Basic Principles of Advertising

Two basic principles of advertising law apply to all types of advertising in any media:

• Advertisers must have a reasonable basis to substantiate the claims they make in their ads.
• If an advertiser needs to disclose information to prevent an ad from being misleading, these disclosures must appear in a clear and conspicuous manner.

To comply with substantiation and disclosure obligations when advertising in social media, companies should:

• Evaluate their ads in social media the same way that they evaluate ads placed on television, websites, or other mediums.
• Ensure that they can support all claims made in the ads.
• Disclose all relevant information in a way that consumers can see and understand.

Substantiation of Claims

Advertisers must have a reasonable basis to support all objective claims in their ads. This requirement applies not only to express claims (that is, what an ad actually says) but also to implied claims that a reasonable consumer may infer from an ad, even if the advertiser did not intend to convey those claims. Therefore, an ad can be accurate but misleading if it conveys a claim that the advertiser cannot support. If an ad is challenged, it will be analyzed from the standpoint of a typical consumer.

Accordingly, when reviewing its ads, a company should:

• Step into the shoes of customers who may not know anything about the product other than what is in the ad.
• Consider how these customers are likely to interpret the ad.

If the company cannot support every reasonable interpretation, it may need to make changes to the ad.

Clear and Conspicuous Disclosures

If it is necessary to disclose information to prevent an ad from being misleading, that information must be disclosed in a “clear and conspicuous” manner. When evaluating disclosures, the Federal Trade Commission (FTC), NAD, and other regulators often disapprove of the practice of including disclosures in footnotes or other places that are remote from the claim the disclosures are intended to modify. Consumers are likely to read a headline, but may not always read every sentence on a page. There are many cases in which fine-print footnotes have been held to be inadequate to disclaim or modify a claim made elsewhere in the ad.

The law does not mandate a font size, color, or specific placement. This lack of specificity provides advertisers with some flexibility. There is also no clear answer, but the FTC provides some guidelines in .com Disclosures: How to Make Effective Disclosures in Digital Advertising (Guidelines). For example, an advertiser should generally make sure that:

• The disclosure appears:
• close to the claim it modifies; and
• in a location where people are likely to see it.
• The font color and font size of the disclosure make it easy to read.

The original version of the Guidelines was published in 2000, before social media existed as it does today. When the FTC updated the Guidelines in 2013, it emphasized that consumer protection laws apply equally to advertising across all mediums, whether ads appear on a desktop computer, a mobile device, a blog, or other social media channels.

While it may be difficult to make disclosures in social media, advertisers are not exempt from complying with the disclosure requirement when advertising in social media. The Guidelines expressly state that:

• A particular platform should not be used if it does not permit an advertiser to make clear and conspicuous disclosures when required.
• When a space-constrained ad requires a disclosure, incorporate the disclosure into the ad whenever possible.
• When it is not possible to make a disclosure in a space-constrained ad, it may be acceptable to hyperlink to the disclosure if the hyperlink is:
• obvious;
• placed closely to the claim it qualifies; and
• takes consumers directly to the page with the disclosure.

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Basic Principles of Advertising

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