Note: This article has been updated on February 18, 2020, from its original publication date of November 20, 2019. The changes are made because of a new statement from the FTC regarding influencer marketing penalties.
Most of us didn’t know what to expect when social media was introduced to the Internet. Even until now, when social media culture has completely and constantly transformed, the Internet is still largely unregulated. What began as platforms to stay in touch with family, friends, and acquaintances, has now become market places, advertising mediums, and even new businesses (That’s why we exist!)
For that reason, the Federal Trade Commission (FTC) has been constantly updating its guidelines regarding influencer endorsements and sponsorship. Brands, agencies, companies like ourselves, and of course influencers need to keep these guidelines on top of our minds – Not only for legal reasons, but also to maintain transparency and increase trust with the public.
Here are some quick links to the FTC’s full guidelines, Q&A, Influencers’ disclosures 101. On February 12, 2020, the FTC also published a new statement, expressing that they will pursue tougher penalties to businesses that practice nontransparent influencer marketing techniques. This article will help brands and agencies like you have a quick look into these guidelines, how they could affect you, and finally best practices/tips.
Why do influencers need to disclose sponsorship information?
The FTC’s main concern is that sponsorship information isn’t always immediately obvious to followers or subscribers. Influencers’ posts about products could either be sponsored, or based on their personal, un-sponsored opinions, whereas a traditional ad is obviously paid for by brands in order to promote themselves. Marketing Week reported that 65% of marketers said that without an indication, there isn’t a clear line between ads and genuine recommendations. For this reason, consumers need to have an indicator of whether an opinion is based on a brand’s affiliation or not.
Note: Just because an endorsement is based on sponsorship doesn’t necessarily mean that it’s not true or unauthentic. There are many ways an influencer can communicate the sponsorship information to their followers, without losing credibility or genuineness.
How can influencers most effectively disclose this information?
Here are some requirements from the FTC influencer marketing practices:
- It has to be clearly stated so it’s obvious to followers that influencers’ content is sponsored. For example: “Thanks XYZ company for sending me this product,” and not just “Thanks XYZ company!”
- Influencers can use hashtags like #ad or #sponsorships, but it shouldn’t be buried a list of hashtags, or at the very end of their caption.
- For videos – it’s important to mention this information in both the written description, and verbally stated in the video.
- Even when influencers are not paid by the company – if they got sent free products or are associated with the brand in any relationship (family, friends, strangers with a deal, etc.), a sponsorship disclosure is still needed.
- When influencers are paid for advertising: tags, likes, pins, and similar ways of showing they like a brand are counted as endorsements. Because of this, even if influencers simply tag a brand that they didn’t have to spend money on, the influencers still need to disclose sponsorship.
- In its February 2020 statement, the FTC focuses its penalties on advertisers and businesses in case of nontransparent endorsements, and not influencers. This means that businesses will need to encourage influencer transparency to avoid penalties themselves.
- Read more in the FTC influencer marketing guidelines: “Disclosure 101 for Social Media“
What this means for brands and agencies
At first glance, these guidelines might seem restrictive to both brands and influencers – and the sound of “sponsored” or “ads” doesn’t seem to bring the most authentic feel to a post. However, in reality, followers don’t seem to mind sponsored content. In fact, a study reported from AdWeek actually suggested that sponsored content, when done right, can receive even more engagement than a native post.
“The study, which analyzed approximately 86,000 influencers, found that followers tend to engage more with sponsored content than non-sponsored content across most follower ranges.” – AdWeek
In fact, a study from Marketing Week suggests that followers and subscribers appreciate it when influencers are transparent about their sponsorship, as long as the content is relevant. By being transparent with followers, influencers are building trust between not only their communities and themselves, but also trust between the consumer and the brand.
How do brands and agencies ensure sponsorship disclosures with influencers?
With that said, it’s important for brands and agencies to have an FTC-approved disclosure policy when working with influencers. In order to avoid running into any potential problem, make sure you as a brand or agency have done everything you possibly could to ensure this transparency. You can mention this requirement to influencers in multiple different places and ways: Campaign brief, influencer contract, publication instructions, via email, or hold off payment until the publications have been vetted with disclosure information.
Even when you’re just gifting influencers products without payment, it’s still required for their post to mention that the product has not been purchased by their own money. The same applies to sponsored strips, accommodations, etc. Don’t assume that the influencer would know, and when in doubt, include a disclosure!
Ultimately, transparency in sponsored posts will also help brands and agencies better understand the influencer marketing landscape. In this article, Vivien Garnes – Upfluence’s CEO and Forbes Communication Councils Member, explains how excess sponsorships can affect influencer marketing.
Saturation rate refers to the ratio between an influencer’s sponsored posts compared to their entire content. Garnes explained that this rate can even be more important than an influencers’ engagement rate, simple because as brands, you will need to understand how an influencer performs when it comes to sponsored posts.
With the Upfluence software, we calculate this number for you – so not only you know an influencer’s engagement rate, but also their Brand Mention rates, and how those sponsored posts perform compared to their overall engagement. Also, wouldn’t it be nice to know which brands an influencer is already associating with?
To keep things simple and straightforward, you can ask influencers to include hashtags like #ad or #sponsored in their caption. However, you can totally let influencers be creative with their disclosure. In fact, some disclosures can come across as more genuine than just simply using short hashtags. (E.g.: “I’ve been a fan of XYZ’s products for a while, and when they reached out to me for a sponsorship opportunity, I was more than happy to take the chance to introduce this wonderful brand to my followers!”
For brands outside of the U.S., if you’re working with U.S. influencers, you’d need to make sure their publications don’t violate the FTC influencer marketing guidelines. This would apply also for U.S. brands working with international influencers – although also make sure you double-check with each country’s guidelines, since most countries have their own outline and requirements when it comes to social media as well as marketing.
With influencer marketing being a very new and ever-evolving industry, brands and agencies should always expect changes when it comes to rules and guidelines. For now, we can be confident that transparency and honesty and authenticity will go a long way, both relationship-wise and legality-wise.