Is Your PR Agency Going to Get You Sued? | News USA Advantage

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Is Your PR Agency Going to Get You Sued?

What do you Know About Your PR Agency?

Advertising has always been a publisher’s primary source of revenue. While still true, the Internet has forced the industry to reinvent itself. No longer is product placement enough. Now public relations people must come up with new ways to promote products and services, across a medium that is fluid and ever-changing.

Enter native, or branded content—ads that look like journalism, but are typically more appealing than other online ads.

The problem with this new type of advertising, according to new Federal Trade Commission (FTC) guidelines, is that consumers may have difficulty in discerning what is sponsored content and what is editorial.

“By presenting ads that resemble editorial content, an advertiser risks implying—deceptively—that the information comes from a non-biased source,” said FTC chairwoman Edith Ramirez at a conference held last December.

“People browsing the Web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad,” echoed Jessica L. Rich, director of the FTC’s Bureau of Consumer Protection in a statement.

To understand this mushrooming trend, consider this: in 2013, $1.5 billion was spent on branded content designed to mimic the look of editorial, according to Pew Research Center’s 2013 State of the News Media Report. Cast that against a 34 percent expected growth rate for 2015, to $4.3 billion, according to ad-tracker eMarketer, which cited data from research firm Socintel360, and you can better understand the allure of this type of advertising. Forbes, for example, charged $50,000 to $75,000 per month in 2014 for a four-month contract when it ran approximately 1,200 native-ad programs. The posts garnered more than 1 million social engagements on Twitter and Facebook.

The question is this, says the FTC: Are consumers being deceived by this type of advertising?

The answer remains elusive.

The guidelines that are of particular importance to those who write the ads (be it PR people or content marketing agencies) as well as the companies who run them, are that disclosures should be in proximity to the headline on the native ad. This is noteworthy because it is not what is “customarily done today,” Linda Goldstein, a partner at Manatt, Phelps & Phillips, told the Wall Street Journal in an interview.

While some industry executives believe the guidelines could be too soft (the FTC is an enforce-ment agency, not a law-making body) to impose on the industry, others believe that those who fail to comply could risk being held as examples and that financial sanctions could follow.

Goldstein agrees.

Should publishers decide to ignore the new FTC guidelines and continue with a business-as-usual attitude regarding native ads, problems of the lawsuit variety could follow, Goldstein warns.

“In 2016, we will begin to see cases brought in the native advertising area,” she predicted. “I be-lieve the FTC will use selective cases to put more meat around these guidelines.”6

The takeaway? Just because a public relations or content marketing agency is writing the copy, it is ultimately the companies that are promoting the content that will be held liable and accounta-ble by the FTC. It follows that it is of utmost importance for companies to perform their own due diligence by ensuring that your public relations or content agency is aware of, and in full compli-ance with, the new FTC guidelines.

While most publishers—be it paper or online—strive to keep its editorial and business relation-ships separate, it would seem that the lines are getting more blurred. It remains to be seen if the new guidelines will help make them more clear.

Mr. Smith founded NewsUSA in 1987 and has served 5,000+ Clients from The Federal Trade Commission to Fidelity Investments and pr firms from Edelman to Fleishman to Cohn and Wolfe. He believes NewsUSA was the first in the pr industry to adopt the FTC guidelines across the board and all articles as of January 1st, 2016 even though the industry appears to have not fol-lowed. His site is www.newsusaadvantage.com and email him at rsmith@newsusa.com