Marketers advertising their products and services on Facebook Inc (NASDAQ:FB) and Twitter will have to follow the same disclosure and honesty standards as old-fashioned ads on television and newspapers, said the Federal Trade Commission.
The regulator said Tuesday that social media advertisers must not mislead consumers.
That means advertisers will have to make full disclosures even in 140-character tweets, and they have to make sure that the disclosures are clearly visible on smartphones. The commission suggested that advertisers can start a Twitter ad with “Ad:” (three characters) or “Sponsored” (nine characters). The guidelines suggest the basis on which FTC might open an investigation.
The latest expansion of guidelines to cover Web advertising is FTC’s attempt to catch up with over a decade of rapidly evolving technology, from the advent of smartphones to the explosion of social media. However, the limited space maintained by social networking sites for mobile platforms will make it difficult for advertisers to make full disclosures. Especially when they have to ensure that users see it.
If a company fails to find a way to stick to the disclosure guidelines for social media ads, they have to change the ad copy so that it doesn’t need a disclosure. The agency said that disclosures should be clear enough that they don’t mislead even a minority of reasonable consumers.
The commission said it may issue civil penalties for misleading advertisements. The penalties could be anywhere from thousands of dollars to millions of dollars, based on the level of violation. Sometimes marketers have been directed to issue partial or full refunds to consumers who purchased the product.
The update comes at a time when advertisers are desperately looking for new ways to penetrate the modern and busy life of consumers. Social networking sites usually display ads based on the consumers’ interests and tastes. On Twitter, which has over 200 million active users, marketers usually pay celebrities to endorse various products to their huge fan following.
Twitter doesn’t disclose how much it earns in ad revenues. eMarketer Inc., a market research firm, estimates Twitter to earned about $545 million in ad revenues in 2012, compared to $288 million in 2011. Facebook Inc (NASDAQ:FB) generated $4.28 billion in ad revenues in 2012.
