Recent industry ire over Google’s new search ad design is a good reminder for publishers to review their own ad disclosure practices - as shady actions could erode user trust and run afoul of the U.S. Federal Trade Commission.
This article will explore the FTC’s legal requirements for ad disclosure and share examples and compliance tips for publishers.
Please note: We are not lawyers. Please view this as informational and seek legal counsel before making conclusions for your business model.
The Federal Trade Commission offers thorough guidelines on digital ad disclosures for those who advertise in the U.S. - regardless of where they’re headquartered.
The commission works with foreign consumer protection agencies to enforce these policies, so we encourage you to read the .com Disclosures in detail.
Here’s an overview of the FTC’s ‘clear and conspicuous’ disclosure requirements:
In addition to the above guidelines, the FTC offers an Enforcement Policy Statement and a detailed guide specifically for native ads (with multiple examples) - noting that not all native ads require disclosure.
The FTC’s ‘clarity of meaning’ guidelines (Section C) also highlight labels it does and doesn’t deem to be understandable. Acceptable labels include “ad”, “promoted by [X]”, “sponsored advertising content”, and variations thereof.
Banner ads are typically more conspicuous, as they’re less likely to mirror site content - both visually and thematically. These are also typically programmatic ads that feature disclosures by default - so programmatic publishers don’t have to worry about labeling them themselves.
For example, Ticketmaster features programmatic ads for FTD and Roselinlin on its Family Tickets page. No extra labeling is needed by Ticketmaster, as:
The New York Times offers an example of non-programmatic banner ads that would also not require disclosure. This Cartier ad’s visual style and subject matter are clearly distinguishable from The Times’ news stories.
By definition, native ads integrate seamlessly into your platform’s content - making any required disclosures even more important. It’s thus vital that any publisher employing native ads of some type - promoted posts, sponsored listings, sponsored content, etc - review their labeling to ensure it’s FTC-compliant.
WeTransfer, the file transfer platform, offers a great example of this. WeTransfer has a stunning design aesthetic for the skin ads on its upload page, which feature work by global artists in addition to advertisers. For instance, the commercial nature of this Microsoft Teams full-page native skin ad is clear for users, so no disclosure is needed.
A native ad that would require a label includes CNN's paid sponsored content. To follow FTC guidelines, CNN does discloses this content with a clear, obvious ‘paid partner content’ banner, so users can distinguish the promoted stories from CNN news stories.
Instagram too discloses promoted posts with prominent ‘sponsored’ labels in the top right corner and a bold ‘shop now’ call-to-action below.
Another type of native ad - sponsored listings - where vendors/sellers promote their listings on sites like Amazon and Etsy, also require disclosure. Users must be able to quickly discern which of these listings are sponsored or organic.
Amazon features clear disclosures, highlighting its sponsored listings with contrasting fonts and colors. These visual cues above the product listings help users understand which are promoted.
Etsy offers another eCommerce approach. It denotes sponsored listings with ‘ad’ labels in the top left corner. The black text on a white circle adds contrast, making the label stand out.
Now that we’ve reviewed the FTC guidelines, let’s explore the grey area of Google’s latest black and white search ads (which they’re now revisiting).
The backlash against Google’s search ads has been building for years. Regular updates since the early blue ‘sponsored links’ format have irked many, and the FTC even presented guidelines for search engine ads in 2013, requiring they be “noticeable and understandable to consumers”, with visual cues and text labels (similar to their rules for all ads in general).
So what’s causing the current consternation? People are saying the new all-white results - with only a small black favicon differentiating paid ads vs organic search results - are deceptive. They’re challenging the prominence of Google’s disclosures, suggesting users will inadvertently click on the paid content (and therefore boost Google’s ad revenue).
Google has defended its design choices - and it’s certainly not a clear-cut FTC violation (one could argue Amazon’s practice isn’t much different) - but let’s explore how to avoid such misunderstandings on your platform.
If you’re questioning the integrity of your native ad units, answering these three questions can help confirm your compliance:
We encourage you to disavow dark patterns and offer valuable user experiences versus just the bare minimum compliance.
We recently made the case for ad exploratory testing. In addition to FTC guidelines, we offer the following tips to avoid deceptive ads and create satisfied users:
This human testing requires time, but it can help you monetize while pleasing visitors.
Clearly there’s no one right way to disclose ads so long as the promotional nature is clear and conspicuous. Thoughtful UX design and disclosure take many forms, and publishers can create their own playbooks to secure the highest ad revenue, while respecting their users and monetizing their platforms.