Are the FTC’s Regulations of Social Media Influencers Sufficient?
By: Arielle Padover
Using celebrities to sell products is hardly a new or innovative practice. Throughout time, celebrities have endorsed almost every product imaginable, from clothing and makeup to cars, credit cards, food, and even milk. This practice has been so consistent over time because, put simply, it is effective: brands are willing to spend whatever it takes to get the sales boost that typically comes with a celebrity partnership. Social media is extremely prevalent in today’s society (the average person spends about two hours a day, or up to nine hours a day for teens, on social media). As a result, social media advertising through influencers (individuals that have the ability to impact an audience’s behavior through their social media posts, such as bloggers and celebrities) tends to be a highly effective way to for brands to interact with their customers. It makes sense that brands are moving their product endorsements from traditional media outlets to the social media world.
Consumers put a significant amount of information about themselves onto social media sites, which allows for very specific tailoring of content to individual consumers. Further, social media advertising tends to be less expensive than traditional advertising channels. According to Liz Dunn, founder and CEO of brand strategy consulting firm Talmage Advisors, “Consumers trust the opinions of those in their social media group, including friends, bloggers and celebrities, more than messages they are getting directly from brands.” These added benefits make social media advertising even more attractive for brands.
The problem is that, as a platform for advertising, social media often makes it difficult for consumers to discern paid advertising from an influencer’s true opinion on a product. When people see an advertisement featuring a celebrity in a magazine or on television, they tend to be savvy enough to know that money exchanged hands. However, when people see their favorite fashion blogger wearing a new pair of shoes on Instagram, it may be less clear whether the influencer was paid to do wear the shoes, or whether the blogger purchased and photographed them on his or her own accord.
The Federal Trade Commission (FTC) seeks protect consumers from practices like deceptive advertising. The FTC defines deception as any “material misrepresentation or omission of information that is likely to mislead the consumer acting reasonably in the circumstances,” noting that a “misrepresentation is material if it is likely to affect consumers’ choices or conduct regarding an advertised product or the advertising for the product.” Because the FTC operates under the belief that consumers need all relevant information in order to determine how much weight to assign to recommendations made in advertisements, it is toughening up on the enforcement regulations as they apply to social media influencers.
In order to avoid misleading consumers, influencers are expected to disclose whether they received payment for their posts (including payment in the form of free products). The touchstone of the regulation is whether the consumers actually read the disclosure. The disclosure needs to be in clear and unambiguous language, easy to read, on the screen long enough to be noticed and read, and visible on all devices. If it is easy to skim over the disclosure, likely to be misunderstood (such as #spon or #sp to signify a sponsored post), buried in other hashtags, or located at the end of a post, it is often deemed to be ineffective disclosure. Disclosure should appear near the advertisement’s focal point, but if the focal point is an image, it might not be sufficiently noticeable. According to the FTC, the relevant question is whether knowing about an endorser’s compensation would “affect the weight or credibility” given to the recommendation. If it could affect the credibility of the recommendation (and the FTC usually believes it can), it should be disclosed. However, it is easy to see how it may be unclear whether a partnership is sufficiently disclosed. This lack of clarity causes brands, such as Lord & Taylor and Warner Bros., to get in trouble for violating the rules.
Going forward, the FTC will need to clarify exactly what is required from social media influencers that partner with brands. The FTC should consider the fact that social media influencer posts differ from traditional marketing in many ways, potentially warranting their own rules, rather than simply applying the rules for traditional marketing. For example, brands often have little or no control over what the social media post ultimately looks like or what the influencer says about the product.
Consumers deserve to have all the information to make fully informed decisions about the products advertised to them; however, it seems that simply applying the existing rules is likely inadequate to effectively regulate social media influencer advertising. In deciding and clarifying what is required, the FTC should consider the inherent qualities of the different social media platforms. For example, Twitter limits the number of characters in a tweet, making it difficult for influencers to use unabbreviated disclosures; however, the abbreviated disclosures are often deemed insufficient, even though they may still effectively disclose the partnership in this circumstance. Additionally, Snapchat and Instagram Stories only allow each photo or video to be 10 seconds long, and they vanish completely after 24 hours, which is problematic since disclosures need to stay on the screen long enough to be noticed and read. Without adjustment of the applicable regulations, these issues could eliminate advertising on some of social media’s largest platforms.
Suggested citation: Arielle Padover, Are the FTC’s Regulations of Social Media Influencers Sufficient?, Cornell J.L. & Pub. Pol’y, The Issue Spotter, (Feb. 8, 2017), http://jlpp.org/blogzine/are-the-ftcs-regulations-of-social-media-influencers-sufficient/.