Influencer marketing has become a 6.5 billion dollar business. Sixty-two percent less expensive than traditional marketing and driving nearly three times as many leads, businesses and consumers alike are acknowledging and realising the benefits of real-time reviews from prominent social figures. The rise of digital influence, however, has come with speculation and concern in relation to consumer protection and false advertising. With forty-seven percent of millennials basing many of their purchasing decisions on social media endorsements, the Federal Trade Commission (FTC) has addressed and continues to address the various concerns surrounding the disclosure and authenticity of sponsored advertisements on social media.
THE FEDERAL TRADE COMMISSION
The FTC works towards protecting consumers and competition through preventing anticompetitive, deceptive and unfair business practices. Over the years, the FTC has noted the potential issues arising from the use of endorsements and testimonials in advertising. In early 2017, the FTC sent out letters to celebrities, athletes, brands, and other prominent social media figures reminding them of the necessity to clearly disclose any relationship that is present when promoting products online. These letters outlined any significant mistakes the influencers were making in disclosing their social media partnership, such as including #ad below the “more” button, hiding any sponsorship-related disclosure in a large number of hashtags, and using abbreviations that may not directly indicate to the consumer that the post is in fact sponsored (such as #spon). The FTC also issued an updated version of their frequently asked questions with respect to endorsement guides. Two years later, the FTC continues to have issues with influencers’ disclosure of associations with brands and products.
RECENTLY PUBLISHED GUIDANCE ON INFLUENCER MARKETING
Recently, the FTC published a new guidance document for social media influencers regarding disclosure of their online advertisements and sponsored posts. This guidance makes it clear that any financial, employment, personal, or family relationship with a brand must be disclosed on social media. Further, financial relationships are not limited to money. If anything of value was obtained from the relationship, this can trigger the disclosure requirement.
Interestingly, the guidance document also outlines that “tags, likes, pins, and similar ways of showing you like a brand or product” are endorsements. This raises practical questions with respect to how influencers would disclose endorsements when it comes to the casual usage and functions of their social media platforms, such as a “like,” rather than a formal post where captions for disclosure are available.
As has been established in the past, the FTC outlines how influencers and marketers must disclose. Ultimately, the disclosure should be hard to miss, simple and clear, and in the same language as the endorsement itself. Recently, many social media platforms have modified their design to include a disclosure tool around or beside the posted photo. The FTC makes it clear that the platform’s disclosure tool may not be enough and should be used in addition to more traditional forms of clear online disclosure.
A CONTINUOUS CONCERN
With social media platforms continuously changing the functional and design aspects of their applications, maintaining applicable rules with respect to how and when advertisements should be disclosed to consumers remains a difficult task. Influencers will continue to utilize grey-area or borderline methods of disclosure in order to ensure that their posts appear authentic to their followers, which will continue to create different sets of circumstances and considerations for the FTC to evaluate with respect to disclosure.
Written by Alessia Monastero, IPilogue editor and articling student at Deeth Williams Wall LLP.