Maybe you are a beauty guru receiving free products to review on your YouTube channel with hundreds of thousands of subscribers. Maybe you are an Instagram influencer who gets paid for each of your posts seen and liked by your millions of followers. Maybe you are a lifestyle blogger who partners with household brands to take on special projects. Or, maybe you are the brand that wants to work with these influencers through sponsorships.
Before you enter into a sponsorship agreement as an influencer or the brand, make sure the social media posts disclose the sponsorship relationship to your followers and consumers. Otherwise, you may run the risk of engaging in deceptive marketing practices in violation of the Federal Trade Commission Act.
The FTC Act and disclosures
The social media advertising world involves brands’ social media teams reaching out to popular YouTubers, Instagram celebrities, lifestyle bloggers, and more in an effort to partner with them to ultimately help sell their products and services online. Social media influencer sponsorships are a non-traditional approach that allows brands to reach consumers who may otherwise miss traditional television and radio commercials. Although non-traditional and effective, this kind of advertising is still subject to the Federal Trade Commission Act.
The FTC Act is the primary statute of the FTC. It protects consumers from “unfair or deceptive acts or practices.” This prohibition on unfair and deceptive practices applies broadly to advertising claims, marketing and promotional activities, and sales practices – even when such practices occur online.
Recognizing the broadening of online advertising activities, the FTC issued “Dot Com Disclosures” in May 2000. This guidance document discussed how consumer protection statutes, rules, and guides applied to online advertising and sales. In 2009, the FTC released Endorsement Guidelines, discussing the standards to which both brands and social media influencers should adhere. The dot-com disclosures were revised in 2013 to reflect the dramatic changes in online advertising, and clarified that the FTC could consider undisclosed social media sponsorships as deceptive marketing practices.
Just a little more than two months ago, the FTC reviewed numerous Instagram posts by celebrities, athletes and other social media influencers, and sent out more than 90 letters to those individuals to remind them to “clearly and conspicuously disclose their relationships to brands when promoting or endorsing through social media.”
Defining a ‘sponsorship’ relationship
Whether you are a brand or a social media influencer, you must disclose your sponsorship relationships to your followers. Under the FTC’s endorsement guidelines, a “material connection” between a brand and social media influencer should be “clearly and conspicuously” disclosed, unless it is already clear from the context of the communication.
A social media sponsorship relationship may be a material connection between the brand and the influencer if it consists of a business or (less likely) family relationship, monetary payment, or a gift of a free product. Practically speaking, sponsorships can take the form of beauty gurus receiving free hair or makeup supplies in exchange for positive review videos, Instagram influencers being paid per post, and lifestyle bloggers partnering with major brands for campaigns. Merely sharing that you are a fan of a particular brand or product does not create a material connection.
When in doubt, it is best to err on the side of disclosure.
‘Clearly and conspicuously’– when in doubt, #Hashtag it correctly
The dot com disclosures also advise brands and influencers to use unambiguous language and to make their disclosures stand out.
For YouTube users, disclosure of sponsorship relationships may take place through audio, videos, or animated segments. Thus, beauty gurus and the like may disclose sponsorship relationships within the title of the video, the caption of the video and through verbal statements as the person reviews the product in the video.
Brands and influencers using space-constrained platforms, such as Instagram or Twitter, can make it clear that there is a sponsorship relationship by placing a simple “#Ad” – doing so “should inform consumers that the message is an advertisement.” Likewise, the term “#Sponsored” will “likely inform […] consumers that the message was sponsored by an advertiser.” Brands and influencers should stay away from hashtags such as “#sp” or “#partner,” as it may not be clear to your consumers that there is a sponsorship relationship.
Brands and influencers can also make it clear that there is a sponsorship by being conscious of where they place the disclosure in the space-constrained caption. The dot-com disclosures encourage brands and influencers to place disclosures such as #Ad or #Sponsor at “the beginning of a tweet or similar short-form message.” The FTC’s letters to several influencers encouraged them to think about consumers viewing Instagram posts on mobile devices. The letters noted that disclosures should occur within the first three lines of a longer post, as Instagrammers typically see only those lines of a longer post unless they click “more,” which many may not do. The letters also noted that when multiple tags, hashtags, or links are used, consumers will likely skip them. As the dot-com disclosures note, “A disclosure that is buried in a long paragraph of unrelated text will not be effective.”
Besides meeting the FTC’s requirements, disclosing your sponsorship relationships to your followers and consumers provides transparency about your vested interest and builds trust. As the brand, make sure you require the influencer to disclose your relationship, as recently done by Instagram. This may help to avoid fines from the FTC. As the influencer, be sure to properly disclose your sponsorship relationship clearly and conspicuously in the social media post.
Whether you are a brand or have a large social media following, you must disclose sponsorship relationships to your consumers and followers. Otherwise, you may risk engaging in deceptive marking practices in violation of the FTC Act.
» Melonie S. Jordan’s Law Elevated is a column on the latest trends, issues and perspectives facing the legal industry, written by associates of Butler | Snow.