Portrait of influencer, beauty blogger, content creator or vlogger girl review make up looking at … [+]
Influencer marketing has taken off in the last few years, with brands rushing to harness the grassroots efforts of social media stars in order to promote their own message. The Federal Trade Commission worries that in this age of wisdom and age of foolishness, this age of authentic influencers and of paid followers, the consumer might have a hard time determining which endorsements are real and which are fake. But influencers and brands alike are firm that the whole point behind influencer-brand partnerships is to authentically align industry with product, not fake it for the cash. So why is the FTC so concerned?
Last week, the agency announced its intention to seek public comment on whether to make changes to its Endorsement Guides as part of their standard reviews on all FTC rules and guidelines. Social media influencers operate under the rules set out by the Endorsement Guides, but those haven’t been amended in over a decade, leaving members of the FTC to wonder aloud whether there’s room for improvement in the way they handle the burgeoning influencer marketing industry.
FTC Commissioner Rohit Chopra published a separate statement that called for financial penalties for advertisers and brands (but, wisely, not influencers) for undisclosed influencer marketing posts. In a digital world polluted by misinformation, Chopra sees stricter laws surrounding influencer marketing to be essential in maintaining an informed consumer population and thus the integrity of the digital economy.
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” wrote Chopra. “The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”
The building of the Federal Trade Commission in downtown Washington DC.
Last November, the FTC published guidelines for influencers disclosing relationships with brands that are basically an influencer-focused riff off the broader Endorsement Guidelines, which the FTC uses as a guide on how to enforce the FTC Act. The act outlaws unfair methods of competition and unfair acts or practices that affect commerce. Hot on the list of guidelines is the need for influencers to disclose, in an obvious manner that’s “hard to miss,” what the relationship between brand and influencer is. The language is not specific, but many influencers finish off their Instagram captions with #ad or #sponsored, and those hashtags can’t be buried among a sea of other hashtags.
Screenshot of men’s fashion influencer Christophe North’s branded Instagram post, in paid … [+]
Instagram now has a widely used tool that adds “Paid partnership with…” to the top of a post when an influencer tags a brand she has been paid to endorse.
Screenshot of beauty and fragrance influencer Tiff Benson’s branded Instagram post, in paid … [+]
All of these efforts ultimately come back to an attempt to avoid false advertising through an unexpected material relationship. Seeing a celebrity on a billboard for a type of toothpaste won’t ring any alarm bells because you’ll assume that the celebrity is being paid to be there. But on social media, and particularly with influencers whose whole following is based on their opinion of the products and services they consume, the line is less clear. At least to the FTC.
“Transparency keeps the trust between an influencer and their audience really strong. It means the influencer can keep growing their audience in a healthy way,” said Mae Karwowski, CEO and founder of Obviously, an influencer marketing agency. Karwowski said that her agency takes a conservative approach to the FTC rulings at all times. “It’s important for the brand because you want to be seen as an authentic, genuine, straightforward brand that isn’t doing anything sketchy, that has real influencers talking about you in an honest way.”
And indeed, there’s a benefit to brands, influencers and consumers alike when influencers disclose paid partnerships or material relationships. According to a 2018 report, 94% of marketers agree that transparency and authenticity are key to influencer marketing success, and 92% agree that it’s critical to work with influencers who have a “natural brand affinity and shared ethics with the brand.” About three quarters of those surveyed say they expect the influencer to already be a loyal supporter of the brand or to have written about them organically, and that they would “refuse to work with an influencer who was not clearly complying with ASA/FTC guidance.”
“I told myself when I entered this game as an influencer that I’m always going to disclose my relationships with brands,” said Tiff Benson, a fragrance and beauty influencer. “I don’t do this as a hobby. This is a full time career, and I want to be paid. I think it’s a good thing to have a paid partnership with a brand that you love. You have to earn that in this industry.”
Benson said that she has turned down plenty of partnerships that don’t resonate with her audience, but that her audience doesn’t get to see that side of things. “You try to do the right thing and take on partnerships that are organic to your brand,” she said.
Most recently, Benson was more than happy to flaunt her partnership with Sephora, both on YouTube and Instagram, because it aligns with her personal brand and she is already a Sephora consumer. Benson opens one of her branded YouTube videos for the makeup company with, “This video is sponsored by Sephora.” The video is tagged #ad #SephoraSquad, and the description is essentially a Sephora ad. making sure she adheres to the FTC guidelines. With around 3,600 views, it’s by no means her most popular video. Benson’s top ten videos average out around 37,000 views. But the feedback from her audience for her partnership has been positive overall, she said. “People are really proud that as a woman of color, I’m speaking to a whole missed audience that is underrepresented in the beauty and fragrance community.”
While there is incentive for influencers and brands to be more authentic, one sketchy TikTok post can spoil the bunch. The problem is that it’s hard to penalize when it does happen, especially on social media. Anyone can be subject to redress or equitable consumer relief, meaning that if a consumer has lost money or a brand has made money by their bad behavior, the FTC can return that money to consumers. In the case of influencer marketing, when the ROI is still just a big question mark, it’s tough to legally prove the amount of sales that are a direct result of influencers a brand has paid but didn’t disclose. As a result, the FTC doesn’t see a lot of monetary relief in these cases.
Which is why Chopra argues that the current guidelines are a good start, but there’s a need for stricter enforcement. Specifically, he wants to codify “elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19.” This means that the FTC will want to take another look at what constitutes violating the FTC Act in the context of influencer marketing, making it easier to enforce a fine on brands that fail to operate under the law.
Chopra also suggests that the FTC specify the requirements that companies must adhere to in their contracts with influencers, and wants to develop requirements for tech platforms like Instagram, YouTube, and TikTok, as they are also profiting, either directly or indirectly, from influencer marketing.
The Office of the Commissioner declined to comment beyond Chopra’s statement, but it’s clear that he’s more interested in going after brands, advertisers and tech platforms than after the influencers who just want to post about their interests to make some money on the side. Why? One can only guess, but maybe he respects the hustle.