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Disclosures exposed: banner ad disclosure adherence to FTC guidance in the top 100 U.S. Web sites.

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 $16.4 billion in 2006 with approximately 21% attributable to banner advertising (PricewaterhouseCoopers LLP 2006, 2007). A banner ad (also called banner) is a "section of on-line advertising space that typically consists of a combination of graphic and textual content and contains an internal link to target ad pages (the advertiser's information on the host site) or an external link to the advertiser's Web site via a click through URL" (Chatterjee 2005, p. 51). Other forms of online advertising may also have banner elements including sponsorship where advertisers sponsor entire Web sites or site areas. Commercial e-mail communication may also contain banner ads (PricewaterhouseCoopers LLP 2005).

The current study presents a content analysis that evaluates the extent to which banner ads in the top 100 U.S. Web sites use disclosures, the level to which those disclosures provide the required disclosure information and the degree to which the disclosures' structural (i.e., physical) characteristics adhere to FTC (2000a) guidance regarding clear and conspicuous online presentation. The commission's continued focus on disclosures as an information remedy coupled with the sizeable expenditures on banner advertising underscore the issue's importance and the opportunity for academic research to contribute to assessment of current practice and identify areas needing improvement. To date, no study has addressed these issues. Thus, this study serves as a baseline assessment for one form of online advertising much as Hoy and Stankey's (1993) investigation in television advertising.

BACKGROUND

Disclosures as an Information Remedy

The FTC (1979) views advertising disclosures as an information remedy for potential deception or unfairness by providing consumers useful information. The FTC influences the level and content of information primarily through issuing regulations that require (mandate) disclosure of material information and setting standards for certain products or services that a typical consumer could not easily evaluate (Azcuenaga 1995). Additionally, disclosures may be triggered based on the advertising claim (FTC 1979). Hoy and Andrews (2004) noted the many changes in the marketplace in the past decade that gave rise to a growing number of FTC-recommended disclosures in television advertising. Indeed, Hoy and Andrews (2004) reported that 67% of the commercials in their primetime network sample contained at least one disclosure in contrast to a 25% disclosure incidence in 1990 in a similar sample (Hoy and Stankey 1993). Appendix 1 provides an overview of the FTC's mandated or triggered disclosures by product/ service category or claim. Given that all disclosures required in traditional media are also required in electronic media (FTC 2000b), one anticipates their use in banner ads also.

Although this study's focus is on FTC guidance, other governmental agencies provide disclosure guidance depending on their jurisdiction, including the Bureau of Alcohol Tobacco and Firearms (alcohol), the Food and Drug Administration (direct-to-consumer prescription drugs), the Federal Election Commission (sponsorship and candidate approval of political messages), and the Federal Deposit and Insurance Corporation (depository accounts such as checking and savings). Indeed, Hobbs (2004) noted that any information that could assist consumers in making "more efficient and knowledgeable purchasing decisions is a candidate for information disclosure" (p. 10). Therefore, marketers may disclose certain information that is neither mandated nor triggered but qualifies or explains the advertising claim.

The CCS

For disclosures to fulfill their intended purpose they need to be presented in such a fashion that consumers can notice and understand their message (FTC 2000a, 2000b). Thus, in its 1970 Statement of Enforcement Policy, the FTC articulated guidance (primarily) for the executional aspects of disclosure presentation in its CCS. The commission provided further elaboration in the 1983 FTC Policy Statement on Deception and addressed audio duration (Clear and Prominent Language [CPL]) in Eggland's Best, Inc. (1994). A summary of the CCS guidelines is given as follows:

CCS1: Use dual modality (simultaneous presentation in audio and video formats)

CCS2: Have sufficient type size for video

CCS3: Video portion should readily contrast with background

CCS4: Use a single background color for video disclosures

CCS5: Have sufficient duration for video ("presentation rate")

CCS6: No other sounds should air during the audio disclosure

CCS7: Audio and video portions should immediately follow related claims

CCS8: Consider the audience (e.g., children)

CPL: Have sufficient duration for audio disclosures

Limited research has profiled advertising disclosures' adherence to this standard, most notably Hoy and Stankey (1993) and Hoy and Andrews (2004). With respect to television, few disclosures in prime-time network advertising adhered to these guidelines in 1990 (Hoy and Stankey 1993) or in 2002 (Hoy and Andrews 2004). Of particular concern in comparing 1990 with 2002 data was the slight increase in using dual modality, the increased number of disclosures with insufficient type size coupled with a decline in color contrast between type and background, and the growth in multiple background colors (Hoy and Andrews 2004). Furthermore, although there were no significant differences in presentation rates between the two time points, a substantial number of disclosures were presented faster than recommended reading rates. Hoy and Andrews (2004) also noted that nearly every disclosure included distraction and that nearly three-fourths of the audio disclosures were not of sufficient duration. In sum, while Hoy and Andrews (2004) had postulated increased adherence in the latter time frame compared to the former as a result of greater FTC activity regarding disclosures, the authors observed just the opposite.

In their investigation of disclosure effectiveness, Morgan and Stoltman (2002) found that their student sample was confident in its ability to perceive disclosures in television advertising, yet "objective measures of claim recognition/comprehension indicate that this competency is more imaginary than real" (p. 523). The authors further described their subjects' response to the disclosures as somewhere between "confusion and inaccuracy" although they noted that standard disclosures (e.g., batteries not included, void where prohibited) were somewhat more recognizable. They concluded that television advertising disclosures are ineffective and provide little clarification/additional information for consumer decision making.

Online Advertising

Internet advertising appears in a variety of forms: search, classifieds, lead generation/referral, sponsorship, e-mail, and display. Search-related advertising encompasses a variety of categories including paid listings where text links appear along the side or top of the search results page for specific search terms, contextual search where a text link is within page content rather than resulting from user-generated terms, and paid inclusion that guarantees that the marketer's URL is indexed by the search engine and site optimization. For classifieds, advertisers pay a fee to online companies to list specific products or services. Similarly, for lead generation/referrals advertisers pay fees to online companies that refer qualified purchase inquiries (PricewaterhouseCoopers LLP 2005). In display advertising, the marketer pays an online company "for space to display a static or hyper-linked banner or logo on one or more of the on-line company's pages" (PricewaterhouseCoopers LLP 2005, p. 14). Banner ads, previously defined, come in a variety of sizes but most are rectangles in three common sizes: 460 pixels wide by 60 pixels high, 460 x 55, and 392 x 72 (PC Magazine 2007).

The key characteristic that typically separates the Internet from other media is its interactivity defined as "the extent to which the communicator and the audience respond to, or are willing to facilitate, each other's communication needs" (Ha and James 1998, p. 461). Ha and James (1998) definition of interactivity captures the essence of the FTC's intentions that in order for disclosures to be clear and conspicuous, and therefore serve their intended purpose as an information remedy, they must be noticed and understood. Schumann, Artis, and Rivera (2001) view interactivity as a characteristic of the individual rather than the medium because the person chooses to interact. Applying the insight of both perspectives to the context of online disclosures, the Internet's interactivity holds marketers accountable for knowing and facilitating the consumer's communication needs. In other words, marketers need to understand how to develop clear and conspicuous banner ads with the consumer's best interests in mind. However, consumers are also accountable to choose to interact with the disclosure information when it is presented. The FTC (2000a) states that the online environment offers contextual differences resulting from its interactivity that require additional guidance regarding disclosure presentation. This topic is further addressed by examining consumer response to banner ads and the FTC's (2000a) guidance and related consumer research.

Consumer Response to Banner Ads

Due to their constrained space, banner ads usually offer limited information in and of themselves. Typically, consumers must click on the banner ad or hyperlink within the ad, that is, "click through," to be directed to the advertiser's Web site or elsewhere within the host Web site in order to gain more information. This click through signals that the consumer has seen the ad (Chatterjee 2005) and is voluntarily exposing him/herself further to an advertising message (Cho 2003b).

Several studies have investigated influences on consumer click-through behavior. Cho (2003a) found that consumer involvement with the advertised product, congruency between ad and Web site, attitude toward the Web site, and attitude toward Web advertising were all positively related to click-through behavior. While banner ad clicking can be viewed as information-seeking behavior (Cho 2003b), Chatterjee (2005) found that one's navigation orientation influenced likelihood of banner ad click through. Specifically, when consumers are engaged in exploratory browsing, in contrast to goal-oriented navigation, they tend to click through more banner ads. This behavior is attributed to the consumer's willingness to depart from his/her intended purpose in visiting the Web site under exploratory browsing conditions compared to when the consumer is goal oriented. Subsequently, banner ad recall and recognition are significantly higher when the consumer is browsing. Cho and Cheon (2004) found that perceived goal impediment has the strongest predictive power of Internet advertising avoidance. Thus, repetition is necessary to produce ad recall and recognition when the consumer is goal oriented while online (Chatterjee 2005).

