A Brand Strategy Perspective on the New FTC Guidelines

Recently, I was interviewed by The Wall Street Journal about the revised Federal Trade Commission guidelines for advertising health-related products. This is the first time in 25 years that the FTC has updated its guidelines, since the 1998 “Dietary Supplements: An Advertising Guide for Industry.”

I am not going to weigh in on the merits of the new 2022 “Health Products Compliance Guidelines.” There are already many strong opinions on whether the new FTC guidelines were warranted at all, or the fact that the agency did not seek public comment before releasing them. What is clear is that the new guidelines reinforce the need to ensure truthful (and not misleading) claims about health benefits and reward those who make claims that are substantiated by science. The anxiety among many in the supplement industry comes from the FTC’s definition of competent and reliable scientific evidence as double-blind, randomized controlled trials (RCTs) only, versus the more flexible 1998 guidelines that saw RCTs as the most reliable substantiation, but not the only acceptable one.

So, while the industry as a whole will benefit from improving the integrity of claim substantiation, how will these new guidelines impact branding and marketing for supplement companies?

Historical Context

The substantiation of scientific claims needs to be historically contextualized. When the FTC first released its guidelines in 1998, the number of supplement users was far less than it is today. The industry has grown from $12 billion to $60 billion. Both the number of consumers and the degree of their knowledge about herbs and supplements were far less than they are now. The insights from our proprietary Supplement Consumer PureSegmentation™ Research revealed that, today, a third of the supplement-buying population describes their level of knowledge about supplements as either “expert” or “relatively well-informed,” and half of all supplement sales are to those who consider themselves knowledgeable.

There is a direct correlation between knowledge and sales, and the day the new guidelines were released, our research estimated that over 50 million adults were well aware of what supplements and botanicals can do.

Impact on Legacy & Emerging Supplement Brands

These revised guidelines bode well for established brands that have the resources to conduct clinical trials and/or source high quality branded ingredients from suppliers who have invested in clinical trials. These “legacy” supplement brands have spent decades building trust and developing an effective way to communicate the benefits of their products. Furthermore, many of the larger consumer and healthcare professional brands have embraced the requirement for greater substantiation as a way of heightening their brand’s integrity.

However, the new guidelines imply that companies with multi-ingredient formulas (that, up until now, may have relied on discrete claims from research conducted by individual, branded ingredient suppliers) need to conduct RCTs on the finished products to make substantiated claims. This may create an entry barrier for emerging brands with multi-ingredient formulas because it is an additional investment that they will have to anticipate when they launch their brands.

Impact on Proprietary Formulas

Similarly, the FTC guidelines suggest that formulas developed as (less transparent) “proprietary blends” may be harder to make specific health claims about without more rigorous substantiation in the form of RTCs on the finished product, versus relying on the claims of ingredient suppliers.

The Big Takeaway: Transparency

Transparency, which we’ve extensively researched and written about, has become more important to supplement consumers and should become more important to brands in response to the new FTC guidelines. We know from our proprietary research that the majority of supplement consumers associate greater transparency with greater efficacy. Transparency about where your ingredients are grown, harvested, and processed may be all the proof that a knowledgeable consumer needs to choose your brand over another. Investing in greater transparency may be as valuable as investing in an RTC, and it will have an impact on your entire brand, not just one product.