What the Latest FTC Crackdown Means for Your Influencer Marketing Efforts

The Federal Trade Commission is sending a stern warning to brands and influencers partnering on paid campaigns in social: disclose or pay the price.

Per MediaPost, the FTC has sent letters to approximately 90 social media personalities—predominantly Instagram influencers—who partnered with brands like Adidas, Puma and Dunkin Donuts on campaigns and failed to disclose the nature of the relationship.

So, why are influencers held to a different standard that the celebrities you see hawking products on TV? The key difference is that in social media, personalities are talking about products from their personal accounts. Thus, the nature of their association with the brand or product, paid or unpaid, cannot be easily inferred by consumers.

Given this nuance, the FTC stipulates that influencers in social media must explicitly state that they were compensated for providing the endorsement, if that indeed were the case. If an influencer simply wants to shout out a product they like, they do not need to disclose, so long as they were not compensated by the brand to do so.

Much of the tension on this topic centers around this idea of disclosure, and what constitutes proper disclosure. Per the FTC, simply thanking the brand is not enough, as this could be misconstrued as an organic experience with the brand or product. Likewise, the hashtag #partner is also not explicit enough, according to the FTC. Brands and influencers must use words like #sponsored or #ad instead.

Taking things a step further, the recent letters distributed by the FTC also discuss the use of multiple hashtags, tags or links in a post. Per the Commission, these types of markers are easily skipped by consumers using mobile devices (Instagram is a mobile-first platform) and so disclosures must appear before the “more” CTA at the end of an image description.

Brands are siphoning money to influencer marketing campaigns because reviews and endorsements are proven to drive sales. According to a recent study, 70 percent of consumers rely on online reviews before making a purchase—yet what studies like this do not reveal is whether knowing an endorser has been paid to promote a product affects purchase behavior.

As advertising pundit Faris Yakob writes: “The paradox of influencer marketing is that when we attempt to buy influence, we transform it into endorsement, which everyone understands is a commercially created fiction.”

In other words, it’s in a brand and influencer’s best interest to be vague in their disclosure, so as to create an aura of authenticity in the content. But at the end of the day, as long as the content has been bought and paid for, the FTC will assert its will to fulfill its mission of protecting consumers.

Though this is the first instance where the FTC has directly reached out to celebs and influencers regarding the disclosure of social media endorsements, it likely won’t be the last. The letters outlined that looking ahead, failure to adhere to the guidelines will result in consequences for the individual, the company being sponsored and even the social platforms themselves.

As the FTC’s Michael Osthemier told Bloomberg, “We hope by bringing these cases that we not only stop the marketer and influencer who didn’t have adequate disclosures previously, but also get the message out that other companies should have clear and conspicuous disclosures.”

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