Federal Trade commission (FTC) - "Truth in advertising"

Influencer marketing is hot and youth targeted marketers like Taco Bell, Dr Pepper and Adidas are jumping on the bandwagon. As television ratings decline and YouTube ratings soar, advertisers are looking for new ways to reach young eyeballs. According to a May 2015 study by Schlesinger Associates in the US, 84% of marketing and communications professionals worldwide expect to launch at least one campaign involving an influencer in the next year. 81% of brand executives who have used influencers are reportedly happy with the results and said influencer strategies work and are effective.

The study defined an influencer as someone who can monetize opinions and create reactions when talking about a specific topic, has a large audience or base of followers and has a degree of participation on a given subject. Most marketers agree influencer marketing is the most exciting and fastest growing online customer acquisition method.  

In another study, Influencer Marketing platform Tomoson, surveyed marketers to try to understand the business upside. Almost 60% of marketers said they plan to increase their budgets within the next year. Almost all said Influencer Marketing offers a great ROI: $6.50 for every $1 spent. 

With those returns, and marketer enthusiasm, it’s fair to assume a lot of young people will be part of this growing tsunami of Influence, evangelizing for brands, increasing brand engagement and ultimately driving consumer purchase.

So who is monitoring the growing frenzy of hiring young people as brand ambassadors?

 

THE FTC IS PUTTING SOCIAL MEDIA AND INFLUENCER MARKETING UNDER THE MICROSCOPE 

In April, 2015 the Federal Trade Commission (FTC) updated their Endorsement Guidelines to  more stringently regulate and enforce influencer marketing.

Recent FTC and Food and Drug Administration (FDA) investigations demonstrate online advertising is more actively scrutinized thanks to high profile families like the Kardashians using their influence in social media to convince a generation to buy “health” and cosmetic products. Between the "First Family of Influence" and the explosion of influencer marketing campaigns, there are legal issues popping up everywhere.

The Guidelines are clear: brands and marketers are ultimately responsible for maintaining compliance and:

  1. Must explain to influencers what they can and can’t say about products (ie what health benefits the product actually has)
  2. Disclose their connection to your business.
  3. Ensure compliance with any influencers they hire

 

Here are the updated FTC rules

  • A disclosure is needed whenever an influencer is given an incentive (financial or otherwise), and when that incentive affects the weight or credibility that audiences give to the influencer’s statements or actions. Microsoft and influencer gaming network Machinima were recently hauled on the carpet for not disclosing game videos as paid sponsorships.

  • Companies hiring influencers to promote brands need to make sure that audiences are aware of the relationship between the company and influencer. In the example below, Cobe Bryant is guilty of non-disclosure.  

  • What makes a disclosure adequate? The FTC Endorsement Guidelines say disclosures should be clear and unambiguous. Consumers should be able to find them easily and should not have to look for them.
  • The FTC doesn’t have specific rules about which words to use when announcing a paid advertisement, however, common hashtags to include with a post or tweet include: 

  • The guidelines also broach “truth in advertising:  “You can’t talk about your experience with a product if you haven’t tried it.” “If you were paid to try a product and you thought it was terrible, you can’t say it’s terrific.” Net: influencers must be bona fide users of the products they endorse and, if they provide a positive review, must have actually had a positive experience with those product
  • Facebook Likes - the FTC recommends against incentivizing likes

  • Contests & Sweepstakes also require disclosure. For social media contests, using #contest or #sweepstakes is acceptable. For media that allow more characters , influencers can write a full sentence about their participation in the sponsored campaign. On balance, audiences generally prefer more vs less transparency.

  • On Twitter, 140 characters Is No Excuse. Space challenges doesn’t give brands or influencers a free pass. According to the FTC FAQ: “The words ‘Sponsored’ and ‘Promotion’ use only 9 characters. ‘Paid ad’ only uses 7 characters. Starting a tweet with ‘Ad:’ or ‘#ad’ – which takes only 3 characters – would likely be effective.”

  • Video Disclosures Must be Stated Early and up FrontA video disclosure must be made at the beginning of the video and ideally repeated multiple times for longer-form pieces. Similarly streaming video — often used by video game reviewers sponsored by gaming companies — needs multiple disclosures during the gameplay.

When In Doubt... Disclose

Kobe Bryant Twitter - Source: MarketingLAnd.com

Does a well-known athlete who acts as a spokesperson for a product need to disclose that he’s being paid every time he tweets about the product? According to marketing and advertising attorney Allison Fitzpatrick of Davis and Gilbert “Determining whether followers are aware of a relationship could be tricky in many cases, so we recommend disclosure.”