In yet another sign that the FTC is serious about enforcing its now not-so-new Testimonial and Endorsement guides, the agency just reached a settlement with Machinima over an influencers’ campaign designed to promote Microsoft’s Xbox One and several game titles for the console.  And, on a related note, if your company doesn’t already have policies in place for social media marketing campaigns, put this blog down now (well, close the screen) and start putting one together now.

So what’s a Machinima other than something that sounds like part of a Seinfeld episode?  Machinima involves the use of computer graphics to create a cinematic production.  See an example here:

Click here to view video

Machinima Inc. is a gaming and media streaming website and multichannel network.  Machinima has agreements with various individual videogamers to produce video content under its brand and distributes such content on its YouTube channel.  According to the FTC’s complaint Machinima offered all of its “influencers” the opportunity to create content for its YouTube channel that endorsed Microsoft’s Xbox One system and several games.  The influencers were given very specific direction for these videos including such things as:

  • 2-3 talking points detailing features you’re looking forward to
  • Announce you will be playing a particular game
  • Showcase products in a positive light

Some influencers were compensated per video while others were compensated based on total views.  Machinima did not require disclosure of the payments and, in fact, according to the FTC, some of its agreements specifically required the influencer to keep their compensation “confidential.”  At the end of the day there were over 30 million views of the videos, that may not top “Gangnam Style” but that’s not too shabby either.

The FTC’s settlement with Machinima sets out some fairly stringent monitoring requirements, including providing influencers with a statement of responsibility, reviewing videos prior to providing compensation, conducting a second unannounced review after uploading and disciplining any influencer that fails to adequately disclose any material connection.  Interestingly, the FTC declined to bring an action against Microsoft or its agency because it found that they had policies in place designed to prevent such practices and quickly took steps to remedy the situation once it became aware of the issue.

While some have referred to the internet and social media as the wild, wild west.  Clearly the sheriff has arrived.  Now may be a good time to check or recheck that your social media activities are FTC compliant