On January 22, 2018, Native Advertising Institute featured an article written by Internet law attorney Richard B. Newman that discusses the Federal Trade Commission’s recently released staff report summarizing agency-commissioned research from 2014-2015. The article discusses the exploration of consumer recognition of paid search advertising and “native advertising” that resemble news, feature articles, product reviews, entertainment, or other non-advertising online content.

The study provides insights into how consumers perceive search and native ads and how modifications to disclosures, including to disclosure language, position, text size, and color and to other visual cues such as borders and background shading, may enhance consumers’ recognition of these ads.

Mr. Newman discusses how the study compared a test group of consumers’ reactions to ads on a series of web pages with another test group’s reactions to the same ads with modified disclosures to improve their prominence, legibility, or clarity. He also explains how the study tested an equal mix of ads that consumers viewed on either a desktop computer or smartphone and measured their eye movements as they looked at the web pages.

The results of the study suggest that using some commonsense disclosure techniques like those discussed in existing FTC staff guidance to search engines and to native advertisers can greatly increase the likelihood that search and native ads are recognizable as ads to consumers.

Native ads that fail to clearly identify their commercial nature are prosecuted by the FTC under Section 5 of the FTC Act, prohibiting “unfair or deceptive acts or practices.”

The article is entitled “Small Changes in Disclosures Can Have a Big Impact on Ad Recognition.”

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

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