A Word to Influencers: Always Disclose Paid Ads

A Word to Influencers: Always Disclose Paid Ads

If you are in the business of social media influencer marketing, there’s no doubt you have heard of big changes coming down the pipe from the Federal Trade Commission (FTC). A September public workshop on results from testing of disclosure practices could lead to new rules in the marketing space.

This news was reported by friend and co-worker Lucas Fulks, Marketing Strategist at Gnack. In early July Lucas released a blog titled, Talking FTC Ad Disclosures, in which he forecasts that disclosure rules around branded posts might be clarified in a way that simplifies and standardizes the disclosure process.

Lucas told me, “Right now the FTC provides guidance to the industry around disclosure practices. However, it might begin to play a stronger role, such as issuing specific guidelines on how to disclose.” This makes sense, considering the growing popularity of influencer marketing.

Recent evidence points to a trend of brands and agencies taking advantage of the ambiguity surrounding  disclosure rules in the influencer marketing sphere.


Top Brands Busted

According to the FTC, in March of this year the retail giant Lord & Taylor settled charges that it mislead the public. As part of the campaign L&T paid 50 influencers to post pictures of themselves wearing a dress sent to them free. The campaign was a huge success with a reach of 11.4 million in a few days and 328,000 engagements. Subsequently, the dress sold out. The only problem was L&T never required their influencers to disclose they were paid or received free merch.

In July the FTC made it clear that ambiguity will not be tolerated when it brought judgement on Warner Bros Home Entertainment. Warner Bros. settled after failing to adequately disclose that it paid influencers for reviews of its new game Middle Earth: Shadows of Mordor. The FTC alleges Warner Bros violated rules by requiring influencers to post disclosures in the description box amidst so much other content that the disclosures were pushed “below the fold” making them only visible to those that pushed the “Show More” button.


The FTC Accountability Process

Up to now the FTC process for dealing with companies who fail to comply is fairly lenient. A spokesperson for the agency told me that “in most cases in this area the settlement of an FTC complaint would require that the company sign an order stating they will not engage in similar deceptive conduct in the future – no financial penalty on a first violation.” The spokesperson goes on to say, “However, if they violate the FTC order, they can be subject to significant civil penalties – up to $40,000 per day per violation.”


FTC Takes it Easy on Influencers

Don’t think that disclosure rules only apply to brands and advertisers. Recently members of the Kardashian family were sent a letter by consumer watchdog Truth in Advertising informing them that continued failure to disclose their relationship with companies in posted ads was a violation of federal laws.

Though the rules are the same for companies and influencers alike, the aforementioned FTC spokesperson wanted to make it clear to me that, “the Commission has, to date, never brought an action related to social media endorsements or testimonials against an individual – celebrity or otherwise.”

One reason for the burden of accountability falling mainly on the shoulders of companies could be a perception of a power relationship, where brands and agencies essentially act as employers and influencers as employees.

An article written earlier this month, by Lindsay Stein of AdAge, reveals a disturbing trend. Ms Stein quotes a survey by influencer marketing company SheSpeaks. The survey cites 25% of influencers as saying they have been asked by advertisers not to disclose their posts as paid advertisements.

Not everyone feels the way I do. In the above mentioned article from AdAge, Aliza Freud, SheSpeaks founder and CEO, is quoted as saying, “Any decent influencers are highly aware that they have to disclose and do it properly.”

However, I imagine that if an influencer refused the request not to disclose, that they would be disqualified from participating in the campaign, or their content would simply not be accepted. This constitutes a power relationship, and the promise of cash or free swag in exchange for non-disclosure might be too much for influencers to ignore.


Micro Influencers™ Have the Most to Lose

Influencers, of course, should know and adhere to FTC regulations, even if only to protect themselves. They have a lot to lose.

In fact, those with the most to lose could be micro influencers™, or those with 10k or fewer followers.

Where brands busted for non-disclosure could take a hit to their brand loyalty, it is highly unlikely many would stop wearing their gear or eating their tacos.

Celebrity influencers who get popped will undoubtedly continue to make headlines, and well, bad press is still press.

The micro influencer™ that makes the decision on their own not to disclose could lose their ability to work in the industry. Many platforms employing them will blacklist them for non-disclosure. If they are working directly with a brand or agency, you can bet a post that doesn’t disclose it’s an ad (and gets caught) will be their last. The micro influencer™ that works among friends and family could lose all credibility in such a tight-knit community.

When the FTC meets in September, they could adopt very clear guidelines for disclosure. They could also stiffen the penalties and start coming down on influencers themselves. Until then, agencies, brands and influencer marketing companies should adopt strict guidelines for disclosing. They should also review all posts prior okaying them. And, influencers should always know and play by the rules.

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