Government entities are typically slow to react to advances in digital marketing, which is why it took the Federal Trade Commission years to make its first attempt at regulating issues around transparency and disclosure in the burgeoning space of online influencer marketing.
Rest assured, the FTC’s initial foray into guidance will not be its last, and it is quite evident that it’s focused on ensuring that consumers receive clear notice that content generated for an influencer marketing program is an ad — and not something else.
The roots of the FTC’s guidance are found squarely in its approach to native advertising; in December 2015, the agency laid down guidelines that made clear the need to distinguish between editorial and promoted content. At the time, the language of the FTC’s guidelines left the door open when it came to disclosure requirements for different kinds of sponsored content: product placements, likes, tweets and other paid social amplification of content — in other words, influencer marketing.
However, earlier this year, the FTC clarified that all sponsored content is governed by the FTC guidelines for native advertising and that regardless of platform, all paid social endorsements must be labeled as such.
This thinking has been evident in a number of FTC enforcement actions. First, and most prominently, the FTC went after retailer Lord & Taylor, which had paid $1,000 to $4,000 each to some 50 fashion influencers to talk up its Paisley Asymmetrical Dress on Instagram last year. In March, the retailer settled with the FTC for an undisclosed sum because the company failed to disclose it had given each influencer the dress, as well as thousands of dollars, in exchange for endorsement.
And most recently, the FTC communicated that efforts on the part of influencers to use hashtags such as #spons to disclose that promoted content is an ad won’t cut it. It remains unclear whether or not consumers can tell when a post is sponsored, though the FTC does have reason to be conservative in its assumptions; a 2015 study from Contently concluded that most consumers can’t distinguish between native advertising and editorial.
One thing is clear: The FTC’s actions are an important signal that the influencer marketing space is reaching a new stage of maturity, and with that maturity must come rules and standards.
Influencer marketing isn’t going away. In all likelihood, it will only grow larger and more complicated as advancements in programmatic make it more accessible and scalable.
In the context of such growth, marketers can’t depend entirely on the FTC to police every execution and campaign. Rather, to secure a healthy path forward for its growth, influencer marketing needs to find a way to police itself.
Regulation beyond the FTC
The FTC’s interest in influencer marketing is recognition and validation of its vitality and potential as a marketing strategy to engage consumers. Though there are no firm estimates of the size of the market, a 2015 report from Augure (now Launchmetrics) found that 75 percent of brands are using influencer marketing to engage with consumers. And the same study found that 93 percent of brands considered influencer marketing to be effective.
Stats aside, anyone who follows a celebrity influencer or a non-celebrity influencer on a blog, Twitter, Instagram or Snapchat has become accustomed to promoted content — sometimes labeled as such and sometimes not.
However, even at this tipping point, with brands allocating more budget and making nascent efforts to identify the commercial nature of posts, there is abuse. In a May post in Digiday, an anonymous marketing executive confessed that brands are merely throwing money at influencers who have sold out and “no longer value their art.”
As if to prove the point of the anonymous exec, around the same time, celeb influencer Scott Distick merely posted instructions from the marketing team at Skinny Tea to his Instagram feed (“Here you go, at 4pm est, write the below…”).
In the long term, such behaviors risk undermining the efficacy of influencer marketing, and in the near term, they undermine the good-faith disclosure efforts that some influencers have already begun to make.
It’s in everyone’s interest at this point — the brands, the influencers, the platforms and the consumers themselves — to arrive at a clear methodology for adhering to emerging standards for disclosure across all of the major influencer platforms.
Guidelines are great — but they’re open for interpretation in matters of implementation. Rather than hope that everyone will uniformly opt in and adhere to the FTC’s guidelines, the industry needs to set up a mechanism (a standard) to ensure that all influencer marketing deals are disclosed transparently.
Having a standard will build credibility for both influencers and the industry among brands, the FTC, and most importantly, consumers.
Settling on a standard will not happen through a laissez-faire approach built on the hope that everyone will arrive at the same conclusion. That’s why we need industry organizations (Interactive Advertising Bureau, Word of Mouth Marketing Association and others) to work together with industry participants to come up with clear, implementable standards for disclosure.
Think the Ad Choice icon for OBA (online behavioral advertising) compliance. The industry’s efforts around OBA disclosure are not the only example we have of taking control and implementing practical standards.
Since 1974, the Children’s Advertising Review Unit (CARU), a subsidiary of the Better Business Bureau, has acted as a self-governing body for children’s advertising. And, for the most part, it’s worked. CARU to this day acts as a shield for advertisers that fear an FTC fine. As long as marketers are in compliance with CARU, the FTC leaves them alone.
Advertising to children doesn’t have the best reputation, but it would be infinitely worse without CARU. The FTC might have taken draconian measures to curb all advertising to kids right now if not for CARU.
The same hypothetical problems — potential consumer abuse and stricter government regulations — are very real threats to the vitality of influencer marketing as a legitimate marketing strategy.
Certainly, industry organizations have not ignored the issue of a disclosure standard; this simply is a call for those participating organizations to hasten their step and more actively broadcast their efforts and achievements.
Those more present and definitive efforts, in addition to protecting advertisers from FTC fines, would improve the image of influencer marketing and establish more consumer trust. That’s a stronger foundation and a win-win that all legitimate marketers can get behind.
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