My kids watch a lot of YouTube videos, ranging in topics from taking an alligator to the vet to the world’s longest walk on Legos. They have their favorites – YouTubers under the names LoserFruit and Dude Perfect come to mind. I have caught my daughter practicing for her own channel about making slime.
Those aspirations had me thinking about the career path of being an “influencer.” Indeed, trickshot stars and video game aficionados have been hired as brand ambassadors for everything from sports equipment and toys to automobiles and insurance. By some accounts, YouTubers are making five-to-seven figures as brand partners.
While brand ambassadors can influence the purchasing choices of their audience, there are rules in the U.S. about influencer marketing that influencers must follow and brand marketers must monitor. This post outlines the basics in three golden rules.
Golden Rule 1: Influencers must disclose when they’ve received compensation or other benefits, such as free products or services.
According to the Federal Trade Commission (FTC), a material connection between the brand and its ambassador might affect the credibility of the ambassador’s enthusiasm for a product, and this connection may not be reasonably known or expected by the consumer. The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (FTC Endorsements Guide)[1] contains an example of a college student who has earned a reputation as a video game expert and posts entries about his gaming experience on a blog.[2] In this example, surely a dream scenario for my son, a video game company sends the blogger a free game to play and review, and the blogger writes a favorable review. Because the gamer’s relationship to the game company would not likely be known to consumers, the blogger should clearly and conspicuously disclose that he received the game free of charge. The FTC example also explains that the video game company should advise the blogger to make such a disclosure and monitor the blogger’s posts for compliance.
Golden Rule 2: Necessary disclosures must be made “clearly and conspicuously.”
With respect to the clear and conspicuous standard, the “Four P’s” apply: proximity of the disclosure to the claim or endorsement, placement in an easy to notice spot, prominence among other content, and presentation of the wording and format used. The FTC’s guide, Dot Com Disclosures – How to Make Effective Disclosures in Digital Advertising (Dot Com Disclosures), provides prevailing guidance.
The FTC updated these guidelines in 2013 specifically to address the digital age, including the use of social media advertising. The Dot Com Disclosures emphasize a long-standing FTC principle that disclosures must be “clear and conspicuous,” meaning that consumers must actually notice and comprehend the disclosure in the context of the entire ad. While this standard is simple enough to state, the practical realities of social media marketing (including, in some cases, limited characters and screen space) and the subjective applicability of the rule can make it hard to follow.
The FTC indicated in its Dot Com Disclosures that “Ad:” at the beginning of a tweet should be adequate, and the word “Sponsored” likely informs consumers that the message was sponsored by an advertiser. At the same time, the FTC expressed doubt about whether “#spon” would be an adequate abbreviation for “#sponsored” in a Tweet, if most consumers would not know what #spon meant. Nonetheless, by 2016, commonly used abbreviations included #ad, #sponsored, and #spon, and usage of these hashtags on sponsored posts increased significantly over following years, likely due to the messaging spread by the FTC’s high profile cases in this area.
Other disclosures that may be acceptable in the areas of contest and sweepstakes (where influencers are rewarded with a sweepstakes entry for posting about the sponsor) include “#[company]sweepstakes” and #ContestEntry. For brand ambassadors, a clear and conspicuous mark of “[Brand]Ambassador” or a note of “Thanks [Brand] for gifting me” may be good options.
In social media in particular, advertisers using influencers should not assume that consumers watch an entire video, read an entire blog, or scroll through an entire online post. In short-form media like Twitter, disclosures at the end may get cut off as posts are re-tweeted, re-grammed, or re-pinned. Thus, advertisers will need to ensure they and their influencers have drawn attention to the disclosure early and often, where consumers will read it, hear it, or see it.
Golden Rule 3: General advertising and marketing principles apply to influencer marketing.
Advertisers using brand ambassadors need to remember that sponsored influencer content is advertising nonetheless. The broad mandates of the FTC and state consumer protection agencies prohibit unfair or deceptive acts or practices in the marketplace. While that is a general premise without black and white rules, especially in social media, advertisers should look for legal guidance to ensure their influencer-focused efforts stay within the bounds of consumer protection concerns.
In addition to using the Dot Com Disclosures and Endorsements Guide, digital marketers may also find guidance in case reports resulting from FTC and state attorney general law enforcement actions and investigations, the results of competitor challenges brought through forums like the Council of Better Business Bureau’s National Advertising Division (NAD), and private litigation. Together, all of these components create an evolving body of law and principles that form the basis of influencer marketing policies and guidelines to help ensure compliance with consumer protection laws.
Overall, the legal considerations for influencer marketing should be manageable for just about any company. A good internal compliance policy, proper instruction to influencers on their obligations, and mechanisms for monitoring influencer activity form a simple foundation for engaging in this area.
[1] 16 C.F.R. Part 255.
[2] 16 C.F.R. Sec. 255.5 Example 7.