Keeping Up With The FTC

The Kardashian-Jenner tribe is actually the least of the Federal Trade Commission’s problems.

 

The marketing scenario is pretty cookie-cutter: Brand pays celebrity to post a photo of their product on social media. Celebrity fails to adequately label the posting as an Ad and the FTC shortly responds, slamming the brand or the celebrity (or both) with a fine and more stringent ex post guidelines. If only it were this straightforward.

 

One problem is that paid posts aren’t clearly “Ads.” Sometimes a post is obviously laid out with copy and photos predetermined for the endorser (case-in-point: sometimes celebs will literally just copy and paste a caption that was sent to them).^[1] In other cases, the post is treated as “sponsored content”–i.e where the influencer has autonomy to create content, as long as it features the brand (and potentially some key points outlined by the brand). In both cases, the brands are paying celebrities and influencers to promote products/services, yet the FTC has chosen to fine the former but not the latter.

 

Let’s back up. It’s important to clarify that native advertisements are designed-to-look-like-content advertisements created by the company itself.^[2] On the other hand, the goal of sponsored content is to raise awareness to consumers. Thus, an advertiser hopes that this organic (but paid for) content will lead the consumer to its product.^[3] Brands typically pay a celebrity or an influencer- a social media user with a sizable following- to post about a product on their social page. This content may include native or sponsored advertisements. Further, there are important distinctions between a celebrity spokesperson and a social influencer. Unlike influencers, many celebrities don’t control their own social accounts. However, they attract a wider audience because their fame is derived from something other than their social brand, while influencers target a more specific audience.^[4]

Currently, the FTC focuses its regulatory efforts on brands and marketing agencies that produce these campaigns. Notably, in a recent settlement with Warner Bros, the FTC required WB to create an internal compliance system, which included a means of informing influencers of regulatory guidelines as well as processes for Influencers who don’t comply.^[5] In a few instances, commission complaints have targeted celebrities (read: the Kardashians),^[6] but not social influencers. According to Julia Casella, Social Media Manager at beauty retailer Birchbox,^[7] this targeting is most likely due to visibility: celebrities are well-known, have a massive following and are easily accessible, so it’s easier for the FTC to make an example of them.  However, celebrities are far outnumbered by influencers in the social sphere. According to a recent analysis from Twitter, social influencers have grown from 6,000 to over 24,000 in just a year.^[8] Twitter’s study also showed that consumers are almost as likely to trust recommendations from influencers as their own friends.^[9] While celebrities provide a brand with more exposure, in many instances influencers lend credibility as self appointed experts on the subject matter and leave a greater impact on consumers.  If the FTC instead focused on creating tools to educate influencers on the implications of not disclosing paid-for-content, it may incentivize more unified self-regulation and standards throughout the industry. Holly Pavlika, SVP of Marketing and Content at Collective Bias,^[10] an influencer marketing company, stated “It is the responsibility of all of us taking part in the influencer marketing boom to adhere to the FTC disclosures of ‘clear and conspicuous.’ Most influencers take tremendous pride in their work and will gladly follow the rules because it’s their livelihood.”

 

In the UK, the Competition and Markets Authority has taken to writing to top influencers warning them that if they don’t use proper disclosures they will be in breach of consumer protection law. The CMA has also suggested that influencers should start refusing requests from companies to post undisclosed paid promotions,^[11] giving influencers a call to action to follow consumer protection regulations even if companies are not enforcing them. Currently, the FTC creates guidelines in response to problems encountered in the marketplace. If, instead, the agency held everyone accountable for their part in not disclosing correctly, brands, celebrities and influencers may work more closely to create a compliance system to avoid breaching consumer protection law.