Who is in charge of regulating online ads? It’s the Federal Trade Commission (FTC). Why do they need to regulate ads?
The common sense reasoning is:
” Suppose you meet someone who tells you about a great new product. She tells you it performs wonderfully and offers fantastic new features that nobody else has. Would that recommendation factor into your decision to buy the product? Probably.
Now suppose the person works for the company that sells the product – or has been paid by the company to tout the product. Would you want to know that when you’re evaluating the endorser’s glowing recommendation? You bet.”
That premise is at the heart of the Federal Trade Commission’s (FTC) Endorsement Guides.
Why does it matter to you, the advertiser? Well, the FTC will make you pay, literally, if you (or your affiliates or influencers) fail to comply with their rules for advertising. Can they do this? Yes. And they have. That is why over the last few years you have started to see a lot of #ad or #sponsored on influencer posts.
So what is allowed and not allowed?
Section 5 of the Federal Trade Commission Act prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.” An act or practice is unfair when it:
- Causes or is likely to cause substantial injury to consumers
- Cannot be reasonably avoided by consumers, and
- Is not outweighed by countervailing benefits to consumers or to competition.
An act or practice is deceptive when:
- A representation, omission, or practice misleads or is likely to mislead the consumer;
- A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and
- The misleading representation, omission, or practice is material.
What should you do?
Ultimately it is your responsibility to learn your industry’s federal ad regulations backward and forward, and understand how to quickly catch any violations. Being proactive will make you better equipped to avoid and handle any situations that arise, and give you an advantage over your competitors, avoid costly lawsuits, protect your brand, optimize your ad partners and improve your own ad performance.
3 Simple Ways To Make Partner Advertising Comply with Federal Ad Regulations
1. Educate partners
Share the knowledge discussed in this article with your partners and repeat often. Make it abundantly clear how serious their compliance is and what the repercussions are for violations. From our experience at The Search Monitor, many advertisers are simply unaware that they need to devote time and resources to partner education. And partners are 100% focused on driving revenue for their advertisers, so they appreciate learning the do’s and don’ts of federal ad regulations.
2. Monitor partners
There can be thousands of locations where content is published, such as email, landing pages, blogs, social media, mobile and video. Monitoring all of these marketing channels is tricky to do manually, but it becomes quite efficient if you deploy an automated rules-based monitoring solution. Make sure your monitoring covers:
- Claims: Make sure your affiliates’ claims are factual. The CFPB and FTC pay especially close attention to financial, health, high-performance and environmental claims.
- Disclosure: Make sure your affiliates’ offers properly disclose all key fees and product claims. Disclosures relating to claims or offers must be clear and conspicuous.
- Endorsements: Make sure affiliate endorsements are honest and transparent about their connection with the advertiser.
3. Optimize and enforce partner relationships
If you’ve found partner violations of federal rules and have given sufficient warning, it’s time to remove these partners from your program and identify new partners. An affiliate network can help with this.
Or, get access to a database of affiliates scored by their compliance history, offered by some content monitoring platforms. Don’t stand for repeat violations. Remove affiliates who break your rules and terminate contracts with partners who violate rules.