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The FTC’s Endorsement Guides, Part 2: Understanding Influencers and FTC Disclosures

Last week, I highlighted key FAQs regarding the Federal Trade Commission’s (FTC) Endorsement Guides. As I said, disclosure (and arguably common sense) is at the heart of these issues. Using a formula of $100 x 10,000 followers + extras = total rate, you can see how quickly the dollars can roll in for influencers. For sponsors, the spend was easy at first — pay big-name celebrities to promote your product, service, or event, but make it look organic. Instagram flourished under this model.

Brand trust is built from relying on these people’s authenticity, which became incredibly murky in the aftermath of Fyre Festival and the influencers who were credited with selling the biggest event that never happened. Were the influencers duped? Possibly. Were they held responsible? Not at all, which is why the FTC stepped in with regulations, fines, and an evolving set of guidelines that are driving regulations on influencer marketing.

We’ve seen hard evidence that influencer endorsements drive sales: 87% of consumers surveyed by Rakuten “were inspired to make a purchase based on what they saw from an influencer.” The number of creators employed in influencer marketing doubles every year, propelled by the fact that brand advocacy delivers an 11x higher ROI than traditional forms of marketing like TV and desktop ads.

How so?

Consider: Suppose you follow someone who tells you about a great new product. She tells you it performs wonderfully and offers fantastic benefits. Would that recommendation factor into your decision to buy the product? Probably. Now, suppose the person works for the company that sells the product – or has been paid by the company to tout the product. Would you want to know that when reading their glowing recommendation? You bet.

This premise is the heart of paid influencer marketing. According to the FTC, using the proper disclosures as to the “material connection” of the endorsed relationship keeps recommendations honest and truthful, while also providing weight to the value of an endorsement.

The 5 tiers of influencers:

  1. Icons: Tier-one talent who boast tens, thousands, or hundreds of millions of followers
  2. Macro-Influencers: Pioneers within their niche who have between 500,000 to 3 million followers
  3. Mid-Tier Influencers: Growing social creators on platforms like YouTube and Instagram who have roughly 50,000 to 500,000 followers
  4. Micro-Influencers: Lesser-known creators who shepherd genre-specific fanbases and have between 10,000 and 50,000 followers
  5. Nano-Influencers: Regular people who happen to influence their community and have fewer than 10,000 followers (but more than 1,000) with a strong rate of engagement

While many brand managers find disclosures intrusive, influencer endorsements continue to drive sales, which is why properly disclosing connections brings value to your overall influencer marketing program. Proper disclosure tagging allows influencers — including agency teams, bloggers, company employees, and more — to gain trust from their followers even when #ad leads a post.

The three most common hashtags you should be considering in your disclosure, aside from #ad, are: #Sponsored, #Sweeps, and #Client.

#SPONSORED

In 2017, the FTC reached out to nearly 100 influencers to address how they disclose their posts on social media. The FTC said that these social creators, all of whom have flourished under the paid social marketing economy, must use clear hashtags, such as #ad or #sponsored, and cannot hide them within groups of hashtags. In November 2019, the FTC released a new guide, “Disclosures 101 for Social Media Influencers” to provide influencers with tips from the FTC about what triggers the need for a disclosure and to offer examples of both effective and ineffective disclosures. They made it clear that the responsibility about endorsements lies with the influencer.

#SWEEPS

Sponsored posts are not the only types of social media content that require proper disclosure. When hosting giveaways on social media, brands must: be aware of the platform rules provided by Facebook, Twitter, and Instagram; adhere to legal guidelines; apply disclosures required by the FTC. If any contest asks social media users to share or upload a post and/or picture as a form of entry, the user is required to include #sweepstakes or #contest within their social media post. This shows the users’ followers that they are not organically promoting the brand involved but are using the content shared to participate in a contest.

#CLIENT

As I researched for this blog, one of the surprises to me is that influencers are not the only social media users required to post disclosure statements when promoting products. If you work for a brand or a #PR agency, you too must disclose when sharing any posts relating to your employer’s products or to your clients. WHAT? Apparently, the best way to ensure you’re adhering to this requirement is to include #client on any posts relating to brands you work with and sharing truthful reviews when posting. Employers should ensure employees are properly using social media by including posting guidelines within their employee handbooks (checkmark) and periodically reminding employees of the policy (hey Caster team, read this blog!).

As social media continues to impact PR, branding, and advertising, the FTC is going to continue to monitor content and seek to regulate it on various platforms. To ensure your clients and brands are not penalized for hyping a vested interest, make sure you’re in-the-know on FTC guidelines, and be smart when it comes to disclosures.

You can learn more and even submit questions at the FTC.gov website here: https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking

#InfluencerMarketing #FTC #Disclosure #Reviews #Ad #Promo #Client #TheMoreYouKnow

Kimberly Lancaster

Kimberly Lancaster

President/Founder

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