Lohtia, Donthu, and Hershberger (2003) examined secondary data involving nearly 8,700 banner ads targeting both consumer and business audiences. They found that incentives, such as a free offer, and interactivity lowered the click-through rate of banner ads, especially for a business audience. In contrast, animation increased the click-through rate. The authors' explanation for these results was that incentives and interactivity might have acted as a distraction to the business segment, while animation tended to be perceived more like television when compared to a static banner ad, and attracted attention.

Although consumers avoid clicking through banner ads when they are engaged in goal-directed navigation, these ads do improve brand attitude (Lohtia, Donthu, and Hershberger 2003). Mitchell and Valenzuela (2002) explain that banner ad repetition creates "brand fluency" and causes the brand to seem more familiar. The greater the brand fluency, the greater the likelihood that the brand will be part of the consideration set and chosen. According to Simmons Market Research Bureau (2004), 11% of adults found banner ads "useful." Banner ads were viewed superior to pop-ups (4%) and comparable to e-mail (10%) but not as useful as "key word web page links" at 26%. Furthermore, banner ads are not viewed as annoying Web site features (emarketer.com, July 29, 2005) and banner ad exposure significantly increases the purchase likelihood for current customers (Manchanda et al. 2006).

FTC Guidance: Online Disclosure Presentation

The FTC's (2000a) DOT COM Disclosures: Information about Online Advertising presents the current guidelines based on the CCS and subsequent legal precedent (see Appendix 2). The Commission offers five main points for making and evaluating effective online advertising disclosure. The following discussion highlights the commission's suggestions and relates them to the original CCS guidelines. In particular, we note the FTC's (2000a, p. 2) recommendation to "creatively incorporate disclosures in banner ads (emphasis added) or disclose them clearly and conspicuously on the page the banner ad links to."

Proximity and Placement

Whenever possible, advertisers should present disclosures such that consumers can view the disclosure and claim together in the banner ad, that is, proximal placement (compare to CCS7). However, the FFC also recognizes that "most banner ads ... are teasers" (p. 11) and some disclosures may be too long to be presented in the banner ad. Thus, disclosures can also link directly from the banner ad (immediate placement). If such a link is used, care should be taken that the disclosure link is prominently placed on the banner, appropriately labeled, and is consistent with typical hyperlink formats. Once consumers click the disclosure link, they should arrive directly at the relevant clearly and conspicuously displayed disclosure (FFC 2000a). Additionally, the FFC (2000a) advises that the disclosure be shown prior to purchase.

Disclosure proximity should be evaluated within the context of the Web page (FTC 2000a). In the mid-1990s, only 10% of Web users scrolled beyond the visible screen information, which was attributed to users' lack of familiarity with the concept (Nielsen 1997; www.clicktale.com 2006). Recent data show that while three-fourths of users scroll to some extent, only 23% scroll all the way to the bottom (Nielsen and Loranger 2006). Thus, whenever scrolling is necessary to view disclosure information, consumers are less likely to be exposed to the information or notice it.

Internet users tend to scan a new Web page they come across, picking up keywords and sentences. Nielsen (1996) found that only 16% of Internet users read Web pages word by word. More recently, eye-tracking studies have identified the "golden triangle" in search results pages where users scan across the top at the first result and then down the far left side about half way looking for a visual cue to catch their attention (Sherman 2005). Similarly, Nielsen (2006) found an F-shaped pattern when users scanned typical Web pages: first a horizontal movement across the top of page, next a shorter sweep in the middle of the page, and then finish with a left vertical scan with attention to the first and second lines. The F-shaped pattern has also been found for link clicking activity too, as Weinreich et al. (2006) note the strong link between user eye and hand movements as he/she scans through the Web page.

Prominence

The FTC (2000a) states that it is "the advertiser's responsibility to draw attention to the required disclosures" (p. 12). Factors that impact disclosure prominence, and thus gain consumer attention, include text size (compare to CCS2); color contrast between text and background to enhance legibility (compare to CCS3 and CCS4); and use of graphics. Smaller disclosure text reduces message comprehension in print (Foxman, Muehling, and Moore 1988) and television advertising (Murray, Manrai, and Manrai 1998). Prior research (Hoy and Andrews 2004, 2006; Hoy and Stankey 1993) operationalized sufficient text size for television disclosures based on Kodak's recommended minimum of 1/25th of the screen height (Moriarty and Duncan 1989).

Contrasting colors is an important means of drawing attention to a particular ad element (Bovee and Arens 1986). The color combination for the foreground and background should achieve the maximum contrast. Minimal contrast environments result in constant focusing and visual fatigue (Murch 1995). Previous studies (Hoy and Andrews 2004, 2006; Hoy and Stankey 1993) defined high contrast as white/yellow letters on dark background or dark letters on light background for television disclosures (Moriarty 1991; Moriarty and Duncan 1989). Similarly, Murch (1995) recommends using brighter colors against a dark background when presenting printed information on the computer display for maximum contrast. This approach avoids blinding the viewer yet allows the printed message to be easily differentiated from other stimuli within the visual environment. Moore, Stammerjohan, and Coulter (2005) found no significant impact on banner ad recall or recognition based on background color-text color contrast. However, they noted that the manipulation of contrast may need to be stronger and advocated future research.

Although not addressed by the FTC, other factors, such as use of capital only versus a combination of upper- and lowercase letters and number of characters per line, influence readability (i.e., prominence) and thus have applicability to online text disclosures. According to Moriarty (1991), people identify words by their shapes that are essential for efficient reading. Moriarty (1991) maintains that a combination of lower- and uppercase (capital) letters has a distinctive word shape created by the pattern of ascenders and descenders. In contrast, all uppercase letters text is harder to read as it presents monotonous rectangles that offer few distinctive shapes to capture the reader's attention.

Longer lines of text are more difficult to read and read at a slower speed than shorter lines of text (Huay 1968; Tinker and Paterson 1949). When the line is too long, a greater extent of eye movement is required to make the proper return sweep from one end of the line to the beginning of the next, resulting in lines being read twice or skipped. Marcus (1992, 1995) recommends that the optimal line length for legible computer screen text is a maximum of 60 characters per line.

Distracting Factors

Distraction reduces consumers' message scrutiny and learning (Tavassoli and Lee 2003). Competing text (Penney 1989), and nonverbal elements such as unrelated graphics, sound effects, and music can all serve to distract consumers from important information (Murray, Manrai, and Manrai 1998; Park and Young 1986; Tavassoli and Lee 2003). Comparable to CCS6, the FTC (2000a) emphasizes that other online ad elements should not distract consumers such that they may fail to notice the disclosure. Specifically, the FTC (2000a) has identified five potentially visual distracting elements: animation, blank space, graphics, intervening hyperlinks, and text.

Animation consists of movements that attract the eye causing it to appear more important than the surrounding images that remain still. Thus, while animation can act to draw attention and thus increase the banner ad click-through rate (Lohtia, Donthu, and Hershberger 2003), animation may also serve to reduce the disclosure's prominence. Yoo and Kim (2005) found that while moderate levels of banner ad animation could serve to increase attitude toward the ad and ad recognition, high animation levels have a negative impact on recognition. They attributed this result to an increased intensity of emotional response (arousal level) that inhibited further processing of the ad. Similarly, Sundar and Kim (2005) found that while animated ads were viewed as more interactive and positively impacted attitude toward the ad, animation also acted as a form of distraction hindering product involvement and subsequent recall of product knowledge.

Disclosures that are presented after several inches of blank space may result in the perception that there is no further information on the Web page. Consumers may be likely to stop scrolling and miss viewing the disclosure. Likewise, as the number of links on the Web page becomes greater, the greater the capacity of that page to lose or distract visitors clicking on these links (Hofacker and Murphy 2000). By increasing the probability of viewing other Web pages through clicking on the hyperlink, intervening hyperlinks appearing on the Web page where the disclosure is presented will limit the possibility of the consumer focusing on the disclosure. Unrelated information, such as graphics and text, may clamor for consumers' attention, making it unlikely that they will attend to the disclosure.

Repetition

Given the Intemet's interactivity, consumers are able to control the presentation order of the information and omit perceived irrelevant communication (Bezjian-Avery, Calder, and Iacobucci 1998). Internet users view pages of interest to acquire certain information while skipping Web pages of lesser interest (Tara 1998). Thus, the FFC (2000a) encourages repetition of the disclosure to ensure the consumer sees it. Additionally, repeated claims that require qualification also require repeated disclosures. As previously discussed, repetition is especially important when consumers are goal oriented as they navigate the Web (Chatterjee 2005).

Multimedia Messages

Internet technology allows for multimedia presentation of information beyond static text. Web sites often include radio and television commercials, sound, animation, and screen changes. Banner ads are often interactive, allowing consumers to hyperlink to further product or disclosure information and read it at their own pace.

If an audio claim needs qualifying, then the disclosure also should be in audio format and "in a volume and cadence sufficient for a reasonable consumer to hear and understand it" (FTC 2000a, p. 14). This guidance parallels that of CPL. Although the FTC has not explicitly defined what sufficient cadence or audio duration would be, Wingfield, Lindfield, and Goodglass (2000) state that "successful comprehension" of spoken speech in normal conversation typically occurs at rates of 140-180 words per minute.

Visual disclosures that are "presented in video clips or as a dynamic part of the online ad should appear for a duration sufficient for consumer to notice, read and understand them" (FTC 2000a, p. 14), comparable to CCS5. In the traditional, self-paced reading environment, consumers' reading rates range from 250 to 400 words per minute (Rayner and McConkie 1976). However, if the text disclosure is presented dynamically (i.e., externally paced), then a slower presentation rate is needed to allow sufficient time to notice and read the disclosure. Faster video disclosure presentation rates relate negatively to consumer comprehension (Murray, Manrai, and Manrai 1998). FTC-recommended televised warranty disclosures of 132 (optimal) and 180 words per minute (acceptable) provide guidance for operationalizing sufficient duration (Federal Register 1987). Furthermore, CCS 1 recommends that disclosures be presented in dual modality (i.e., presenting the disclosure in both audio and video format simultaneously). Although the intended context is television, it seems reasonable to apply these benchmark presentation rates and modality recommendations to dynamic banner ads.

RESEARCH QUESTIONS

Given the overall importance that the FTC places on disclosures and the role of banner ads as an online marketing tool, the primary goal of this research is to expand our understanding of banner ads' inclusion of disclosures as well as those disclosures' adherence to FTC guidance. That adherence is evaluated in two components. First, this study provides a point in time evaluation of banner ad disclosure prevalence as well as adherence to the CCS as presented by the FTC's most current guidelines (FTC 2000a). This level of assessment focuses on the structural, or physical, characteristics of the disclosure. In essence, we explore whether online disclosures are theoretically presented in such a way that "reasonable (online) consumers should be able to notice and read or hear the disclosure" (FTC 2000b, p. 3). As such, this study becomes a baseline for future comparisons for banner ad disclosures much as Hoy and Stankey's (1993) study did for Hoy and Andrews' (2004) evaluation of television advertising disclosures. Kolbe and Muehling (1992) note the value of monitoring trends in disclosure usage and presentation in that they provide insight to regulators. Thus, we have the following research questions:

RQ1: To what extent do banner ads on the top 100 U.S. Web sites include disclosures?

RQ2: To what degree did the banner ad disclosures adhere to the FTC's (2000a) guidance for clear and conspicuous/prominent online presentation?

The study's second goal in understanding banner ad disclosures' adherence to FTC guidance goes beyond prior research that focused exclusively on disclosures' physical traits (Hoy and Andrews 2004; Hoy and Stankey 1993). This study also investigates the extent to which mandated or triggered disclosure information was included. In other words, given the banner ad product or service category or its claim or message, was the FTC-specified disclosure information given?

RQ3: To what extent do banner ad disclosures on the top 100 U.S. Web sites adhere to FFC guidance in terms of providing the advised disclosure information?

Finally, the CCS (1970) has provided the foundation for FTC guidance across all media. Given the predictable prevalence of disclosures in all media (see Hoy and Andrews 2004), a comparison of adherence to the CCS between banner ads and television commercials (Hoy and Andrews 2004) may point to specific areas where advertisers designing for one medium could learn from the other. Additionally, overall strengths and weaknesses can be identified. Thus, we ask the following:

RQ4: How does disclosure prevalence and adherence to the CCS compare between disclosures in banner ads and those in prime-time television commercials?

METHOD

Sample Selection

The one hundred most popular Web sites based in the United States were visited in July 2005. The Web sites were selected based on a third-party rating by Alexa.com, an internet rating service of Amazon.com. (1) All banner ads found on each of these Web sites at the point of coding were included in the analysis.

Coding Scheme and Process

Adherence to CCS

A primary coding scheme was developed that assessed adherence to the FTC's (2000a) guidance for clear and conspicuous online disclosure presentation that represents the commission's current guidance. Specifically, the coding scheme measured disclosure features related to proximity and placement, prominence, distracting factors, repetition, and multimedia messages. Operational definitions for each area were based on the previously discussed literature, especially as used in prior content analysis studies that examined disclosure adherence to the CCS (Hoy and Andrews 2004, 2006; Hoy and Stankey 1993).

Two independent coders were trained on the coding scheme and operational definitions to acquaint themselves with the coding task. The coders used a 15-inch LCD monitor screen with resolution set at 800 x 600 pixels and medium text size (Gillespie 2000), a metric ruler to assess letter height, and Microsoft Word to measure the number of words in the disclosure. As a familiarization task, the coders were first assigned to a banner ad outside the sample and coded five unique disclosures.

Next, to establish intercoder reliability, the coders were given 30 unique ads that were not part of the sample, 20 of which included disclosures. A disclosure was defined as a text, audio, or video statement that served to qualify, delimit, or explain the advertising offer or claim. Agreement on the presence of disclosures was 100.0%. These independent coders then assessed adherence to FTC guidance regarding clear and conspicuous disclosure presentation using the coding scheme for the first disclosure the consumer would encounter on each banner ad. In the coding pretest of the resulting 20 unique disclosures, reliability scores (Perreault and Leigh 1989) for individual items ranged from 0.9 to 1.0. (see Table 1). This study's reliability scores mirror those reported by Hoy and Andrews (2004, 2006). Any discrepancies in coding were resolved through discussions between coders and the supervising researcher. Given the coding scheme's objective measures, the high level of intercoder reliability, and the sample size, the independent coders divided the sample and coded each half separately (cf. Hoy and Andrews 2004, 2006; Hoy and Stankey 1993).

As each of the two independent coders visited each of the assigned sample Web sites, the Web site homepage was archived together with all banner advertisers' homepages, using the "save" feature or in hard copy. Next, the coder clicked on each banner ad to link to the advertiser's Web site and examined every possible Web page and link, scrutinizing for the presence of disclosures qualifying, limiting, or explaining the claims made in the banner ad. Additionally, the text of each banner ad's claim/offer and the companion disclosures were archived in a spreadsheet. Next, the coders noted the number of disclosures and evaluated each in accordance with the coding scheme's measures of online clear and conspicuous presentation.

Inclusion of Mandated or Triggered Disclosures

A second coding scheme was developed to evaluate the extent to which banner ad claims included the necessary FTC disclosures. Specifically, claims related to the following products or services were evaluated against the itemized list of necessary disclosures as presented in Appendix 1. However, as the pretest coding process unfolded and products were offered that were not addressed by the FFC but rather fell under the Truth in Savings Act, the coding scheme was expanded to also include Federal Deposit and Insurance Corporation-required disclosures (see Appendix 1). Additionally, the coding scheme captured disclosures that were used to qualify or delimit the claim but were neither mandated nor triggered by the FTC and disclosures that provided further explanation but did not delimit the claim. In essence, the coding scheme was Appendix 1 where coding involved assessing whether the claim related to any of the mandated/triggered disclosures; and if so, which required disclosure information was addressed. If the disclosure was not required, it was evaluated as to whether it delimited and]or explained the claim. It is important to note that in contrast to the initial coding where the focus was assessing each disclosure's structural characteristics against the FTC's guidance for physical presentation, the purpose of this round of coding was to assess the disclosure's linguistic characteristics by reading the claim and disclosure language together.

Another independent coder, who did not code for clear and conspicuous presentation, was trained in this task by examining four unique banner ads outside the sample that contained a total of 10 disclosures. The independent coder first read the claim and all affiliated disclosures to decide if the disclosures were (1) mandated/triggered based on the categories presented in Appendix 1, (2) not mandated/triggered but delimited or qualified the claim, or (3) provided further explanation without delimiting the claim. If the claim/offer related to one of the mandated/triggered categories, the individual disclosure was evaluated against the specific requirements for that category (as presented in Appendix 1). The independent coder's pretest results were compared to the supervising researcher's independent coding of the pretest banners and the modifications to the coding scheme previously described were implemented.

The independent coder then proceeded to code the unique banner ads and their companion disclosures (see Sample Profile) that had been archived in a spreadsheet as previously described. To establish intercoder reliability for this aspect of the study, a second independent coder went through the pretest training task. As advocated by Rifle, Lacy, and Fico (1998), the second coder then evaluated a randomly selected sample of 20% resulting in 23 banner ads that yielded 30 disclosures. Reliability scores (Perreault and Leigh 1989) for individual items ranged from 0.894 to 1.0 (see Table 2). The first author resolved the discrepancies and reviewed all coding prior to analysis.

ANALYSIS AND RESULTS

Sample Profile

Forty-three of the sites, including government Web sites that comprised 10% of the sample, contained no banner ads. The number of ads in the remaining 57 Web sites ranged from I to 8, with 23% each having one or two ads for a total of 198 banner ads. There was an average of 3.47 banner ads among those sites or 1.98 ads among the entire sample. Of these 198 banner ads, 113 were unique and formed the basis for further analysis. The decision to include only unique ads rather than duplicates was based on two factors. First, Davis (1997) notes that "conclusions drawn about advertising approach and content can be distorted by coding multiple occurrences of the same ad" (p. 400). Second, we are following the precedent set by prior content analysis research that has examined disclosures/footnotes (see Hoy and Andrews 2004, 2006; Hoy and Stankey 1993; Kolbe and Muehling 1992). This approach avoids "double counting" (Kolbe and Muehling 1992).

The 113 unique banner ads represented a variety of business categories: E-tailers (as differentiated from retailers whose focus is on brick and mortar stores) were the major categories (25.7%). Other notable categories include credit card companies (14.2%), Internet service providers (11.2%), and technology firms (9.7%).

Banner Ad Disclosure Prevalence

One hundred percent of the 113 unique banner ads in our sample had at least one disclosure. Approximately two-thirds of the 113 banner ads (68.1%) had only one disclosure, while another 24.8% had two. Five (4.4%) banners had three disclosures. Finally, there were single banner ads with four, five, and six disclosures each. In sum, we had 163 disclosures for further analysis.

Banner Ad Disclosure Adherence to FTC CCS Guidance

Table 3 provides a summary of the results for banner ad disclosure adherence to the FTC (2000a) guidance.

Proximity and Placement to Claim

As recommended, most advertisers made an effort to present disclosures early, with 65.7% (n = 107) of disclosures being presented immediately on the Web pages after the coders clicked on the banner ads or earlier. However, 34.4% (n = 56) of disclosures were nonimmediate.

Per the FTC's (2000a) recommendation, 65% of the disclosures were accessed directly by clicking on the banner ad. For the remaining 35.0% (n = 57), the consumer is led to a Web page that does not display the disclosure upon clicking the banner ad. Instead, one sees the hyperlink to the disclosure, thus requiring an additional step to locate and access this disclosure. In this subsample with hyperlinks, 77.2% (n = 44) were labeled for distinct identification (e.g., terms and conditions). Nearly all (n =- 56) of the hyperlinks were placed near the disclosures and conspicuous for easy access. Last, all of these hyperlinks (n = 57) went straight to the printed disclosures.

Contrary to FTC guidance, 85.3% of the disclosures (n = 142) required scrolling in order to view the disclosure or the hyperlink. However, only 4.3% (n = 6) used a cue to encourage scrolling. Last, all the advertisers followed the FTC guideline of presenting the disclosure prior to purchase.

Prominence of Disclosures

None of the disclosures met the guideline of sufficient text size (CCS2) as operationalized by 1/25th of the screen size (7.2 mm for a 15-inch monitor) with 95% at 2-3 ram. However, nearly all (98.8% or n = 161) of the disclosures were stated in combination characters as suggested by Moriarty (1991) for enhancing readability. Moreover, as recommended (Marcus 1992, 1995) 84.9% (n = 138) of the disclosures had an average of less than 60 chars per line. As such, clear and conspicuous disclosure presentation in this area appears mixed.

Out of the 163 disclosures, 67.5% (n = 110) had "glaring" contrast that was attributed to using a white background with black lettering. About one-fourth (26.4%) had a low contrast, which was based on disclosures having similar shades of dark or light background colors with the same color lettering. Only a small percentage (6.2% or n = 10) of disclosures had bright-colored lettering against a dark background, which, according to Murch (1995), provides maximum contrast and thus adhered to FTC guidance (CCS3).

In addition to the contrast and presentation attributes that contributed to the legibility of the disclosures, 98.2% (n = 160) of disclosures were displayed on a single overall background color (CCS4). Only 1.8% (n = 2) of disclosures consisted of color variations or text printed over images (i.e., multiple backgrounds). Therefore, almost all the disclosures followed this FFC recommendation.

Distracting Factors (CCS6)

Approximately two-thirds (n = 111) of the disclosures adhered to the FTC guidelines and did not include distracters that might affect communication of the disclosures. However, a sizable percentage (29.5% or n = 48) of disclosures contain intervening hyperlinks in the proximity of the disclosures that may distract readers. In addition, some disclosures were also found to contain moving visuals and animation (8.0% or n = 13), other text (3.7% or n = 6), as well as graphics distractions (3.1% or n = 5).

Repetition and Multimedia Messages

Contrary to FTC (2000a) recommendations, the vast majority of disclosures (95.7%) have zero repetitions. Five disclosures (3.1%) were repeated once.

In contrast to the dual modality recommendation (CCS1), all the banner ad disclosures in our sample were presented in single modality; specifically, print. Thus, analysis of CPL in an audio context is not applicable. Furthermore, contrary to print disclosures in television commercials that are externally paced, print disclosures in our banner ad sample were static and thus self-paced. Therefore, we did not have any multimedia messages to analyze for sufficient presentation rate (CCS5 and CPL).

Inclusion of Required Disclosure Language

Profile by Banner Ad and Individual Disclosure

All 163 physically distinctive disclosures in the study were coded as previously described. Sixty-six of the 113 banner ads (58.4%) had at least one mandated/triggered disclosure. Additionally 55 of the 113 banner ads (48.6%) included a disclosure that qualified the claim but was not required. Only 2.7% of the ads included a disclosure that simply provided further information or explanation without delimiting the claim. Because individual banner ads could include disclosures for multiple reasons, these percentages exceed 100.

Looking across all 113 banner ads, the most common category of required disclosure resulted from the triggering term "free," which was found in 34.5% (n = 39) (Table 4). The next most common type of required disclosure across all banner ads was for credit-related claims that triggered disclosures under the Truth in Lending Act with 11.5% (n = 13). Categories that were in the coding scheme and presented in Appendix 1 but are not shown in Table 4 (e.g., warranties, nutrition, jewelry, and precious metals) had zero observations. Examination of the 66 ads with required disclosures revealed 81 distinct claims that triggered a disclosure.

The profile of the 163 physically distinct disclosures revealed a similar pattern. Also shown in Table 4, use of the word "FREE" resulted in the most disclosures (30.2%, n = 49) with credit-related disclosures as the second most prevalent (14.1%, n = 23). Disclosures that qualified or delimited claims accounted for 38.6% of the individual disclosures with 4.3% of the disclosures explaining the claim. Because the language of individual disclosures may address more than one disclosure type category, the total percentages exceed 100. One hundred ten disclosures contained language related to the 81 claims that triggered a disclosure (Table 4) and served as the basis for addressing research question 3 regarding the extent to which the banner ads included required disclosures.

Evaluation of Inclusion of Required Disclosure Language

When evaluating an advertisement, the commission looks at it in its entirety rather than focusing on individual elements (FTC 1983). Therefore, each of the 66 banner ads that included at least one triggered disclosure was examined more closely. As previously noted, these ads yielded 81 distinct triggering claims resulting in 110 disclosures that contained some of the required language. Thus, each banner ad's claim(s) was/were read in conjunction with the affiliated disclosure(s') coded adherence to evaluate if the required disclosure language had been presented in the ad. In some cases, more than one physically distinct disclosure needed to be read together with the claim to determine if the ad provided the required information. Thus, in addition to coding for the required language in each physically distinct disclosure, all disclosures related to a particular banner-ad-triggering claim were assessed collectively for adherence. At this level, the focus was on whether the ad as a whole provided the necessary information rather than if the individual disclosure did.

In order to determine if the banner ad and companion claims adhered to FTC guidance for required disclosure inclusion, the ad had to present the necessary disclosure language immediately (on the ad itself) or proximally (one click through from the banner) in compliance with CCS guidance regarding proximity and placement as previously described. In some cases, there were "hints" of the required disclosure information with another click through (i.e., nonproximal placement) under the auspices of "terms and conditions," "fine print," "account disclosures," or "offer details" links. In other cases, the disclosure references were more oblique in the proximal disclosure such as "Learn more about rates, fees, and other cost information by reviewing Price & Terms" or "See online application for additional information." In either case, the required disclosure language was not presented according to FTC guidance regarding proximity.

Out of the 66 banner ads that had at least one triggering claim that required a disclosure, 46 or 69.7% presented all required information. This result (shown in Table 5) is influenced by the high incidence of using the term FREE coupled with the relatively high adherence level for that disclosure (89.5%). Provision of disclosures related to credit terms under the Truth in Lending Act was relatively high (62% or 8 of 13 claims). Adherence would have been noticeably higher had more of the required disclosures been proximal rather than requiring a second click through (nonproximal) as noted in Table 5.

Disclosure Prevalence and CCS Adherence in Banner Ads vs. Television Commercials

As shown in Table 6, disclosure incidence and adherence to the CCS for the banner ad sample was compared with the 2002 profile of disclosures in prime-time television commercials reported by Hoy and Andrews (2004, p. 174-175). With respect to incidence, there was a significantly higher disclosure prevalence in banner ads (100%) compared to the 67% found in prime-time television commercials ([chi square] = 53.2, p < .0001).

Additionally, for all the CCS guidelines where direct comparison was possible, disclosure adherence was significantly different between banner ads in television commercials. Compared to banner ads, adherence was better in television commercials with respect to dual modality (CCS1), sufficient type size (CCS2), high contrast between text and background (CCS3), and proximity to claim (CCS7). Conversely, adherence was superior in banner ads for use of single background (CCS4) and absence of distractions (CCS6). Because all the banner ad disclosures were print, it was not feasible to compare sufficient presentation rate (CCS5) or audio cadence (CPL).

DISCUSSION

This study's finding that all of the banner ads in the top 100 U.S. Web sites had at least one disclosure gives additional support to Hoy and Andrew's (2004) observations of increased disclosure use in the marketplace. Yet, the results also present a mixed image of banner ad disclosures' adherence to FTC guidance.

On one hand, banner ad adherence to FTC guidance regarding inclusion of required disclosure information was relatively high. However, that observation is limited by the potentially overrepresented use of FREE as the triggering claim and the rather general guidance that the FTC offers include the terms and conditions of the free offer (Appendix 1). One assumes that the language provided in the associated disclosures was, in fact, all the terms and conditions. Perhaps failure to disclose all terms and conditions would not come to light unless consumers complained to the FTC or the Better Business Bureau.

However, as Tyebjee (1979) pointed out, "for an information disclosure program to be effective, not only must information be made available, in addition people must be aware of its availability and it must be made available at the place and time where it will influence behavior the most" (p. 220). Although the vast majority of the disclosures in this study were in response to FTC guidance (i.e., triggered) and in theory should provide the additional information to aid consumers in decision making, this study also found that many aspects of clear and conspicuous online presentation needed improvement. Considering Ha and James' (1998) definition of interactivity, marketers should be proactive in presenting their disclosures in a clear and conspicuous manner. This willingness to respond to consumers' communication needs regarding disclosures makes the most of the interactivity that the Internet has to offer. Marketers can and should test their banner ads and the linked pages, depending on disclosure location. The FTC (2000a) underscores the importance of consumer research in determining effective methods of presenting required disclosures. Eye-tracking technology can identify where on the banner ad or following page the consumer is looking and assess the extent to which users are attending to the disclosure. Click-through measurements can also tap into the degree to which consumers are pursuing disclosure information.

This point brings up the companion perspective of interactivity that focuses on the consumer choosing to interact with Web site content (Schumann, Artis, and Rivera 2001). What might motivate the consumer to interact with the (clear and conspicuous) disclosure that the marketer provides? One area of future research could explore the role of consumer involvement with the product category. Cho (2003b) viewed banner ad clicking as an information-seeking activity and found that the level of product category involvement correlated positively with this behavior. Does product category involvement impact level of perceived "clear and conspicuous" presentation? For example, if the consumer is looking for a home loan, is he/she more likely to notice (and therefore click) the banner ad link that says terms and conditions?

Cho and Cheon (2004) noted that consumers avoid Internet advertising when they perceive their goals being blocked. If consumers perceived disclosure information as facilitating, rather than impeding, their goals--would they reduce their avoidance of the disclosure? Would they experience more involvement with the potential of the disclosure information? Would this enhanced involvement increase their perception that the disclosure is clear and conspicuous? Does the modest level of adherence to the CCS found in this study make it easy for consumers to avoid disclosures? All these questions provide rich areas of future research.

IMPLICATIONS

The results of mixed banner ad disclosure adherence to the CCS pinpoint specific areas of weakness and offer an opportunity to suggest improvements.

Proximity and Placement: Making Effective Use of Hyperlinks

Hyperlinks on the banner ad or linked Web site have the capacity to direct users toward the disclosure or distract users from the disclosure. Although the FTC (2000a) recommends that no further hyperlinking, additional click through, or scrolling should be necessary to reach the disclosure, lengthy disclosures such as those required by the Truth in Lending Act (12 CFR Part 226) or prescription drugs (Food and Drug Administration 1999) may make that difficult.

Consumers face problems with getting access to necessary information if their clicks on banner ads do not get to the disclosures promptly. Although most disclosures were accessed immediately, approximately one-third of the disclosures were presented in a nonimmediate format. This may in turn pose risk for consumers who purchase online goods and services without obtaining a full picture of the terms, conditions, or qualifying information. Hence, once the consumer clicks the banner ad, the Web site to which they are directed should contain the required disclosure and in a place where consumers naturally scan the Web page.

Given that most of the disclosures in our sample required scrolling and only a minority of users scroll (Nielsen and Loranger 2006), few may notice the disclosures' presence even if the disclosure is a direct click from the banner ad. Cho (1999) points out that the information for which consumers are looking should be located at the top or middle of the Web page so that they do not have to scroll. Eye-tracking studies could identify optimal disclosure link placement and verify that consumers are attending to them.

Furthermore, while all our banner ads showed the disclosure at some point prior to purchase, few repeated the disclosure. Consumers need to be repeatedly exposed to the disclosure message to increase the likelihood that the disclosure will be noticed, attended, and clicked on. Repetition also produces greater communication outcome gains (e.g., recall and recognition) when users are engaged in goal-directed navigation rather than just browsing (Chatterjee 2005). The need for repetition complements the advice of Stewart and Martin (2004) who said that a multimedia approach to disclosure presentation is essential to what ultimately determines an effective disclosure: consumer comprehension and use of the disclosure information. Thus, including a prominent disclosure hyperlink at the top of the page and also as the first hyperlink down the left side of each page could facilitate multiple opportunities for consumers to seek out the information as they peruse the site and accommodate lengthy required disclosures.

A companion consideration is the disclosure hyperlink label. While the Nielsen (2006) study underscored users' "banner blindness," or the tendency to ignore banner ads while viewing a Web page even if the banners contained the desired information, it also found paid searches are effective if the search term matches what they are looking for (Bums 2006). In other words, the search term matters. Hyperlink phrases that denote banner ad disclosures include disclosure, terms and conditions; see site for details; click here for more details; and point here for important safety information. Future research could explore the prime placement and terms for disclosure hyperlinks to maximize consumer attention.

Although hyperlinks could provide an effective way to link to extensive disclosures, this study also found a sizable proportion of distracting hyperlinks located in the proximity of the disclosure. A user may click on a link that appears before the disclosure and never return to that page--especially if the consumer is in a browsing or exploration navigational mode. Those links could be elsewhere within the advertiser's Web site or to another Web site. To reduce this occurrence, other linked content could be placed subordinate to the disclosure link, either to the fight on the top line as users read left to fight or below the disclosure link on the left vertical side per the F-shaped pattern (Nielsen 2006).

Growth in Online Video: Opportunities to Enhance Prominence

Perhaps the greatest deficit in banner ad disclosure presentation encompasses design features related to prominence: insufficient text size, minimum use of high contrast, and single modality presentation. Gaither (2006) notes the recent growth in Internet video overall as at-home broadband connectivity penetration reached 72% of active U.S. Web users in May 2006 compared to 57% in May 2005 (Nielsen/Netratings 2006). Online advertisers are projected to spend $4.1 billion on video ads by 2011 (emarketer.com, March 5, 2007). Although one component of this growth includes placing existing television commercials online or creating unique ones that run traditional lengths, other options include video demonstrations that can run several minutes, downloadable videos for mobile video devices (e.g., iPods) and video banner ads. These video banners can either be host initiated (instant play when one arrives at the Web site) or user initiated (click to play). In a cutting-edge move, New Line Cinema promoted The Number 23 premiere by streaming nearly live video from "fan confessionals." Live video streams in banner ads are on the horizon for product launches and other real-time events (Morrissey 2007).

The Interactive Advertising Bureau (2005) offers guidelines for developing creative streaming advertising video. Because it maintains that consumers "opt in" to view the content, the Interactive Advertising Bureau recommends that video be host initiated but advises that start/stop, volume on/off, and volume controls be included to minimize user annoyance. Similar to the broadcast environment, video banner ads could allow dual-modality disclosure presentation. Technological advancements and consumer adoption of broadband provide opportunities for personalizing the disclosure presentation. Giving the consumer control to enhance prominence may offer the potential of maximizing notice and comprehension of banner ad disclosures, especially in comparison to television commercial disclosure presentation. For example, consumers can easily replay the video as often as they like, adjusting the volume if necessary. One company, Accela Communications, Inc., includes a pop-up menu while the video is playing that highlights video content. In addition to traditional features such as pausing or rewinding, users can jump directly to content of interest--such as the disclosure. Companion information in a text format (e.g., "white papers") is also available at a click as well as a complete transcript of the video. Although the company's product is primarily for content that is several minutes long, such techniques could be applied to enhancing access to the disclosures in more traditional length spots.

Many computer environments allow the user to adjust the text size to optimize readability. Similarly, users could have control over the font and background colors to alter contrast. This ability to customize exists at a basic level in Microsoft Windows[TM] through the Accessibility Wizard that allows users to magnify screen areas by pointing the cursor or to change to a high contrast (bright lettering on a black background) environment. However, few users may be aware of these features, let alone use them. Some Web pages currently include JavaScripts that allow users to increase or decrease the text size as desired.

Future research could explore the extent to which consumers would or would not take advantage of these control features to acquire the disclosure information. Will consumers personalize the environment or do they simply accept the information in the format presented? Or should advertisers present banner ad disclosures according to clear and conspicuous guidance initially, while allowing for and encouraging customization? Which customizable disclosure features are consumers most likely to use, and benefit from, in order to notice and use disclosure information? Prior research on banner blindness (e.g., Pagendarm and Schaumburg 2001) and avoidance of online advertising (e.g., Cho and Cheon 2004) could guide these investigations.

Computer vs. Television Environment

Perhaps not surprisingly as the newer medium, online banner advertising generally demonstrated less adherence to the CCS for disclosures compared to television. Prior research, and the current study, assessed adherence to the CCS based on disclosure literature related to a broadcast television environment. Discussion so far has related to online disclosures that are implemented using typical Web page techniques such as formatted text, hyperlinks, pop-ups, and both static and animated graphics. Such was the case with this study's sample. As yet unexplored are the applications of CCSs to disclosures that are embedded in streaming video. While many of the same standards applied to broadcast television would be applicable, some will need to be modified. For example, standards for readability involving vocabulary and sentence structure would still apply but word rate may be less of a factor since the user may easily pause or rewind the presentation at any time. Standards for legibility of text may also need to be revisited. Because of bandwidth limitations, streaming video is almost always presented to the user at a lower visual resolution than is typical for broadcast television. Text that meets the 1/25 size requirement for broadcast television is unlikely to be legible once the video data have been compressed to current practical streaming video data rates. Modality issues may become more complicated since Web-page-based disclosures may be displayed simultaneously with the audio and video in the streaming presentation.

CONCLUSIONS

This study addressed a previously unresearched aspect of disclosure research. Banner ad disclosure prevalence, limited clear and conspicuous presentation, the growth of online video and broadband penetration plus the technical differences among television, traditional Web page features, and streaming video underscore the issue's relevancy to consumers and policy makers. As a content analysis, this research provides a snapshot at a point in time and describes the extent to which banner ad disclosures meet or fail to meet the FTC's recommendations to provide required disclosure information and in a consumer-friendly format. Future research could investigate a random sample of Web sites outside the top 100 to provide a broader perspective on banner ad disclosure adherence. One could also explore the level of media clearance or industry self-regulation occurring by also including measures of whether or not the advertiser placed the banner ad itself, if an advertising network was involved, or if the Web site on which the banner ads were placed engaged in clearance procedures comparable to traditional media. (2)

One thing that is apparent is that disclosures are ubiquitous to banner ads. What were once viewed as "static billboards along the information superhighway" now offer expanding creative potential (Morrissey 2007). With that creative potential comes additional concerns for how to present required disclosure information. Numerous research opportunities exist to understand if and how consumers use banner ad disclosures and ways to empower the consumer's acquisition of this important information.

APPENDIX 1

Mandated or Triggered Disclosures

BY THE FTC

Business Opportunities (a)

Franchise and business opportunities: The names, addresses, and telephone numbers of other purchasers; a fully audited financial statement of the seller; the background and experience of the business's key executives; the cost of starting and maintaining the business; and the responsibilities of the seller and purchaser once the purchase is made.

Companies that make earning representations must give consumers the written basis for their claims, including the number and percentage of owners who have done at least as well as claimed.

Multilevel marketing: The number and percentage of existing franchisees who have achieved the claimed results, as well as cautionary language.

Credit and Financial Issues (b,c)

Triggering Terms for Open-Ended Credit:

1. The periodic rate used to compute the finance charge or the annual percentage rate.

2. A statement of when the finance charge begins to accrue, including the "free-fide period."

3. The method of determining the balance on which a finance charge may be imposed.

4. The method of determining the finance charge, including a description of how any finance charge other than the periodic rate will be determined.

5. The amount of any charge other than a finance charge that may be imposed as part of the plan.

Required Disclosures:

1. Any minimum, fixed, transaction, activity, or similar charge that could be imposed.

2. Any periodic rate that may be applied, expressed as an annual percentage rate. The term "annual percentage rate" or an abbreviation such as "APR" must be used and, if the plan provides for a variable periodic rate, that fact must be disclosed.

3. Any membership or participation fee.

Triggering Terms for Closed-Ended Credit:

1. The amount of the down payment (expressed as either a percentage or dollar amount).

2. The amount of any payment (expressed as either a percentage or dollar amount).

3. The number of payments or the period of repayment.

4. The amount of any finance charge.

Required Disclosures:

1. The amount or percentage of the down payment.

2. The terms of repayment.

3. The annual percentage rate, using that term or the abbreviation APR. If the annual percentage rate may be increased after consummation of the credit transaction, that fact also must be stated.

Consumer Leases (a)

Lease costs and terms: Total amount due at delivery; number, amount, and due dates of scheduled payments; whether or not a security deposit is required.

Contests and Sweepstakes (c)

Sweepstakes: No purchase is necessary; how to participate without buying or paying anything; purchase will not increase your odds of winning; the odds of winning a prize (if the odds cannot be determined in advance, the promoter must tell the factors used to calculate the odds); what one has to pay or the conditions to be met to receive or redeem a prize.

Contests: the terms, rules, and conditions of the contest; how many rounds of the contest you must achieve to win the grand prize; the time frame for the winner to be determined; the name of the contest's sponsor; an address where you can reach the sponsor to request that your name be removed from the mailing list.

Dietary Supplement (d)

Depending on the claim, a variety of disclosures may be appropriate including the limited applicability of the advertised benefit and/or presentation of scientific studies or "evidence" (substantiation).

Although only required for labeling, a disclosure stating that "the statement has not been evaluated by FDA and that the product is not intended to 'diagnose, treat, cure or prevent any disease'" (the DSHEA Disclaimer) may be prudent.

Environmental Claims (a)

Need to qualify broad environmental claims.

Free Products (a)

Terms and conditions of the free offer.

Jewelry (a)

Depending on the precious metal, gemstone, diamond, or pearls, certain disclosures are required. Examples include whether the gemstone is natural or synthetic/lab created; if the diamond or gemstone has been specially treated; or if an ultrasonic cleaner should not be used.

Mail and Telephone Orders (a)

There is a reasonable basis that merchandise will ship within 30 days. If not, another shipping statement is made.

Negative Option Offers (a)

Material information about the terms and conditions of the plan prior to billing/charging consumer credit cards.

900 Numbers (a)

The cost of the call.

Those 900 numbers that promote sweepstakes or games of chance, provide information about a federal program (but are not sponsored by a federal agency), or target individuals under 18 require additional disclosures.

Nutrition Claims (e)

Refer to a "nutrition panel" (required when a nutrient content claim is made); disclose nutrients for diet-related diseases (i.e., fat, saturated fat, cholesterol, and sodium) and disclose amount of nutrients when claims concern fiber, saturated fat, cholesterol.

Rebates (f,g)

Noncomputer or Internet service: the before-rebate cost, as well as the amount of the rebate; purchase requirements; additional fees; and when consumers can expect to receive rebate.

Computer or Internet service: the before-rebate cost, as well as the amount of the rebate; if required to purchase Internet service to qualify for the "low-cost" deal; purchase requirements; additional fees; and when consumers can expect to receive rebate and what components are included in offer.

Telemarketing: Credit Repair, Advance Fee Loans, and Investment Opportunities (a)

If consumers are allowed to order these goods/services by phone, certain disclosures apply:

The total costs to purchase, receive, or use the offered goods or services. While disclosing the total number of installment payments and the amount of each payment satisfies this requirement, the number and amount of such payments must correlate to the billing schedule that will be implemented.

The total quantity of goods the consumer must pay for and receive.

