New guidelines from the Federal Trade Commission (FTC) provide clarity to influencer marketing disclosure practices. The FTC’s Disclosures 101 for Social Media Influencers detail when and how influencers should reveal any “material connection” to brands when endorsing products.
Brands and their PR and marketing agencies could face the ire of the FTC, financial penalties and reputational damage if they ignore disclosure rules. Companies that pay influencers must inform them about the guidelines, says Michael Atleson, a staff attorney for the FTC’s Bureau of Consumer Protection, according to NPR. “That’s because an endorsement is an advertisement that the influencer is making on the advertiser’s behalf,” Atleson says. “Indeed, in terms of our own law enforcement activities, our focus so far has been on advertisers or their ad agencies and public relations firms.”
Disclose Free Products
It’s important to note that financial relationships aren’t limited to money. Influencers must disclose the relationship if they received anything of value to mention a product.
“The reason is obvious: Knowing about the connection is important information for anyone evaluating the endorsement,” the FTC states.
The FTC recommends including simple explanations like “Thanks to Acme brand for the free product” in an obvious location.
If a brand gives free or discounted products or other perks in return for a mention, influencers should include a disclosure even if they weren’t asked to mention the product. Influencers should also include disclosures even if they think their reviews are unbiased.
While the guidelines provide some needed clarity, it’s not certain if more influencers will prominently display financial arrangements with brands, especially those who accept free samples in return for reviews. Given the FTC’s limited ability to review the massive amount of online content and to follow up with definitive actions, many influencers my try to fly under the regulatory radar. Companies, however, would be unwise to do that.
Prominent Disclosure Required
These are more FTC recommendations for influencers.
Include #ad, #advertisement or #sponsored in a prominent location in the endorsement.
Don’t use vague or confusing terms like “sp,” “spon,” or “collab,” or stand-alone terms like “thanks” or “ambassador,” and avoid other abbreviations and shorthand when possible.
Burying a #ad within a string of other hashtags, isn’t good enough. The disclosure must be prominent.
Tags, likes, pins, and similar ways of showing an influencer likes a brand or product are endorsements.
Disclosures should be placed with the endorsement message itself. Disclosures are likely to be missed if they appear only on an About Me or profile page, at the end of posts or videos, or anywhere that requires a person to “click more.”
Influencers who claim exceptional or above average results from the product can pose problems. If the advertiser doesn’t have proof that the endorser’s experience represents what people will generally achieve from the product, then the ad must make it clear what the generally expected results are.
Bottom Line: It’s essential for PR and marketing agencies, their clients and influencers to understand the latest FTC recommendations on influencer endorsements. Brands could suffer penalties if their influencer partners fail to reveal to audiences when they’re paid to endorse products or when they receive free products.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.