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It’s What You Don’t Say: Time to Strengthen Your Social Media Disclosure Standards

13 Sep, 2016 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Leonard L. Gordon


Endorsements have always been one of the most powerful advertising techniques, and we can tell you from experience that endorsements and testimonials are the cornerstones of direct response marketing. During the past decade, the explosion of social media platforms connected a class of engaged and authentic content creators with very large and highly engaged audiences.

In an era where consumers are bombarded with marketing messages and have become better than ever at tuning them out, these content creators became powerful drivers of market share whom consumers went out of their way to interact with. It was only a matter of time until brands sought to leverage the influencers’ audiences to drive sales. Brands paid influencers, who touted the brand’s products with varying degrees of transparency and everyone made money.

A few short years later, it appears this “golden age” – if it was that – of undisclosed social media influencer marketing is ending. After several high-profile enforcement actions in which the Federal Trade Commission (FTC) alleged that brands failed to ensure that social media influencers disclosed paid or sponsored posts, the Commission is making noises about pursing its first enforcement action against an influencer for failing to disclose a material relationship with a brand.

During the past several years, the FTC has repeatedly stated that it expects brands and influencers to be transparent with consumers as the lines between advertising and content become increasingly blurred. The lion’s share of this burden has been placed on brands that, the Commission believes, understand disclosure requirements better than a blogger typing away in his or her den.

However, a recent study released by the influencer marketing platform SheSpeaks appears to demonstrate that some brands have not been the best stewards of disclosure. According to the survey of 347 social media influencers, more than 25 percent of those surveyed reported that brands had asked them not to disclose their relationship with the brand.

Adding fuel to the fire, a trio of public interest organizations, including Public Citizen, Campaign for a Commercial-Free Childhood, and Center for Digital Democracy, sent a letter to the FTC last week, urging the Commission to investigate and pursue enforcement actions to fight what it characterized as rampant undisclosed paid endorsements on Instagram.

Interestingly, some data suggests many influencers may be making an effort to comply with the FTC’s guidance and simply falling short. A Bloomberg story published in August quoted a statistic from social media management platform Captiv8 stating that in July 2016 more than 300,000 sponsored Instagram posts included hashtags such as #ad, #sponsored, and #sp – more than double the number of posts that included the terms in July 2015. The problem is that the FTC does not view #sp and #spon as acceptable disclosures because the Commission is not convinced that consumers understand what those hashtags mean.

Whether real or imagined, the perceived lack of disclosure by social media influencers is widespread and may explain, at least partially, why the FTC’s interest enforcement focus is shifting to include individual influencers, in addition to brands.

In this climate, brands that pay or provide product to social media influencers should mitigate enforcement risk by developing rigorous disclosure standards for their influencers’ posts, educating influencers about what constitutes an acceptable disclosure, and monitor the posts of influencers with whom the brand works to ensure all posts comply with the brand’s disclosure guidelines. Experienced legal counsel can help brands develop these policies and programs, or review a brand’s existing policies to ensure they are adequate.

Jeffrey D. Knowles is the chair of Venable LLP’s Advertising, Marketing, and New Media practice group. Leonard L. Gordon is a partner in the group. They can be reached at (202) 344-4000.

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About the Author: Jeffrey D. Knowles

Jeffrey D. Knowles

About the Author: Leonard L. Gordon

Jeffrey D. Knowles

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