influencer marketing FTC guidelines

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A surprising number of U.S. marketers remain unaware of FTC rules on influencer marketing disclosures. Well over half (56%) of marketers surveyed for Izea’s 2017 State of the Creator Economy said they are not familiar with FTC guidelines on paid influencer marketing posts.

Only 11 percent said they are aware of or understand the guidelines. Almost a quarter (23%) said they’re “somewhat familiar” with the rules. Although influencer marketing observers have commented on marketers’ lack of understanding of the rules, the degree of ignorance is surprising.

Another unnerving survey result: 29 percent of influencers said marketers have asked them not to disclose their compensation on a post. Given the sensitivity of the issue, the figure could be higher, the Izea report notes.  Some influencers (3%) declined to answer the question.

Ads Must be Labeled as Ads

FTC guidelines require that sponsored social media posts to be clearly labeled as ads. While the FTC doesn’t spell out the exact wording for sponsored posts, it states that disclosures must be clear and conspicuous. Brands typically use hashtags like #ad or #sponsored.

Most U.S. influencers understand the rule, the survey indicates. Six out of 10 influencers said they are aware of or understand the guidelines, and 23 percent said they’re at least somewhat familiar with them. Most influencers (67%) said they disclose compensation in posts. Another (35%) said they include disclosures in policy statements (which may not meet FTC requirements), and 47% include them in both.

Although some marketers fear content will appear less authentic if it’s revealed as an ad, consumers are becoming comfortable with seeing #ad and #sponsored hashtags. The number of sponsored posts on Instagram labeled with hashtags such as #ad, #sponsored and #sp increased from 120,000 to 300,000 from July 2015 and July 2016, Bloomberg reported, citing data from Captiv8.

The Risks of Not Disclosing

Social media ads that masquerade as authentic content annoy many readers and viewers. Many marketers may also feel annoyed, believing the ads make the entire marketing industry look bad. Irritated competitors can retaliate by filing a complaint with the FTC.

Companies that don’t properly disclose paid posts risk FTC actions. In one case, the FTC called out Lord   & Taylor for paying 50 fashion influencers between $1,000 and $4,000 to share a photo of themselves wearing a dress from the company’s “Designer Lab” collection on Instagram, according to the FTC.  Even if the FTC does not level a fine, brands risk reputational damage.

To avoid allegations of deception, the FTC recommends following these guidelines:

Transparency. An advertisement or promotional message shouldn’t suggest or imply that it’s anything other than an ad.

Clear disclosures. If a disclosure is needed, it must be clear and prominent. Consumers must be able to see and understand them. In videos, they must be on the screen long enough to be noticed, read, and understood. For audio disclosures, they must be read at a cadence that’s easy to understand. The FTC says clear disclosures are:

  • in clear and unambiguous language,
  • as close as possible to the native ads to which they relate,
  • in a font and color that’s easy to read and
  • in a shade that stands out against the background.

Bottom Line:  A surprising number of marketers don’t understand or are not aware of FTC guidelines on sponsored influencer marketing posts. Even worse, some marketers ask influencers not to reveal they were compensated. Failing to disclose that influencers’ posts are paid placements will backfire. The misguided, dishonest tactic risks annoying potential customers, attracting undesirable FTC and consumer attacks, and damaging a brand’s reputation.