#Spon: New FTC Rules Impact Celebs and Influencers’ Social Media #Ads

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FTC Rules Ginge

Last year, ad agency Deutsch LA ran afoul of the Federal Trade Commission and ended up settling over charges the agency had used Twitter in a misleading manner on behalf of its client Sony. Deutsch’s account execs had lobbied agency employees to use Twitter and the tag #gamechanger to promote PlayStation’s Vita ad campaign. The crime? The tweets were not disclosed as sponsored even though they came from people paid to promote Sony’s product.

To help clear up any confusion, the US watchdog has issued a FTC Endorsement Guide that covers social media, native advertising, affiliate marketing and sponsored consumer reviews. Call it an idiot’s guide to sponsorship on social media. But while the guide clarifies many aspects of native advertising and blogger endorsements, it also leaves a lot of murky wiggle room where celebs like NBA MVP Stephen Curry slip through.

The FTC says the extensive guidelines “reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading.” It consists of answers to common questions like How Should I Disclose That I Was Given Something for My Endorsement? When Does the FTC Act Apply to Endorsements? And What Are an Advertiser’s Responsibilities for What Others Say in Social Media?

And Now a Word From Our #Spon
The agency’s guidelines come as the practice of paying bloggers for positive reviews is exploding. The reason for this isn’t difficult to break down. Word-of-mouth from a trusted source has always been a gold standard of marketing, and on the social web that truism has exploded. Study after study has noted that consumers’ trust and reliance on reviews and ratings drives between 70 percent to 90 percent of their online purchasing decisions.

Stacy Jones, President of Entertainment marketing firm Hollywood Branded, says the result of the FTC’s guidance is something “we’re all just going to have to get used to.” She continues, “Having an #ad or #sponsored or verbal description included in the content is absolutely going to affect how consumers view the content… Influencers and bloggers are going to have to develop new skills to really make sure they are creating great content.” Jones sees consumers likewise developing new understandings and allowing leeway for the fact that their favorite influencers endorse products.

But the new guidelines leave many questions unanswered. For example, in the run-up to Father’s Day, Gillette paid athletes and Twitter celebs to tweet out Father’s Day gift endorsements for its shaving kit. TV show star Daymond John’s tweet was tagged #ad while NFL star Larry Fitzgerald’s tweet is merely hashtagged with the abbreviation #spon. Superstar comedian Kevin Hart also #spon-ed the Gillette Father’s Day promotion.

Daymond John Sponsored Post
Larry Fitzgerald Sponsored Post

Pay to Play: The New Rules
It turns out that #spon is regularly used in Twitter product endorsements but would it pass the FTC’s test? Below is what the FTC defines as “clear and conspicuous” disclosure:

“To make a disclosure ‘clear and conspicuous,’ advertisers should use clear and unambiguous language and make the disclosure stand out. Consumers should be able to notice the disclosure easily. They should not have to look for it. In general, disclosures should be:
•    close to the claims to which they relate;
•    in a font that is easy to read;
•    in a shade that stands out against the background;
•    for video ads, on the screen long enough to be noticed, read, and understood;
•    for audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand.”

Is “#spon” clear and conspicuous? The answer is ambiguous.

Meanwhile, Larry Fitzgerald appeared to have erred (barely) on the side of FTC prudence even though the FTC FAQ makes dispensations for sponsors with known connections:

“A famous athlete has thousands of followers on Twitter and is well-known as a spokesperson for a particular product. Does he have to disclose that he’s being paid every time he tweets about the product?

“It depends on whether his followers understand that he’s being paid to endorse that product. If they know he’s a paid endorser, no disclosure is needed. But if a significant portion of his followers don’t know that, the relationship should be disclosed. Determining whether followers are aware of a relationship could be tricky in many cases, so we recommend disclosure.”

A good case study of the FTC’s new rules in practice is with newly-minted NBA champion Stephen Curry. Curry tagged a recent Playstation tweet #sponsored instead of #spon —

Stephen Curry Sponsored Video Game Post

But his Twitter profile picture is of the star lounging inside a giant Under Armour logo. The photo is not disclosed but as most NBA fans certainly know, Curry is sponsored by Under Armour.

Stephen Curry

Stephen Curry and Express

Then, however, there is something like this 2,000-plus retweeted tweet promoting, without disclosure, US fashion retailer Express.

Maybe Curry just really likes Express, or maybe it’s because the tweet was posted months before the FTC “clarified” its disclosure requirements. (Probably the latter.) The FTC’s message appears to have gotten through for at least one celeb endorser.

Jones maintains that positive connections still define good partnerships, #spon or not. “[Influencers] are still going to only partner with those (paying) brands that they think are of a high enough quality and which share a messaging platform they agree with, to be part of their content. So despite it being paid, it still results in being an endorsement that can positively impact the brand partner.”

The most important takeaway from the new guidance, she adds, recalls the old adage that strong ads still rule. “Just like any inbound marketing program, marketers and influencers need to determine how to create content that is strong enough on its own merit to be interesting to a consumer, to get them over that hump of being branded an #ad.”

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