Last week, the FTC released a new staff paper titled “Protecting Kids from Stealth Advertising in Digital Media.” The paper follows an October 2022 workshop the FTC held on the same topic, which explored the “techniques being used to advertise to children digitally and online,” and considered the measures that should be implemented to protect children from related harms. It also aligns with the FTC’s recent updates to the Endorsement Guides, which recognized that “it is difficult for children – especially younger children – to discern ads from entertainment or other content in the digital environment where the lines are blurred more than in traditional ‘linear’ media, like television.”

In response, the new staff paper addresses the concerns raised by blurred advertising and provides recommendations for marketers who are engaging in advertising to kids. Here are some key takeaways:

Overarching principles:

• Advertisers are in the best position to prevent harm to children associated with blurred advertising and while avoiding blurred advertising to children is the best policy, if they are going to engage in blurred advertising to kids, they should follow the FTC's recommendations (described below).
• Platforms also have a significant role to play an should “consider offering or promoting standardized disclosures, icons, or other uniform methods of transparency, and they should consider developing, monitoring, and enforcing policies to hold content creators accountable.”
• It is no longer reasonable to expect parents to monitor kids’ media and advertising exposure given the frequency of exposure and constantly changing landscape. Instead, the FTC is doing what it can (including through its COPPA cases) to “take the burden off parents,” and place the onus elsewhere.
• Research has shown that children, especially younger children, lack certain knowledge and skills necessary to properly recognize and/or evaluate advertising (also referred to as “ad literacy”).
• Research also indicates that, while disclosures can (in some cases) help kids identify embedded advertising, they are often inadequate “either because the disclosures themselves are unlikely to be seen or understood by kids, or because they are insufficient to help kids identify and evaluate an embedded ad.”

The FTC’s key concerns surrounding blurred advertising to kids are:

1. Trustworthiness/authenticity (kids may come to trust certain online figures, and therefore may be less skeptical of ads when delivered by figures they trust)
2. Classical conditions/cultural effects (delivery of blurred ads, such as by influencers, is more likely to affect cultural norms/ideas about what is “possible or normal” than traditional ads)
3. Physical harms (blurred ads may market physically harmful products or services)
4. Financial harms (blurred ads may lead to accidental/social/emotional purchases or purchases without parental approval)
5. Privacy harms (use of kids’ personal information/interests complicates their ability to recognize/evaluate ads)
6. Disproportionate affects on certain populations (blurred advertising may disproportionately impact certain populations, especially in situations where there are factors that may affect a child’s ad literacy)

The FTC’s position is that “the best way to prevent harm stemming from blurred advertising to kids is for marketers not to engage in the practice,” however, if marketers are going to continue engaging in the practice, the staff paper makes the following recommendations to reduce the likelihood of deceiving or harming young consumers:

1. Ensure there is a clear separation between the entertainment/educational content, and the advertising (for example, use formatting, visual, or verbal signals to communicate to children that they are about to see an ad).
2. Even though the FTC notes that disclosures alone are unlikely to be sufficient in certain circumstances (i.e., for younger children), where used, disclosures should (i) be timely/prominent/appropriately placed; (ii) be provided verbally and in writing; and (iii) include important information about the commercial messages, including an explanation of the sponsor's intent. 
3. Consider "creating and using an easy-to-understand and easy-to-see icon" that signals something is an ad/there is an underlying relationship between a sponsor and a content creator. 
4. Look for ways to educate kids, parents, and educators about digital advertising, how it works, and how to recognize/evaluate it.
5. Platforms should consider (i) requiring creators self-identify content that includes advertising through policies/tools; and (ii) offering parental controls that allow parents to limit/block content that includes advertising.