By Marc Roth
Earlier this summer, I commented on Facebook's ability to crack the mobile code by displaying advertisements within members' timelines. By inserting sponsored ads among friends' posts and other content, Facebook was able to increase its advertising revenue by promising its advertisers more eyeballs. As a result, two months after announcing that its mobile strategy is making money, the company's stock price turned the corner and is now trading above its IPO price.
But consumer eyeballs are not the only ones focusing on these ads, as regulators are also taking note of these developments and have begun expressing concerns with such practices. Commonly referred to as "native" or "sponsored" advertising" because the ads live among other, organic content, regulators such as the FTC are questioning whether consumers know that these "posts" are paid advertising, and if not, what types of damage or deception might result. In an effort to develop a better understanding of these practices and the possible legal issues they may raise, the FTC recently announced that it will host a one day workshop on December 4 to hear what industry, academics and others have to say. The September 16 press release announcing the workshop invites the public to comment on a number of specific questions and seeks candidates to participate at the workshop.
Given the tone of and questions posed in the press release, coupled with the FTC's history of establishing its presence in emerging areas that lack clear legal precedent without actually suing anyone, don't be surprised to see warning letters issued by the agency either later this year or in Q1 2014 to put industry on notice that it is very much on the beat. The press release announcing the workshop is here.
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