FTC Concerned About Increase in "Sponsored Content"

The blurring of advertising and editorial content, particularly through publishers’ websites and mobile applications, is in the spotlight at the Federal Trade Commission (FTC) as government regulators struggle to deal with the impact of social media on health-related promotion. The Commission’s long-held policy is that advertising and sales pitches should be readily identified and not blended into surrounding content, explained Mary Koelbel Engle, FTC associate director for advertising practices. Now the Commission is looking at “native advertising” in digital media and how it creates new ways to blend advertising with news, entertainment and other content, Engle announced at the recent advertising & promotion conference sponsored by the Food and Drug Law Institute (FDLI) in Washington, D.C.

FTC has set disclosure standards for advertorials and infomercials over the years and will explore the need for new standards at a Dec. 4, 2013 workshop. The meeting will bring together publishing and advertising executives with consumer advocates, academics and government regulators to examine whether paid messages in social media may not be obvious to consumers. Workshop participants will discuss how the use of digital media makes it difficult to establish clear “walls” between content and advertising; how paid messages are integrated into regular content within mobile apps and other devices; the incentives and controls on “native” advertisements; use of labels and visual cues to differentiate ads from content; and how these developments impact consumers. Interested parties should submit proposals and papers by Oct. 29, 2013 to be included on the program [further information available at www.ftc.gov/opa/2013/09/nativeads.shtm].

This topic fits the FTC’s ongoing interest in applying necessary disclosures for advertising to the small screen. The Commission is examining uses of smart phone apps in providing health care treatment, and investigating whether consumers are adequately protected when they provide sensitive health information through new media. If a platform is too limited to permit “clear and conspicuous” disclosure to avoid deceptive practices, then the health care entity probably should not use it, Engle noted.

The widespread use of social media also is prompting a new look at FTC’s policy on endorsements and testimonials. It may be more difficult to disclose relations, compensation and other links between a celebrity and a product or service when providing the message on a small screen. Yet, the Commission still wants all potential conflicts of interest to be disclosed. The  FTC has updated guidances on search engine advertising, Dot Com disclosures and endorsement and testimonials and continues to explore the need for further clarification of its rules and their application to new media.