FTC Demands Clearer Disclosure for Internet Celebrity Promos

The Federal Trade Commission is now cracking down on Internet celebrities pitching products without disclosing whether or not they’re being paid. Using familiar hashtags such as #ad, #sp, or #sponsored aren’t always enough to ensure viewers realize the content is a paid promotion, says the FTC, whose Ad Practices Division is beginning to hold advertisers responsible for compliance. The result is likely to dampen the impact of a favorite digital influencer enthusing over a specific product.

Bloomberg quotes FTC Ad Practices Division deputy Michael Ostheimer as saying, “We’ve been interested in deceptive endorsements for decades and this is a new way in which they are appearing. We believe consumers put stock in endorsements and we want to make sure they are not being deceived.”

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A recent example is celebrity PewDiePie, who pitched the videogame “Middle-Earth: Shadow of Mordor” to his 50 million followers. The FTC brought a case against the publisher for not disclosing that PewDiePie was paid for the promotion and instructed on how to promote it.

Similarly, Lord & Taylor was dinged by the FTC for paying digital fashion influencers to write glowing posts about a dress, “without disclosing that the retailer paid them and gave them the dresses for free.” In an effort to reach millennials, companies are “pouring money into social media endorsements.” Captiv8 reveals that brands are “already spending more than $255 million on influencer marketing every month just on Instagram.”

Personal endorsements are a tried-and-true tactic in advertising, so the FTC’s stricter rules appear unfair to some. “We’re venturing into a little bit of ridiculous territory with the FTC saying these things because influencers really want to follow the rules,” said marketing agency Clever Girls Collective founder Stefania Pomponi, who wants the FTC to be clearer about policies and rules.

In fact, some of the FTC rules do seem a bit random: #ad works at the beginning of a post, but not #sp or #spon. “If consumers don’t read the words, then there is no effective disclosure,” said Ostheimer. “Any disclosure would be better at the beginning.”

Disclosures on video must be “said out loud or displayed on screen.” With no obvious place for a hashtag and seconds-long videos, Snapchat is an especially difficult site for clear disclosures.