INFLUENCER MARKETING ACCORDING TO THE FEDERAL TRADE COMMISSION

As influencer endorsement continuously grows as an industry, so do the size and value of influencer marketing platforms every year, making collaborations between brands and creators more profitable than ever. The global influencer marketing market value currently stands at approximately 13.8 billion U.S. dollars (as of 2021). [1] The reason behind the tremendous success of influencer marketing hides behind the facts that influencers possess a high amount of trust built up with their following, and recommendations from them serve as a form of social proof to a brand’s potential customers. [2]

But as the influencer market grows, fraud is growing alongside it, and it becomes more difficult to determine whether influencers are engaging in honest and ethical publications, or post in questionable ways that deceive both the brands that pay them and their social media following. Another problematic side comes from the brands promoting their products on social media themselves. It is no secret that many companies actively discourage content creators from disclosing that a post is an advertisement, fearing that less people would interact with it. According to a recent survey, a third of brands admitted they don’t disclose paid partnerships with influencers. [3] Notorious scandals involving misleading advertising and unfair business practices on social media include Sony’s PS Vita Promotion in 2014, Machinima’s Xbox One Influencer Campaigns in 2015, Warner Bros. Video Game Promotion with PewDiePie in 2016 and the Fyre Festival fiasco in 2017. [4]

What the US government has done to prevent such abuses is leaving industry regulation to federal agencies, particularly the Federal Trade Commission. Its main purpose is to oversee the protection of consumers and maintain competition in the American (and eventually global) marketplace. [5] In the late 2000s, the FTC has been issuing guidance on how sponsored content should be disclosed online. The first FTC Guidelines for Internet Advertising were released as far back as May 2000. In 2009, the FTC updated its Endorsement Guidelines. Since then, the federal agency has taken on a couple of big cases (Sony in 2014, and Xbox and Machinima in 2015 are of particular importance) and consequently updated the Endorsement Guidelines once again in 2013 and 2015. After receiving complaints for the lack of transparency in some social media posts, in April 2017 the increasingly proactive Commission sent letters to 90 influencers and companies reminding them of proper disclosure regulations. [6]

Currently, the general rule is that if any sort of relationship exists between a content creator and a brand, paid or other, which is not immediately obvious to the average social media user, that relationship should be disclosed. [7]

Specific to the influencer domain, the 2019 FTC “Disclosures 101 for Social Media Influencers” include the following rules of thumb:

1. Influencers cannot make claims about products that are not backed by science

2. When an influencer dislikes the product they are paid to advertise, they must be honest as they recommend the product. This does not mean that they should necessarily disclose their love or hate for a product, but they cannot actively lie about their personal opinion.

3. Influencers are not allowed to talk about their experience with any products or brands that they have not used.

4. Using simple and clear language is required. The influencer has to make it very clear to the consumer that a product is being advertised and place the disclosure in a way that is hard to miss. The use of common hashtags such as #ad, #sponsored, #advertisement in the beginning of the caption is not necessary, but it is preferred. Confusing hashtags such as #sp #spon #collab are to be avoided, since they may be unclear for a user unfamiliar with those terms. [8]

Simply put, what the Federal Trade Commission requires from influencers is that when they receive money to promote a good or service online, they should make it crystal clear to their followers. They cannot hide it behind a “More” link, as many people used to do on Instagram, and it cannot be assumed that people know what a #sp means. For example, in line with the FTC letters, Instagram has created its own internal and enforceable policy where any form of arrangement between an influencer and an advertiser for a post should include the “Paid Partnership with…” sub-header. [9]

The US federal agency is leveling the playing field by stepping in and ensuring that consumers know when influencers are honest in their product opinion compared to when they are being paid for that opinion.

Sources:

[1] https://www.statista.com/topics/2496/influence-marketing/#dossierKeyfigures

[2] https://sproutsocial.com/insights/influencer-marketing/

[3] https://www.marketingweek.com/influencer-marketing-partnerships/

[4] https://mediakix.com/blog/ftc-influencer-marketing-violations-cases-history/

[5] ​​https://www.ftc.gov/about-ftc

[6] https://influencermarketinghub.com/ftc-social-media-guidelines/

[7] https://www.ecfr.gov/current/title-16/chapter-I/subchapter-B/part-255

[8] https://www.ftc.gov/tips-advice/business-center/guidance/disclosures-101-social-media-influencers

[9] https://influencermarketinghub.com/instagram-paid-partnership-feature-everything-know/