How to Tell Stories with Transparency

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“Omnichannel” may be the term du jour, but it is business as normal for electronic retailers. For over 3 decades, marketers have introduced new methods for communicating with prospective buyers—and have also wrestled with the legal and creative challenges these new formats present.

Nowhere is the advantage of experience more evident than in native advertisements—content which bears a similarity to the non-sponsored content on websites like feature articles, product reviews, blog posts, etc. Some advertisers claim to be bewildered by how established truth-in-advertising principles apply in what they perceive as this new marketing medium.

But ads that blur the line between advertising and content have been a customer security concern for the Federal Trade Commission (FTC). And if the problems raised by native advertising—for instance, whether customers understand the commercial nature of this content—seem familiar to direct-to-consumer marketers, it is because these questions arose in the early days of infomercials. That’s why industry members have a leg up on understanding the need for transparency.

In December 2015, the FTC issued its Enforcement Policy Statement on Deceptively Formatted Advertisements and an accompanying employee book, Native Advertising: A Guide for Businesses. The policy statement draws on the experience of the FTC in contemplating novel marketing formats such as infomercials. It’s the law—and always has been the law—that, “advertisements and promotional messages that are not identifiable as advertisements to consumers are deceptive if they mislead consumers into thinking they are independent, impartial, or not from the sponsoring advertiser itself.”

Why would matter to customers? According to the policy announcement,” Knowing the origin of a marketing or promotional material typically affects the weight or credibility consumers give it [and] also may affect whether and to what extent customers choose to interact with content comprising a promotional message.”

The forms that native advertisements take may be new, but the FTC views them through exact same legal prism, “Regardless of the medium where an advertising or promotional message is disseminated, deception happens when consumers acting reasonably under the circumstances are misled about its nature or source, and this misleading impression is very likely to affect their conclusions or conduct concerning the advertised product or the advertisements.”

Those principles are illustrated by a proposed settlement in a recent FTC case against a federal department store. According to the complaint, the retailer deceived customers by paying for native advertising that comprised a seemingly objective article in an internet fashion book and also a post on the magazine’s Instagram page, without revealing that the contents actually were paid promotions for your company’s spring clothing line. The FTC also alleged that the retailer paid trend “influencers” to post Instagram pictures of themselves wearing a dress from the organization’s group, but failed to disclose it had contributed each influencer the dress and thousands of dollars in exchange for their endorsement.

What do these improvements imply for DR entrepreneurs interested in native advertising? It boils down to this, although the FTC’s employee business guide offers 17 examples to help advertisers avoid deception, it states an advertisement or other marketing materials should not indicate that it is anything aside from an advertisement. The key is transparency in native advertising.

Even without a disclosure, some advertisements could possibly be so clearly commercial they’re not likely to mislead consumers. In other instances, a disclosure may be necessary to ensure that customers understand that the content is an ad. And when there is a disclosure needed, it has to be clear and prominent. In Native Advertising: A Guide for Businesses and .com Disclosures: How to Produce Effective Disclosures in Digital Advertising, the FTC clarifies what advertisers can do to match that standard.

It ends with a note about the breadth of liability under the FTC Act. The FTC has taken action against other people who helped create advertising material, such as operators of affiliate advertising networks and agencies, and manufacturers. Thus entrepreneurs using native advertising have an interest in ensuring that anyone is knowledgeable about the bedrock principle—that an advertisement should be identifiable to consumers within an ad.