FTC guidance on promotional social media content

Brand-sponsored content and promotions with so-called "influencers" are continuing to expand on social media. Though the Federal Trade Commission requires clear and conspicuous disclosures of advertising content including paid reviews and influencer campaigns, many businesses are not complying with FTC guidelines. Here is a brief overview of applicable rules for promotional content on social media.

Expansion of Brand-Sponsored Content

Brand advertising through social media and other online platforms continues to grow, including through sponsored reviews and so-called "native advertising," which is embedded advertising that matches the format of social media content. For example, Snap Inc., which started publicly trading in March, has experienced explosive growth, with paid advertisements accounting for approximately 98 percent of the company's revenue.

However, a large segment of advertisers and influencers may be misinformed or unaware of regulations governing advertising within social media platforms, especially where "native" advertisements look like regular social media posts.

FTC Interest in Social Media Campaigns

The FTC recently sent out more than 90 letters to influencers and marketers reminding them that they must clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media. In particular, the FTC highlighted that consumers viewing Instagram posts on mobile devices typically only see the first few lines of text unless they click "more," and that disclosures of material connections should be made above the "more" button using clear and understandable terms.

In addition, the FTC settled several cases involving advertisements in new media last year, including regarding influencer campaigns on YouTube and Instagram.

FTC Guidelines for Endorsements

The FTC has published detailed guidelines for endorsements and native advertising in social media, including: "Guides Concerning the Use of Endorsements and Testimonials in Advertising" (16 CFR Section 255), its "FTC's Endorsement Guides: What People Are Asking" (Updated FAQs), ".Com Disclosures" and "Native Advertising: A Guide for Businesses." These guidelines apply to all parties involved in promotional campaigns including advertisers, ad agencies and influencers.

As an initial matter, the FTC defines an endorsement as an advertising message that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of someone other than the sponsoring advertiser. This includes situations in which one is paid or gets something of value (e.g., free or discounted merchandise) to endorse a product. Under FTC rules, disclosures must be truthful and substantiated, clear and conspicuous, and disclose material connections between the one providing the endorsement and the advertiser. Underlying this rule is the principle that a material connection between the endorser and advertiser (for example, if the endorser was paid or received a free or discounted product) might, if disclosed, materially affect the weight or credibility of the endorsement

Whether a social media post contains an endorsement with a material connection typically depends on the circumstances. Posts which could be considered endorsements include: a celebrity video displaying a certain brand of handbag or shoes, a reality star photo of herself next to hair vitamins, or a celebrity video talking about a brand of water bottle.

If the individual is paid or received something of value for an advertising message, there is likely an endorsement that should be disclosed. However, there is an exception for spokespeople clearly promoting a product and for experts. For example, consider a posted video in which a spokesperson for an advertising drug company purports to speak on behalf of the company and clearly promotes a drug by praising the drug's ability to deliver fast pain relief. If a significant portion of the viewing public knows the individual is a spokesperson, the statement is likely not an endorsement under FTC rules. While there is a grey area in certain situations, generally, the more subtle and less straightforward an endorsement, the more likely consumers will be deceived, and the more likely disclosures are needed. Stated differently, if consumers are likely to believe an advertising message reflects the endorser's personal views, rather than the views of the advertiser, there likely should be a disclosure.

FTC rules do not state the exact language required for disclosures; however, the FTC's guidelines state that parties should use clear and unambiguous language, make disclosures stand out and display disclosures close to the claims to which they relate. The FTC recently commented that consumers may not understand disclosures such as "#sp," "Thanks [Brand]," or "#partner." Moreover, video and audio disclosures should be easily noticed and understood.

How to Make Social Media Disclosures Compliant

While the sufficiency of disclosures will often depend on the circumstances, parties should provide essential information in a clear and noticeable format so that consumers will see and understand the disclosures; the FTC will look at the net impression and consider how a disclosure looks and sounds in relation to the other content. Many advertisers and influencers are now using terms such as "Advertisement" or "Paid Ad," and the FTC has stated that "#ad" would "likely be effective" for disclosing an advertisement on a platform such as Twitter.

Accordingly, parties should at minimum implement compliance policies and programs and instruct and monitor influencers and affiliates on proper disclosures. As the guidelines apply to all platforms, disclosures should be made in both photos and videos, and parties should consider how to maintain disclosures if content is reposted or viewed on various devices. Finally, as platform limitations are not a defense, if a disclosure cannot be made clearly, one may want to rethink the endorsement all together.