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FTC Staff Report: Consumer Recognition of Paid Search Advertising Online, Native Advertising

The Federal Trade Commission recently released its staff report “Blurred Lines: An Exploration of Consumers’ Advertising Recognition in the Contexts of Search Engines and Native Advertising,” reporting on an agency study from 2014 to 2015 aimed at learning consumer perceptions of native advertising, digital advertising and advertising in internet searches. 

The staff report addresses an issue that has become a priority for the FTC — ensuring that consumers understand when they are being presented with advertising as opposed to other kinds of content. The FTC’s “Enforcement Policy Statement on Deceptively Formatted Advertisements,” released in December 2015, clarifies that an advertisement is deceptive under Section 5 of the FTC Act if it “materially misleads consumers as to its commercial nature or source.” 

In particular, the commission has been focused on consumers’ ability to distinguish regular search results from paid or promotional search results and native advertising — content that looks like a new article, a product review or other nonadvertising online content. As a follow-on to its general guidance on disclosures in digital media (“Dot Com Disclosures”) and its “Endorsements and Testimonials Guides,” the FTC has provided updated and specific guidance letters to operators of search engines and guidance to advertisers and publishers that publish native advertising (“Native Advertising: A Guide for Businesses”).

According to the December report, the Commission’s study (unsurprisingly) suggests that advertisements created in accordance with FTC guidance and using what the agency calls “commonsense disclosure techniques” improve the likelihood that consumers will recognize the content as advertising — and minimize the risk that the FTC will find the advertising deceptive. 

The study’s methodology included comparing the reactions of a test group of consumers to actual ads captured on a series of web pages with the reactions of a second group of consumers to the same web pages, modified with ad disclosures aimed at improving the prominence, legibility or clarity of the disclosures (modified language, positioning, size and color of text, and other visual changes, including to the borders and backgrounds). The study used eight sets of web pages — four pages were search engine ads, and four were native ads — viewed on either a desktop computer or a smartphone. The study did not ask most participants directly about their perceptions but rather sought to evaluate whether they recognized the content as advertising by “indirect measures” — participants’ spontaneous comments, their responses to general questions concerning specific content items and eye movements as they viewed the web pages. Only the members of the final group of participants were asked directly about their perceptions of whether the content they viewed were ads. 

Overall, results suggest that using disclosures that are consistent with the FTC staff’s guidance can substantially improve the likelihood that consumers will recognize an ad as an ad, whether in a search result or native advertising — although the agency cautioned that “a significant percentage of participants still did not recognize some ads as ads.”

Some of the commonsense disclosure techniques the study used to clarify and distinguish native ads and search ads included:

  • Distinctive labeling: Use identifiable labels with clear borders and contrasting background colors to set off the content.
  • Fonts: Use large, bold fonts to make headings, labels and notices stand out.
  • Text color: Use contrasting text color that stands out from the background for disclosures. The study showed that light text on a dark background is difficult for the consumer to read and process.
  • Layout and organization: Use a clear visual layout to ensure that viewers see labels and associate them with the correct content. For example, for English copy, position labels above and to the left of the content.
  • Color contrast: When using color contrast to differentiate content, make sure that the colors contrast well — and keep in mind that not every consumer can see color differences, so other “redundant” cues are necessary.
  • Consistency: Use terminology and symbols consistently on a site to ensure that consumers understand their meaning.
  • Label terms: Use commonsense, familiar and clear terms. Do not use technical terms or industry insider terms.

The full staff report can be viewed on the FTC site by clicking here.