On December 15, 2017, the FTC released a staff report that summarizes agency-commissioned research from 2014-2015. The research explores consumer recognition of paid search advertising and “native advertising” that resemble news, feature articles, product reviews, entertainment or other non-advertising online content.
An advertisement is deceptive under Section 5 of the FTC Act if it materially misleads consumers as to its commercial nature or source. In other words, consumers should be able to recognize an ad as an ad. If a separate disclosure is necessary to make that happen, the disclosure should be made in a way that ensures consumers can read, process, and understand it.
The Commission believes that ad recognition is particularly challenging for consumers in the areas of search advertising and “native advertising.” The FTC staff has expressed concern that consumers sometimes have difficulty distinguishing regular search results from advertised search results and has previously provided specific guidance to search engines on this issue.
Only a small number of studies have investigated how consumers perceive these non-traditional forms of advertising. Some of these studies are online surveys that explicitly ask about respondents’ understanding of an ad’s source or commercial nature. Other studies measure changes in participants’ behavior, such as their clicking or purchasing behavior or visual attention, but not their understanding of the ads.