Testimonials and Endorsements (a)

Testimonials and endorsements must reflect the typical experiences of consumers, unless otherwise disclosed.

Connections between an endorser and the company that are unclear or unexpected to a customer, whether they have to do with a financial arrangement for a favorable endorsement, a position with the company, or stock ownership.

Warranties and Guarantees (a)

Warranties: Tells consumers how to get a copy of the warranty and discloses conditions limiting warranty.

Guarantee: Terms of the offer.

Wool and Textile Products (a)

Country of origin information.

Ads that say or imply anything about fiber content must disclose the generic fiber names (as assigned by the FTC) in order of predominance by weight.

BY THE FEDERAL DEPOSIT AND INSURANCE CORPORATION

Depository Accounts (including Checking, Savings, and Time Accounts (h)

The annual percentage yield (APY) (must use this term or abbreviation).

The interest rate (must use this term).

Variable rates: if accounts are variable rate, advertisements must display the fact that rates may vary.

Time period the APY is offered: an institution must state how long advertised APYs are offered, such as "from March 7 through March 13" or "APY effective as of March 7."

Minimum balances: if a minimum balance is required to obtain the advertised APY, the minimum balance must be stated.

Minimum opening deposit: an institution must state any minimum opening deposit requirement.

Statement concerning fees: an institution must state that fees could reduce earnings on the account.

Time account features: the term of the time account (e.g., "three months") must be stated.

An institution must also state if a penalty will (or may) be imposed for early withdrawals.

Bonus information: if a bonus is advertised, an institution must disclose any time requirement to obtain the bonus, when the bonus will be provided, any required minimum balance to obtain the bonus, and the APY (which triggers additional disclosures).

Sources: (a) FTC Bureau of Consumer Protection, Advertising and Marketing on the Internet, September 2000. http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.htm.

(b) FTC Bureau of Consumer Protection, How to Advertise Consumer Credit and Lease Terms. http://www.ftc.gov/bcp/conline/pubs/buspubs/creditad.htm.

(c) FTC Bureau of Consumer Protection, Prize Offers: You Don't Have to Pay to Play, July 2000. http://www.ftc.gov/bcp/conline/pubs/tmarkg/prizes.pdf.

(d) FTC Bureau of Consumer Protection, Dietary Supplements: An Advertising Guide for Industry, April 2001. http://www.ftc.gov/bcp/conline/pubs/buspubs/dietsupp.htm.

(e) FTC Bureau of Consumer Protection, Enforcement Policy on Food Advertising, May 1994. http://www.ftc.gov/bcp/policystmt/ad-food.htm.

(f) FTC Bureau of Consumer Protection, Advertising Practices: Frequently Asked Questions. Answers for Small Business. http://www.ftc.bog/bcp/conlin/pubs/buspubs/ad-faqs.pdf.

(g) FTC Bureau of Consumer Protection, Big Print. Little Print. What's the Deal? http://www.ftc.gov/bcp/conline/pubs/buspubs/bigprint.htm.

(h) Under the Truth in Savings Act (12 U.S.C. 4301 et seq.) Regulation DD, which implements the Truth in Savings Act became effective June 1993. See Office of Thrift Supervision, Truth in Savings Act, Section 365, December 1999.

APPENDIX 2

FTC Guidance for Clear and Conspicuous Online Disclosures

To make a disclosure clear and conspicuous, advertisers should:

* Place disclosures near, and when possible, on the same screen as the triggering claim.

* Use text or visual cues to encourage consumers to scroll down a Web page when it is necessary to view a disclosure.

* When using hyperlinks to lead to disclosures:

** Make the link obvious.

** Label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads to.

** Use hyperlink styles consistently so that consumers know when a link is available.

** Place the hyperlink near relevant information and make it noticeable.

* Take consumers directly to the disclosure on the click-through page. Assess the effectiveness of the hyperlink by monitoring click-through rates and make changes accordingly.

* Recognize and respond to any technological limitations or unique characteristics of high-tech methods of making disclosures, such as frames or pop-ups.

* Display disclosures prior to purchase, but recognize that placement limited only to the order page may not always work.

* Creatively incorporate disclosures in banner ads or disclose them clearly and conspicuously on the page the banner ad links to.

* Prominently display disclosures so they are noticeable to consumers, and evaluate the size, color, and graphic treatment of the disclosure in relation to other parts of the Web page.

* Review the entire ad to ensure that other elements--text, graphics, hyperlinks, or sound--do not distract consumers' attention from the disclosure.

* Repeat disclosures, as needed, on lengthy Web sites and in connection with repeated claims.

* Use audio disclosures when making audio claims, and present them in a volume and cadence so that consumers can hear and understand them.

* Display visual disclosures for a duration sufficient for consumers to notice, read, and understand them.

* Use clear language and syntax so that consumers understand the disclosures.

Source: FTC (2000), Dot COM Disclosures: Information about Online Advertising, pp. 2-3. www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.html.

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(1.) The ratings are derived from a variety of sources such as traffic rank and speed based on Web usage information to provide key statistics about each site on the Web. The traffic rankings represent the largest and most global sample of Internet usage available in the world.

(2.) The FFC holds the sellers as responsible for the claims they make about their products and services. The commission notes that third parties, such as advertising agencies, host Web site or advertising network, may be held responsible for claim substantiation depending on the extent of the agency's preparation of the challenged ad (FTC 2000b). However, claim substantiation is a totally different issue than presenting mandated or triggered disclosures.

Mariea G. Hoy is a professor of advertising in the School of Advertising and Public Relations, College of Communication and Information, University of Tennessee, Knoxville, TN (mhoy@utk.edu). May O. Lwin is an assistant professor and acting head in the Division of Public and Promotional Communication, Wee Kim Wee School of Communication & Information, Nanyang Technological University, Singapore, Republic of Singapore.

The authors gratefully acknowledge the Nanyang Technological University's SCI Special Teaching and Research Grant to the second author. The authors also thank Les Hoy for his technical insight.
TABLE 1
Intercoder Reliability for CCS Adherence Measures

 Ir (a)

Presence of disclosures 1.000
Proximity and placement to claim
 Proximity to claim .961
 Disclosure shown prior to purchase 1.000
 Scrolling required to view disclosure 1.000
 Includes hyperlink for access 1.000
 Link labeled? 1.000
 Link located near? .949
 Link direct to disclosure .949
Prominence
 Text size .949
 Contrast between word and background .922
 Overall background color 1.000
 Letter combination 1.000
 Number of characters per line 1.000
Distracting factors
 Any distraction? .961
 Scene change? 1.000
 Moving visuals and animation? 1.000
 Blank space? 1.000
 Graphics? .949
 Distracting hyperlinks? 1.000
 Distracting text? .949
 Sounds or music? 1.000
Repetition
 Number of repetitions for disclosure 1.000
Multimedia messages
 Modality of presentation 1.000
 Sufficient presentation rate? N/A

(a) Ir is the intercoder reliability index as found in Perreault
and Leigh (1989, p.141, formula [7]).

TABLE 2
Intercoder Reliability for- Inclusion of Advised Disclosures

Presence of Claim Type/Inclusion of Required Disclosures Ir (a)

