According to recent Nielsen ratings, the most watched TV shows and live TV events top off at around 20 million viewers. In contrast, the most popular personalities on various social media platforms have well over 100 million followers. It’s no surprise then, that retailers and advertisers are increasingly turning toward these social media “influencers” to help advertise their brands and products. For example, Amazon recently announced its Influencer Program, a service that allows social media personalities to earn commissions on the Amazon products they promote.
This trend has not gone unnoticed by regulators. We previously blogged about the Federal Trade Commission’s (“FTC”) growing concerns about deceptive use of endorsements and testimonials in social media advertising. Since the time of that posting, the FTC has taken its first enforcement action against individual social media influencers, sent warning letters to a larger group of influencers, and updated a staff guidance document on influencers and marketers.
On September 7, 2017, two online gaming influencers settled charges with the FTC relating to the allegedly deceptive endorsement practices of an online betting service named CSGO Lotto. The influencers, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, failed to disclose they jointly owned CSGO Lotto, and also allegedly paid other influencers to promote the site on various social media platforms without requiring disclosure of payment within the social media posts.
In a statement, FTC Acting Chairman, Maureen Ohlhausen, said that the enforcement action “should send a message that such connections [between paid influencers and brands] must be clearly disclosed so consumers can make informed purchasing decisions.” As we previously blogged, the FTC does not mandate the specific wording of such disclosures but requires that they be clear and conspicuous. Thus, starting a tweet with “Ad:” or “#ad” would likely be effective, whereas burying disclosures in footnotes, in blocks of text people are unlikely to read, or in hyperlinked sources would not.
On the same day as the enforcement action was publicized, the FTC announced that warning letters had been sent to 21 social media influencers, including Sofia Vergara and Vanessa Hudgens. In these warning letters, the FTC inquired as to whether material connections existed between the influencers and the brands in certain posts, and if so, what actions will be taken to ensure that clear and conspicuous disclosures accompany each such brand endorsement.
Advertisers would be wise to take note of this marked increase in FTC attention to social media postings. The updated version of the FTC’s endorsement guide, which contains a list of frequently asked questions on the topic, is available here. Finally, below is a graphic summarizing the recent FTC guidance: