The FTC, or Federal Trade Commission plans to crack down on celebrity and influences on social media from taking selfies with products without clearly stating whether they are being paid to promote the brand.
They agency wants advertisers to make sure the celebrity or influencer makes it clear that they are being paid to endorse the product by using hashtags such as #ad or #sponsored.
Michael Ostheimer, a deputy in the FTC’s Ad Practices Division said, “We’ve been interested in deceptive endorsements for decades and this is a new way in which they are appearing.”
“We believe consumers put stock in endorsements and we want to make sure they are not being deceived.”
Examples of paid endorsements include Lord & Taylor paying fashion influencers on Instagram to promote one of the new dresses. However there was no indication that was made explicit to followers. The FTC wants this to change.
Other social media stars include: the Kardashians, YouTuber iJustine to fashion lifestyle blogger Cara Loren.
In a recent case, the FTC fought with Warner Brothers Home Entertainment for using influencers, such as PewDiePie, who has around 50 million followers on YouTube; paying them to give positive reviews of the video game, Middle-Earth: Shadow of Mordor.
The FTC emphasizes that at the moment paid promotion on social media is having a disclosure problem in that audiences are misled into believing the review is genuinely coming from the influencer, not knowing that they have been paid.
Due to the rise in free digital content, traditional media sources, such as the TV, is losing marketing power. This is particularly true for the tech-savvy twenty plus range, who are more likely to check their social media accounts daily.
According to Captiv8, a company that connects influencers with brands:
companies are investing more than $255 million on influencer marketing every month on Instagram alone
Influencers And Following The Rules
Stefania Pomponi, the founder of Clever Girls Collective Inc., a marketing agency that works with brands including Disney and Ford, said:
“We’re venturing into a little bit of ridiculous territory with the FTC saying these things because influencers really want to follow the rules.”
“They want to do a good job- they want to be seen as useful to brands and don’t want to do anything that would jeopardize their relationships.”
Influencers may think they are following the rules but many posts still remain ambiguous as to whether it is sponsored content.
What Happens Next
According to Captiv8, last year 120,000 posts on Instagram had hashtags like #ad and #sponsored compared to July where there were more than 300,000.
However, despite this positive trend, the FTC wants posts to use #ad at the beginning of the post, rather in the middle where it could get lost by other hashtags.
The FTC also notes that abbreviated forms of the hashtag #sponsored such as #sp or #spon is not enough to make followers understand the post is promoted material.