Free (or similar terms: bonus; given without charge; gift) .894
 Terms and conditions of the free offer .894
 Cannot tell. Appears to require another click through 1.000
Sweepstakes (i.e., chance) 1.000
 No purchase is necessary 1.000
 Purchase will not increase your odds of winning 1.000
 Odds of winning a prize. If the odds cannot be determined 1.000
 in advance, the promoter must tell you the factors used
 to calculate the odds
 How to participate in the contest without buying or paying 1.000
 anything
 What you will have to pay or the conditions you will have 1.000
 to meet to receive or redeem a prize
 Cannot tell. Appears to require another click through 1.000
Contest (i.e., skill, knowledge, or talent required) 1.000
 Terms, rules, and conditions of the contest .966
 How many rounds of the contest you must achieve to win the 1.000
 grand prize
 Time frame for the winner to be determined 1.000
 Name of the contest's sponsor .933
 Address where you can reach the sponsor to request that 1.000
 your name be removed from the mailing list
 Cannot tell. Appears to require another click through 1.000
Guarantee (or such as "satisfaction guaranteed" or "money-back 1.000
 guarantee")
 Terms of the offer 1.000
 Cannot tell. Appears to require another click through 1.000
Warranty
 Tells consumers how to get a copy of the warranty 1.000
 Discloses conditions limiting warranty 1.000
 Cannot tell. Appears to require another click through 1.000
Rebate (noncomputer or Internet service) 1.000
 Before-rebate cost, as well as the amount of the rebate 1.000
 Purchase requirements 1.000
 Additional fees 1.000
 When consumers can expect to receive rebate 1.000
 Cannot tell. Appears to require another click through 1.000
Rebate (computer or Internet service) .966
 Before-rebate cost, as well as the amount of the rebate 1.000
 Required to purchase Internet service to qualify for the 1.000
 "low-cost" deal?
 Purchase requirements 1.000
 Additional fees 1.000
 When consumers can expect to receive rebate 1.000
 What components are included in offer 1.000
 Cannot tell. Appears to require another click through .966
Credit-related offers (e.g., credit cards, buying on credit) .000
 Credit terms 1.000
 Finance charges expressed as an annual percentage rate 1.000
 Amount of down payment (expressed as % or $ amount) 1.000
 No. of payments or period or repayment 1.000
 Cannot tell. Appears to require another click through 1.000
Leasing 1.000
 Lease costs and terms 1.000
 Total amount due at delivery 1.000
 Number, amount, and due dates of scheduled payments 1.000
 Whether or not a security deposit is required 1.000
 Cannot tell. Appears to require another click through 1.000
Nutrition-related information
 Refers to a "nutrition panel" (required with a nutrient 1.000
 content claim is made)
 Discloses nutrients for diet-related diseases (i.e., fat, 1.000
 saturated fat, cholesterol, and sodium)
 Discloses amount of nutrients when claims concern fiber, 1.000
 saturated fat, cholesterol
 Cannot tell. Appears to require another click through 1.000
Dietary supplement (not required in advertising, but may be
 "prudent")
 Statement has not been evaluated by Food and Drug 1.000
 Administration and that the product is not intended to
 "diagnose, treat, cure, or prevent any disease" (DSHEA)
 Limited applicability of advertised benefit 1.000
 Scientific studies or "evidence" 1.000
 Cannot tell. Appears to require another click through 1.000
Disclosure delimits claim .894
Disclosure explains claim .933

(a) Ir is the intercoder reliability index as found in Perreault and
Leigh (1989, p. 141, formula [7]).

TABLE 3
Banner Ad Disclosure Adherence to FTC Guidelines (N = 163)

Guideline and Related CCS Percent

Proximity and placement to claim (CCS7)
 Immediate (disclosure is on the banner ad) 62.6
 Proximal (disclosure is on page directly linked from the 3.1
 banner ad)
 Nonimmediate (disclosure requires additional clicks 34.4
 beyond proximal)
 Disclosure shown prior to purchase 100.0
 Scrolling required to view disclosure 85.3
 Cue used to encourage scrolling (n = 6) 4.3
 Includes hyperlink for access 35.0
 Subsample with hyperlink (n = 57)
 Link labeled for identification (79)
 Link located near and visible for accessing (98)
 Link goes directly to disclosure (100)
Prominence
 Sufficient text size (CCS2)a 0.0
 Contrast between type and background (CCS3)
 High contrast-dark background with bright lettering 6.2
 Glaring contrast-white background with black lettering 67.5
 Low contrast-background/lettering similar shades 26.4
 Overall background color (CCS4)
 Single 98.2
 Multiple 1.8
 Letter combination
 Combination of upper and lower case 98.8
 All upper case 1.2
 Average characters per line
 <60 characters 84.7
 60 characters or more 15.3
Distracting factors (CCS6)
 No distraction 68.1
 Distraction during print disclosure 31.9
 Scene change 0.0
 Moving visuals and animations 8.0
 Blank space 0.0
 Graphics 3.1
 Other distracting hyperlinks near disclosure 29.5
 Other distracting text 3.7
 Other sounds, including music 0.0
 Distraction during audio disclosure (other sounds, N/A
 including music)
Repetition
 Number of repetitions for disclosure
 0 95.7
 1 3.1
 2 0.6
 4 0.6
Multimedia messages
 Modality of presentation (CCSI)
 Single 100.0
 Print only 100.0
 Audio only 0.0
 Dual (disclosure presented simultaneously in audio and 0.0
 print format)
 Sufficient presentation rate (CCS5 and CPL [132 wpm, 180 N/A
 wpm-video; 140 wpm, 180 wpm-audio)

Wpm = words per minute.

(a) 1/25th of screen or 7.2 mm equivalent for a 15-inch monitor.

TABLE 4
Disclosure Type

 % of Banner % of Disclo-
 Ads (a) sures (b)
 n (n = 113) n (n = 163)

Mandated/triggered disclosure 66 58.4 110 67.5
 Free 39 34.5 49 30.2
 Credit-related (TILA) 13 11.5 23 14.1
 Sweepstakes 9 8.0 9 5.5
 Savings-related (TISA) 7 6.2 9 5.5
 Rebate 6 5.3 6 3.4
 Guarantee 4 3.5 6 3.4
 Contest 2 1.8 6 3.4
 Lease 1 0.8 2 1.2
 n=81 n=110
Disclosure delimits claim 55 48.6 63 38.6
Disclosure explains claim 3 2.7 7 4.3

TILA = Truth in Lending Act; TISA = Truth in Savings Act.

(a) Individual banner ads could present multiple claims that would
result in disclosures in more than one of these three categories.
Thus, the percentage exceeds 100.

(b) Individual disclosure text could have included language related to
more than one disclosure type category. Thus, the percentage
exceeds 100.

TABLE 5
Degree of Inclusion for Mandated and Triggered Disclosures by
Claim Type

 Claim Included
 All Disclosure

Claim Type n n % Disclosures Omitted (n)

Free 39 35 89.7 Terms and conditions (4)
Truth in Lending 13 8 62.5
 Open-ended credit
 Credit card offer 3 0 0.0 Cannot tell-disclosure not
 with triggering immediate/proximal (3)
 disclosures
 Other open-ended 6 6 100.0
 credit
 Closed-ended Credit 4 2 50.0 The "annual percentage rate"
 or "APR" (2)
Sweepstakes 9 3 33.3 No purchase necessary (2)
 Purchase will not increase
 odds (2)
 Odds of winning (4)
 How to participate without
 purchase (5)
 Conditions to meet to redeem
 prize (4)
Truth in Savings (b) 7 2 28.6
 Checking (n = 4) 1 25.0 Cannot tell--disclosure not
 immediate/proximal (2)
 Disclosure relates to rewards
 program only (1)
 Savings (n = 1) 0 0.0 Cannot tell--disclosure not
 immediate/proximal (1)
 IRA (n = 2) 1 50.0 Cannot tell-disclosure not
 immediate/proximal (1)
Rebate 6 1 16.7
 Noncomputer/ 4 1 25.0 Before-rebate cost and amount
 Internet of rebate (2)
 Additional fees (3)
 When consumers can expect to
 receive rebate (3)
 Computer/Internet 2 0 0.0 Before-rebate cost and amount
 of rebate (1)
 Must purchase Internet
 service to qualify for low-
 cost deal (1)
 Purchase requirements (l)
 Additional fees (1)
 When consumers can expect to
 receive rebate (1)
 What components are included
 in the offer(2)
Guarantee 4 3 75.0 Terms of the offer (1)
Contest 2 1 50.0 Name of contest's sponsor (1)
 Contact for removal from
 mailing list (1)
Lease 1 1 100.0

(a) The disclosure text was captured at the immediate (on the banner
ad) or proximal (one click away) placement, which represents FTC
adherence in terms of being clear and conspicuous. Adherence to the
required/triggered disclosure was assessed based on the information
provided at these levels.

(b) See Federal Deposit and Insurance Corporation.

TABLE 6
Banner Ads vs. Television Commercials: Disclosure Incidence and
Adherence to the CCS

 Banner Ads (%/N)

Disclosure incidence within ads 100.0/113

Adherence within disclosures % n (N = 163)

 Dual modality (CCS I) 0.0 0
 Sufficient type size (CCS2) 0.0 0
 High contrast (CCS3) 6.2 10
 Single background (CCS4) 98.2 160
 No distractions (CCS6) 68.1 111
 Proximity to claim (CCS7) 65.7 107

 TV Commercials
 (%/N) (a) [chi square]

Disclosure incidence within ads 67.3/1142 53.2, 1 df *

Adherence within disclosures % n (N = 660)

 Dual modality (CCS I) 8.5 56 14.8, 1 df *
 Sufficient type size (CCS2) 31.2 203 69.3, 1 df *
 High contrast (CCS3) 26.4 169 30.8, 1 df *
 Single background (CCS4) 31.7 202 231.8, 1 df *
 No distractions (CCS6) 0.5 4 495.3, 1 df *
 Proximity to claim (CCS7) 99.4 656 220.3. 1 df *

(a) Hoy and Andrews (2004, pp. 174-175).

* p < .0001.
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Title Annotation:Federal Trade Commission's regulation on internet advertising
Author:Hoy, Mariea G.; Lwin, May O.
Publication:Journal of Consumer Affairs
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Date:Dec 22, 2007
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