Short-form ads on Twitter and Facebook have the same basic requirement as any old-fashioned ad: They can't mislead consumers, federal regulators said Tuesday.
Whether it is including the average effectiveness of a weight-loss shake or noting that a celebrity was paid to push a product in a Twitter post, marketing company need to apply the same standards to online ads as they long have to older media, according to guidelines released Tuesday by the Federal Trade Commission.
That means making room for full disclosure even in a 140-character tweet on Twitter.
The agency suggested that marketers could flag Twitter ads by including "Ad:" (three characters) at the beginning of the post or the word "sponsored" (nine characters).
The new guidelines are important because they suggest the grounds on which the agency might open an investigation.
The report expands the FTC's more than decade-old rules on Web ads to the world of social media and smartphones.
The FTC said marketers need to be conscious of the location of disclosures and ensure that users can still see them easily on a smartphone.
If a company can't find a way to make its disclosure fit the constraints of social or mobile ad, it needs to change the ad copy so that it doesn't require a disclosure, the agency said, making that point explicit for the first time.
Disclosures must be clear enough that they aren't "misleading a significant minority of reasonable consumers," the FTC said.
The FTC provided some hypothetical promotions that could cross the line. One would-be Twitter post from a fictitious celebrity account said: "Shooting movie beach scene. Had to lose 30lbs in 6 wks. Thanks Fat-away Pills for making it easy. Typical loss: 1lb/wk. #Spon." The FTC said the used abbreviation for sponsor, "#Spon" could be unclear to consumers.
The commission doesn't handle criminal investigations but can issue civil penalties if it finds misleading advertising. Civil penalties range from thousands of dollars to millions of dollars, depending on the nature of the violation. Sometimes advertisers have been ordered to give full or partial refunds to all consumers who bought the product.
The update comes as marketing firms continue to search for new ways to penetrate through the noise of modern life. Consumers on social networks are often shown ads based on their tastes and interests. On Twitter, with its more than 200 million active users, companies sometimes pay celebrities to send endorsements to their followers or buy prominent placement for 140-character advertisements.
Twitter Inc. doesn't disclose its financial results, but research firm eMarketer Inc. expects Twitter to generate about $545 million in ad revenue this year, up from $288 million last year. Facebook Inc. posted $4.28 billion in ad revenue for 2012.
Asked for comment on the FTC's move, a Twitter spokesman pointed to posted company policies that say advertisers must comply with all legal requirements.
Twitter's policies say advertisers must comply with all legal requirements, and the company's written ad guidelines highlight industries—including pharmaceuticals, tobacco and weight-loss remedies—that have "legal, cultural or safety restrictions."
Twitter has found ways to incorporate disclosure requirements into short Twitter ads. In 140-character ads for political candidates or other direct political ads, Twitter designates them with a purple box and when a user hovers his mouse over the box, it shows a disclosure about who paid for the ad.
That setup is intended to hew to requirements of the Federal Election Commission.
The FTC said disclosures need to be included in micro ads because in many cases consumers can immediately go purchase the item at a brick-and-mortar store without browsing for more information online, regulators said.
If the product can be purchased only on a company's website, the company can place its disclosure there, regulators said.
Danny Yadron and Shira Ovide, The Wall Street Journal. March 12, 2013
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