, it stresses that the ultimate test for whether a particular ad is deceptive, unfair, or violates an FTC law or rule is whether the information intended to be disclosed is actually conveyed to consumers. Importantly, the FTC warns that “if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.”5
FTC Advertising Law Basics Apply in the Online Space
As with the 2000 guidance, the new document emphasizes that the basic principles of FTC adverting law apply to advertisements in any form, including online ads. These core principles require that advertising must: (1) be truthful and not misleading; (2) be backed by evidence that supports the claims in the advertisement; and (3) not be unfair.6 If an ad is likely to mislead a consumer, be unfair, or otherwise violate a FTC rule without certain qualifying information, then a disclosure must be used to qualify or limit that claim.7 If practical, advertisers should incorporate this disclosure into the claim instead of having a separate disclosure that qualifies each claim.8 The new guidance reiterates the long-held FTC principle that a disclosure can only qualify or limit a claim to avoid a misleading impression—it cannot cure a false claim.
The FTC also requires that disclosures be clear and conspicuous.9 In determining whether a disclosure is clear and conspicuous, the FTC encourages advertisers to consider: (1) the proximity and placement of the disclosure; (2) the prominence of the disclosure, including the size, color, and graphics used to draw attention to the disclosure; (3) whether the disclosure is unavoidable; (4) the risk that other parts of the advertisement could distract a consumer from reading the disclosure; (5) whether the disclosure needs to be repeated multiple times or in multiple locations to effectively reach consumers; (6) whether the disclosure is at an adequate volume or appears for a sufficient duration; and (7) whether the language of the disclosure is understandable to the intended audience.10
Making Clear and Conspicuous Disclosures in Space-Constrained Online Ads
The FTC emphasizes that these traditional factors should be used to evaluate whether disclosures are likely to be clear and conspicuous in the context of online ads. With regard to the proximity and placement of disclosures, the FTC explains that the extent to which a consumer needs to scroll in order to view disclosures may affect whether the disclosures are clear and conspicuous, especially on a small screen.11 If scrolling is necessary to view a disclosure, the FTC recommends that the disclosures be “unavoidable”—that is, consumers should be required to scroll through the disclosure before proceeding with a transaction.12 The guide also encourages optimizing websites for mobile devices to eliminate the need for scrolling.
Another factor that the FTC will consider in determining if a disclosure is clear and conspicuous is the use of hyperlinks. The FTC cautions that while hyperlinks may be useful, particularly where the disclosure is lengthy or needs to be repeated, they may never be used if the disclosure is integral to or inseparable from the claim.13 Rather, for inseparable claims, the disclosure must be placed on the same page and immediately next to the claim.14 The guidance explains that for hyperlinks to be effective, they should be obvious; labeled to convey the importance, nature, and relevance of the information to which the hyperlink applies; indicate why a claim is qualified or linked to a disclosure; account for the technological differences and limitations of different platforms; be presented consistently in a hyperlink style throughout the ad; be prominently placed; and lead the user directly to the hyperlinked text.15 The guidance cautions that hyperlinks are likely inadequate where they use a single word or phrase, or where they are labeled “disclaimer,” “fine print,” or “important information,” because consumers are unlikely to understand the significance of the hyperlinked information.16 Further, the guide encourages advertisers to use analytic tools that measure click-through rates and to not ignore data that suggests that hyperlinks are not followed.17
The FTC also singles out pop-ups as an issue that could negatively impact the effectiveness of required disclosures, because customers might not read the information or understand what claim the disclosure relates to, and pop-up-blocking software may block the pop-up.18
In addition, the new guidance clarifies that disclosures must be communicated before a customer makes the decision to purchase an item (e.g., before a customer adds an item to a shopping cart) rather than solely on the “order screen.”19 If a disclosure is unlikely to be read because a consumer is interested in completing the task at hand, such as signing up to receive a service, the guide recommends requiring the user to affirmatively acknowledge the disclosure by answering a question about the disclosure before an item is added to the shopping cart.20 The FTC stresses that if a product will be sold at a physical store, companies must make the disclosure before the customer visits the store.21
