If a social media influencer gets paid to post an advertisement but doesn’t disclose it, is it really an advertisement?

The Federal Trade Commission would answer this question unequivocally yes.

In April of this year, the FTC sent out more than 90 letters to social media influencers in response to their Instagram posts that made endorsements or referenced brands. The letters were sent to remind these influencers that if there is a “material connection” between the influencer and a brand then the influencer must “clearly and conspicuously disclose” their relationship in the endorsement of the product. A “material connection” can consist of “a business or family relationship, monetary payment, or the provision of free products to the endorser.” Further, the FTC provides that the endorsement must be unambiguous, and the viewer should not have to search for the disclosure (for example, placing the disclosure above the “more” button on Instagram).

These guidelines seem simple enough, but yet very few social media celebrities and influencers are following them. In May, Mediakix did their own study on the posting habits of Instagram’s top 50 celebrities. While only 30 of the top 50 celebrities posted sponsored content, the study results showed that only 7% of these posts may be FTC compliant. To put this in perspective, in one year a top celebrity posts an average of 58 sponsored posts but only 3 might be FTC compliant. This lack of disclosure has led to complaints against brands like Lord & Taylor, for misrepresenting the nature of their advertising content and failing to disclose the nature of the relationship between the brand and the influencer. Not to mention some people point to this as the reason for the catastrophe which was Fyre Festival earlier this summer.

Recently, Instagram has introduced a feature that will make following the FTC guidelines easier. Instagram has recently unveiled a new “branded content tool” which will place a Paid partnership with… subheading on Instagrams that promote paid content. This tool will aid in transparency, and as an added bonus from Instagram, both the influencer and the brand will be able to see metrics showing how the post is performing. Instagram’s policies “require” creators and publishers to tag business partners when there is an “exchange of value between a creator or publisher and a business partner.” However, Instagram currently has no penalty for not using the branded content tool. Although, there seems to be plans for an enforcement policy in the works.

The FTC guidelines do have some teeth: practices inconsistent with the FTC guidelines may result in law enforcement actions alleging violations of the FTC Act. These actions can range from defendants being forced to return the money from their violations to a requirement to abide by various rules in the future. Also, the Commission can issue an administrative complaint that can result in civil penalties. The FTC works to protect and educate consumers through their guides and enforcement actions. These sanctions are important from a policy standpoint, in that we, as a community, want to be able to trust those we follow online. We don’t want to reward celebrities for knowingly deceiving their fans and instead want to reward truthful and fair advertising. This will become more important as Instagram grows. While lack of transparency online means that there are no official numbers on the size of the Instagram influencer market, Instagram is considered to be one of the fastest growing advertisement categories and projected to be a $5-10 billion market by 2020. Mediakix estimates that advertisers spend over $1 billion per year on influencers, with indications of significant growth. As this market grows, it is important that the advertising standards grow with it, and we as consumers can trust what those we follow and what they post online.

–Alyx Eva

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