1. How FTC Regulation of Native Advertising Impacts PR Practice
Cayce Myers, Ph.D., LL.M., J.D.
Legal Research Editor Institute for Public Relations
Assistant Professor, Virginia Tech, Department of Communication
March 30, 2017

2. Native Advertising: Definitions
Seamless integration of promotional messages into unpaid/non-promotional content
Native advertising can take varying technological forms such as recommendations, promotions, and search results.
Note that content marketing and native advertising are viewed differently within industry (especially in measurement), but may not be under the law.

3. Process and Cost
Native advertising is about placement and creating awareness through traffic
Placement needs to be made in a way that provides integration with other content
Estimated 74 percent of advertising expenditures will be for native advertising by 2021

4. Benefits to Practitioners
Native advertising is a regular part of public relations practice
It blends advertising and public relations techniques and delivery
It is extremely effective (high ROI), but it is a practice that is increasingly regulated. This may ultimately affected ROI for native advertising.

5. Native Advertising and First Amendment Issues
Native Advertising is Commercial Speech under the First Amendment
That means there’s less protection for its content under the First Amendment (intermediate scrutiny)
Practical effect: Federal agencies can regulate this type of speech
PR practitioners have (justifiably) been concerned over PR being categorized as commercial speech
However this categorization is not about self-identification. It is about purpose of the speech.

6. FTC Regulations
Federal agencies give two types of guidance on their regulations
Rules: similar to a statute; law of the agency that is passed using a notice and comment procedure
Guidelines: interpretation of the rule and how they will be applied by the agency (sometimes this shows more insight into agency mindset)

7. FTC Regulation of Deception
FTC has a policy statement on what is deception that states deception must meet three requirements:
“There must be a representation, omission or practice that is likely to mislead the consumer”
“The consumer using the product must do so reasonably”
“The representation, omission, or practice must be a material one”
(Federal Trade Commission, 1983, p. 1)

8. Evolving FTC Guidelines
FTC Policy Statement on Deception (1983)
FTC Policy Statement Regarding Advertising Substantiation (1983)
Dot.Com Disclosures (2000)
Federal Trade Commission Advertising Enforcement (2008)
Blurred Lines: Advertising or Content? An FTC Workshop on Native Advertising (2013)
.com Disclosures (2013)
Enforcement Policy Statement on Deceptively Formatted Advertisements (2015)
FTC Issues Enforcement Policy Statement Addressing “Native” Advertising and Deceptively Formatted Advertisement (2015)
Native Advertising: A Guide for Business (2015)
The FTC’s Endorsement Guides: What People are Asking (2015)
**Note: these guidelines and memos are cited in the IPR Signature Study: FTC Regulation of Native Advertising: How New Federal Rules Impact Public Relations Practice

9. Deceptive Advertising & Endorsement
Honesty is the best policy
No “special language” that needs to be used
Placement of disclosure is important (cannot be hidden)
For example social media may use disclosures such as: #ad, #sponsored, #promotion, #paid ad

10. What Does FTC Look For in Disclosures?
FTC states that it looks at 5 things when evaluating a disclosure:
Close to the claims to which they relate;
In a font that is easy to read;
In a shade that stands out against the background;
For video ads, on the screen long enough to be noticed, read, and understood;
For audio disclosure, read at a cadence that is easy for consumers to follow in words consumers will understand.
(FTC, 2015, p. 12)

11. What Does the FTC Look for in Third Party Endorsements?
FTC Endorsement Guidelines State that Organization Should Look at Four Things When Determining Proper Endorsement:
Given an advertiser’s responsibility for substantiating objective product claims, explain to member of your network what they can (and can’t) say about the products—for example, a list of health claims they can make for your products;
Instruct members of the network on their responsibilities for disclosing their connections to you;
Periodically search for what your people are saying; and
Follow up if you find questionable practice
(FTC, 2015, p. 16)

12. Native Advertising Regulations
Disclosure in a native advertisement depends on if the advertisement is obviously an ad (if it’s obvious, then no disclosure required)
Transparency is the key element in evaluating whether something is deceptive (when in doubt disclose)
Note that native advertising transparency relates to technology; sometimes technology allows for greater or less deception (Example: social media disclosures need to remain when shared)
Context of the native advertisement matters (Example: a disclosure at the end of a video is not as transparent as a disclosure at the beginning)

13. Things to Avoid When Making Disclosures
Technical of industry jargon;
Different terminology to mean the same thing in different places on a publisher site;
The same terminology to mean different things on a publisher site;
Terms that customarily have different meanings to consumers in other situations;
Unfamiliar icons or abbreviations;
Company logos or brand names unaccompanied by a clear text disclosure.
(FTC, 2015, section III (C), para. 1)

14. Implications for Public Relations
Public relations is subject to some advertising laws. Native advertising is subject to laws governing commercial speech. PR is subject to government regulations.
Native advertising regulations will change based on consumer awareness. Some consumers are savvy, some aren’t. As technology evolves so do consumers’ expectations.
When in doubt, disclose and be honest. No one will be sanctioned for over-disclosure. The FTC guidelines make that clear.

15. Questions?

16. References
Federal Trade Commission. (1983a). FTC Policy Statement on Deception. Retrieved from:
Federal Trade Commission. (2015a). Native Advertising: A Guide For Business. Retrieved from:
Federal Trade Commission. (2015b). The FTC’s Endorsement Guides: What People Are Asking. Retrieved from:

17. Thank You!
Cayce Myers, Ph.D., LL.M., J.D. Legal Research Editor, Institute for Public Relations Assistant Professor Department of Communication Virginia