Consumer Protection in Social Media Advertising

April 1, 2013

Social Media AdsThe Federal Trade Commission (FTC) recently issued consumer protection requirements for online advertising it characterizes as, “short form.”  These short ads are commonly presented through social media, such as Twitter and Facebook, and through mobile networks.  The FTC essentially announced that all short form online advertising will be held to the same consumer protection requirements as all other advertising.  Specifically, presenters of online short form ads will be required to ensure that their advertising does not mislead consumers.

The FTC requires that advertising present accurate descriptions and claims to consumers.  Additionally, advertising must make all factual disclosures necessary to be sure that consumers are not in any way misled about good or services.  The FTC statement makes it clear that these well-established advertising requirements apply to short form online ads, as well.

The required accuracy and disclosures can be difficult to achieve given the extremely limited space provided in most social media and mobile advertising.  For example, Twitter “tweets” are limited to 140 characters.  This type of extremely short form content can make presentation of adequate disclosures challenging.

Some observers anticipate that short form advertising systems may expand their current use of creative approaches to provision of more detailed information in association with regulated content.  For example, Twitter already uses a system to provide legally required disclosures associated with short form advertising for political candidates.

Twitter uses a color code to identify political advertising.  The Twitter system also presents an appropriate disclosure statement on screen when the user holds the cursor over the ad.  It seems likely that social media systems may choose to apply a similar system to provide consumers with access to appropriate disclosure statements associated with other forms of advertising.

The FTC also makes it clear that ads presented through mobile devices must be accurate and provide appropriate disclosures.  Advertising content must be structured and presented in formats that ensure that all necessary content, including disclosures, can be seen and understood on the full range of mobile devices, including smartphones.

In its statement, the FTC made it clear that accuracy and appropriate disclosures are mandatory requirements for short form advertising.  It indicated that, if advertisers are unable to present appropriate disclosures in a clear manner that can be readily seen and understood by consumers using any device to access the advertising, the content of the ads must be modified so that no disclosure is required.

The FTC requirements were likely presented at this time in response to the rapidly expanding short form online advertising market.  Reportedly, Twitter is expected to earn approximately $545 million in advertising revenue this year and it is estimated that Facebook earned more than $4 billion from advertising last year.

The FTC rules will affect a range of short form online advertising formats.  They will, for example, be relevant to the increasingly popular practice of advertisers paying celebrities to include positive statements about their products in the celebrity tweets and other posts.

Advertising through social media and mobile networks is considered by many to be one of the fastest growing components of the advertising marketplace.  The FTC’s statement on short form online advertising provides a clear indication that the FTC recognizes the significance of that advertising and that it intends to monitor the ads actively as part of its consumer protection mandate.