The new guidance suggests that disclosures should be repeated if necessary. For example, if a customer can access a website in different ways, it may be necessary to include disclosures in multiple locations.22 Likewise, if claims are repeated throughout an ad, it may be necessary to repeat the disclosure that relates to those claims.23
The release also addresses the space limitations imposed by different methods of advertising, such as space-constrained banner ads and tweets. The FTC reiterates that disclosures are required in each ad despite the limited space, and encourages companies to use creativity and abbreviations.24 In determining whether the disclosure should be placed in the ad itself or on the landing page, the FTC advises advertisers to consider how important the information is to prevent deception, how much information needs to be disclosed, the burden of disclosing such information 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.25
Finally, the FTC stresses that claims should be tailored to the media of the campaign. Audio claims should have audio disclosures that are presented in a sufficient volume and cadence to be understandable, and written claims should use written disclosures.26 Disclosures in mixed media, such as video clips, should be presented for a duration that allows the customer to read them.27
Specific Guidance for Disclosures in Social Media, Such as Tweets and Blogs
Through sample mock advertisements, the FTC offers the following specific guidance for disclosures in social media, such as in blogs and space-constrained tweets:28
- The FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising”—and particularly the requirement that endorsers must disclose any material connections to the products they endorse—apply equally to endorsements that bloggers and tweeters make in social media.29
- If you endorse a product through a tweet, it is not sufficient to include a non-descriptive hyperlink, such as a tiny URL, to additional disclosures. Even if the link in the message leads directly to sufficient disclosures, that would, in the FTC’s view, still be insufficient because users may not click through to the linked website.30
- Including a required disclosure in a subsequent tweet would be problematic because unrelated messages may arrive in the interim and, by the time the disclosure arrives, consumers might no longer be reading these messages, or they may not realize that those disclosures pertain to the original message.31
- Even including a hashtag such as “#Spon” may not be sufficient to disclose that a person tweeting a product recommendation is a paid endorser because consumers may not understand that the hashtag means that the message was sponsored by an advertiser.32 If a significant portion of the reasonable viewers would not understand this, then the ad would be deceptive. The FTC has previously advised that hashtags such as “#paid ad,” “#paid,” or “#ad” may be sufficient.33
- A blog post disclosing in the last sentence that the blogger received the reviewed product for free may be insufficient where the blog post contains several hyperlinks in the text that could cause readers to click away before they get to the end of the text.34
As more advertising dollars are directed toward mobile and social media marketing, advertisers increasingly are challenged to make effective disclosures in limited spaces. The .com Disclosures can serve as a roadmap for how to incorporate such disclosures into mobile and social marketing. Advertisers would be well advised to familiarize themselves with the guidance because, although it is not law, the FTC may bring enforcement actions against companies that decline to follow it.
1 Total mobile and social media revenues increased 30.2 percent to $45.38 billion in 2011, and have risen at a compound annual growth rate of 28.7 percent since 2006. Mobile and social media revenues are expected to exceed $100 billion by 2015, the fastest any communications industry has surpassed this benchmark, outpacing subscription TV and the Internet by nearly 20 years. See “U.S. Mobile and Social Media Forecast 2012-2016,” PQ Media, available for purchase at http://www.pqmedia.com/mobilesocialforecast-2012.html.
2 FTC, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising” (2013), available at http://www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf (“.com Disclosures”).
3 See id. at i.
5 Id. at iii.
6 Id. at iv.
7 Id. at 5-6.
8 Id. at i.
9 Id. at 6.
10 Id. at 7.
12 Id. at 9.
13 Id. at 10.
15 Id. at 11-13.
16 Id. at 12.
17 Id. at 13.
18 Id. at 13-14.
20 Id. at 18-19.
21 Id. at iii.
22 Id. at 19.
24 Id. at 15 and 16.
25 Id. at 15.
26 Id. at 20.
28 Id. at A-17 – A-20.
29 FTC, “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (16 C.F.R. Part 255), 73 Fed. Reg. 72374 (Nov. 28, 2008).
30 See .com Disclosures at A-17.
31 See id. at A-19.
32 See id. at A-20.
33 “The FTC’s Revised Endorsement Guides: What People are Asking,” available at: http://business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat-people-are-asking.
34 See .com Disclosures at A-25.