FTC takes aim at pay for play

As new influencers such as the Kardashians enjoy free apartments from Airbnb and cash in on lucrative social media endorsement deals, federal regulators vow to crack down on misleading posts.

Kim Kardashian and family are staying in a NYC penthouse courtesy of tweeting about Airbnb
Kim Kardashian and family are staying in a NYC penthouse courtesy of tweeting about Airbnb

#spon. #ad. #collab. #co. - just some of the hashtags influencers use to identify paid posts on Twitter, Instagram, Pinterest, and other social media platforms.

However, the Federal Trade Commission warns not all of them meet advertising disclosure requirements, and it will crack down on paid influencer posts it deems misleading or deceptive.

The move was sparked by the rise of celebrity influencers, such as reality TV stars the Kardashian/Jenner family, actors, models, athletes, musicians, and other showbiz types who make as much as $75,000 per post on Instagram or Snapchat and $30,000 for a single tweet, according to San Francisco agency Captiv8.

"It’s been frustrating to watch celebrities come to social media and use their channels not just to promote their work, but also products such as Fit Tea and booze," says Stefania Pomponi, president and co-founder of Clever Girls Collective, which has executed influencer campaigns for such brands as Yahoo! Style, Western Union, and Swiffer. "It’s gone largely unchecked for a while."

"Non-celebrity influencers have always been very careful about cultivating their audience, because trust is their currency, not celebrity. They’ve always followed FTC guidelines," asserts Pomponi. "An organic food blogger, for instance, would be very quickly called out by followers if she suddenly started touting McDonald’s. They’re saying [of the FTC’s crackdown], ‘It’s about time.’"

Tim O’Malley, founder and CEO of Chicago-based Social Media Beast, says: "Typically the onus has been on the influencer to declare they received sponsorship for a statement [on social media]." His firm advises clients to seek partnerships with influencers who align on "integrity and transparency."

Yet, many comms pros say it’s understandable some influencers would rather avoid disclosing paid relationships.

"In the eyes of influencers, adding #ad loses credibility [with their audience]," says Ali Grant, founder and director of Be Social PR, which represents beauty, lifestyle, and fashion brands from offices in Los Angeles and San Diego. "Unless you’re living and breathing this world, consumers don’t realize content is an advertisement unless they see the ad or sponsored disclosures."

Grant adds "many influencers prefer not to use disclosure because, in reality, most never support a brand on their digital platforms they don’t believe in."

But given the "FTC will start cracking down on big players, more than ever it’s important to disclose collaborations," she says.

Disclosure do’s and don’ts

The FTC updated its online advertising disclosure guidelines in late 2015, with a Q&A document designed to bring more clarity to how it looks at social media endorsements.

"We don’t say you have to use a specific word or term, but disclosure has to clearly convey a financial relationship or exchange between brand and poster," says Mary Engle, FTC’s associate director for advertising practices. "The disclosure also has to be placed in such a way the consumer isn’t going to miss seeing it."

"But we’re seeing disclosures that are ambiguous, given the context of the culture of these platforms," she tells PRWeek. "#ad and #sponsored is fine, but not #spon and #sp (short for sponsored), #collab (short for collaboration), or #co (short for courtesy of)."

"It has to be clear to the consumer," says Engle.

For blogs, that would mean a prominently placed indication (usually at the top of the post) that "this was brought to you by brand X."

The FTC isn’t proactively monitoring influencer posts, because there’s just too much content out there, but Engle says the watchdog is very responsive to third-party complaints from consumers and organizations such as the Word of Mouth Marketing Association and TruthinAdvertising.org.

"We also keep up on the PR, tech, and advertising trade press, because that can lead us to an investigation as well," she adds.

TruthinAdvertising.org recently filed a complaint against Kim Kardashian West and her sisters, Khloé and Kourtney Kardashian and Kylie and Kendall Jenner.

"[They] engaged in deceptive marketing campaigns for various companies by routinely creating and publishing sponsored social media posts… without clearly and conspicuously disclosing they are paid representatives of those companies," reads a letter the nonprofit penned to the sisters and their lawyer.

As a result, Kylie Jenner changed some language in her posts. A few weeks ago, she captioned a photograph of herself inside a mansion on the Caribbean island of Turks and Caicos with: "thanks for the birthday home @airbnb". Now it reads: "thanks for the gift of a lovely birthday home @airbnb."

And in a post this week, Kardashian West thanked Airbnb for putting her up in a lavish New York penthouse. "Just checked into our NYC penthouse. Thanks @airbnb for the gift of our home away from home," she wrote, also on Instagram.

Does that mean paying celebrities to promote brands could be less attractive for companies, as consumers realize they’re ads rather than an influenced endorsement?

"It’s tempting to welcome the FTC working harder to disclose paid relationships, as it'll mean organic endorsements have more appeal and power," acknowledges Andrew Pray, founder of Praytell Strategy, which represents LuMee, Kim Kardashian’s phone case of choice. "But that’s anecdotal."

"There isn’t enough A/B testing to know the effect of #ad on engagement. It would be nice to think it won't hurt performance that much, as seeing a celeb awkwardly pose next to a bottle of iced tea is a dead giveaway something is up," adds Pray. "I'm betting more disclosure won't slow celeb endorsements or the lift they offer on social."

Could celebrity influencers even eventually be exempt from disclosure at all? Based on FTC regulations, they could if a case can be successfully made that the majority of their followers assume from the start any tweet about a product is, in fact, a paid endorsement.

"The Kim Kardashians and [Snapchat star] DJ Khaleds of the world live completely sponsored lives; they don’t wear or do or use anything via social media without being paid," says Pomponi.

However, the FTC says, given how difficult that can be to determine, "we recommend disclosure."

Brands take action

Social media leaders on the agency and brand side now specify how disclosures are made, rather than leaving it to the influencer to decide.

David Kellis, director of PR and social media at The Clorox Company, says the company insists on clearly worded and positioned disclosures. For example, Burt’s Bees has the hashtag #WorkingWithBurts on posts from actress Bella Thorne, celebrity makeup artist Georgie Eisdell, and other influencers with which the cosmetics brand partners on social media.

"We wouldn’t risk [not disclosing]," says Kellis, who notes how important influencer marketing has become for Clorox. "It’s critical to our PR and social media programs, because of the confluence of two events: media is more fragmented, making it harder to amass impressions, and organic social media reach is dying. Those two things put influencer marketing at the forefront of our communications."

As for worrying a sponsored post looks less authentic and leads to lower levels of engagement, Kellis argues many other factors contribute to how authentic something is perceived by audiences and how valuable it is to them.

"The influencer needs to be credible with his or her following and not overexposed via posting about a different brand every day," he says. "The creative also needs to be authentic to the influencer. The brand mention can’t come out of left field."

Clint Bagley, SVP, head of influencer relations at Current, Clorox’s AOR on influencer marketing, says upfront disclosures are becoming the norm.  Still, there "are a lot of people jumping into this space [to help brands get social media endorsements], but they’re operating by the seat of their pants."

"Some people don’t have that brand protector hat on and think they can just jump into the throes of people who are going to amplify a product and leave it at that," says Bagley. "But you need to come up with a detailed creative brief.

"The brief should not only be about the project, but also cross all the t's and dot the i's related to FTC guidelines," he adds.

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