Disclosures Exposed: Banner Ad Disclosure Adherence to FTC Guidance in the Top 100 U.S. Web Sites

Article excerpt

With banner ads accounting for one-fifth of the $16.4 billion spent on Internet advertising in 2006, this advertising format has become an integral marketing communications tool. Inclusion of required disclosure language and presenting those disclosures in a clear and conspicuous manner are important areas of regulatory interest and in recent years have extended to the online environment. This study examines the extent to which disclosures in banner ads in the top 100 U.S. Web sites adhere to Federal Trade Commission guidance in these two areas. Additionally, this study compares the banner ad results for clear and conspicuous presentation to those of a prior study that examined television advertising. All the banner ads in the study contained at least one disclosure; yet, adherence was mixed in terms of providing all the required information clearly and conspicuously. Implications of these results are discussed.

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Fine print. Terms and Conditions. Legal Notice. Disclaimer. Disclosure. All of these words communicate that more information is needed or provided to explain or qualify the advertising claim. In the 1970s, disclosures were offered as one form of information remedy whose purpose was to "have the direct benefit of improving the free flow of truthful commercial information, (thus allowing) consumers to improve the quality of marketplace decisions" (FTC 1979, p. 14) and subsequently a more competitive marketplace. The companion caveat, however, was that in order to effectively accomplish this purpose, the disclosure must be effectively communicated. The FTC (1979) noted that "the form, availability and context of the information can substantially alter its use and consequently the ultimate consumer decision" (p. 18). The FTC (1970) offered the Clear and Conspicuous Standard (CCS) as the legal precedent for effectively presenting disclosures. Today "clear and conspicuous" (also phrased as clear and prominent) remains the guidance for disclosure presentation regardless of medium (Eggland's Best, Inc. 1994; FTC 1983; FTC 2000a, 2000b).

Although the 1970s saw extensive efforts by the commission and congress to enhance the information marketers provided, much of the growth in disclosure regulation and guidance occurred in the 1990s. Indeed, Hoy and Stankey (1993) predicted that the 1990s would be the "decade of the disclosure." Hoy and Andrews (2004) confirmed that not only did television advertising disclosure prevalence significantly increase during this time but they also noted the rise in overall governmental agency guidance and requirements for disclosures across a variety of product and service categories and advertising claim types.

Additionally, the 1990s saw the growth of e-commerce and the use of the Internet as a communication medium. Early FTC discussion regarding online consumer protection focused on fraud and privacy issues. By September 2000, the FTC had articulated that the application of its current enforcement practice extended to the online environment (FTC 2000b). Of specific relevance to this study, several FTC workshops in the past few years have addressed the importance of making online disclosures clear and conspicuous: Etail Details (January 2001), Disclosure Exposure (May 2001), Negative Options Marketing Workshop (January 2007), and its continuing education workshop "Green Lights and Red Flags: FTC-BBB Rules of the Road for Advertisers"--first held in November 2001 and continuing to the present (www.ftc.gov). In July 2002, the FTC stated that search engines should disclose clearly and conspicuously paid placement or inclusion within their results (FTC 2002). Disclosures, and their presentation in a clear and conspicuous manner, are also important components of the dialogue in addressing the issue of marketing violent entertainment to youth (FFC 2004), peer-to-peer file sharing (FTC 2005), and consumer financial privacy (FTC 2006).

Internet advertising bit a record $16. …