I am in my final semester of my master’s program in Public Relations at IUPUI. This semester, I’m working on an extensive research paper about influencer marketing. Here is an excerpt from my still-in-progress paper that provides information about the FTC guidelines surrounding influencer marketing:
A significant risk of influencer marketing is potential fines from the Federal Trade Commission (FTC). This risk can be mitigated by having a thorough understanding of FTC rules and guidelines for advertising. The purpose of the FTC is to regulate advertising in order to protect consumers. The FTC is specifically interested in making sure companies are disclosing that they are paying someone to promote their product or service in a clear way so that consumers are aware when they are being advertised to. The overall premise of the FTC guidelines is explicitly explained on the FTC website:
“The Guides, at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading. An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make.
In addition, the Guides say, if there’s a connection between an endorser and the marketer that consumers would not expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed” (Federal Trade Commission).
These guidelines apply to brands, influencers, agencies, and networks. And not following these rules can lead to steep fines, sometimes reaching tens of thousands of dollars. This punishment could lead to many small businesses going bankrupt, so it is crucial to know and follow the FTC disclosure rules. The Businessese: Influencer Marketing Podcast dedicated an entire episode to explaining the FTC disclosure guidelines. This podcast episode began by providing a simple test that brands and influencers can use when creating disclosures called, “The Mom Test.” When crafting disclosures, picture an older woman, perhaps a grandmother, who isn’t technologically savvy. When this person sees a product promotion on an influencer’s Facebook page, does she understand that the promoter is in a paid relationship with the brand? If the answer is yes, then the promotion most likely follows the FTC’s guidelines. However, if the answer is no, then disclosure needs to be made more clear so that the consumer understands that there is a “material connection” between the influencer and the brand.
What is a material connection? A material connection is any payment, gift or benefit to the influencer that can potentially change how that person talks about a product or service. For example, a material connection can be a payment, a gifted product, a coupon code, or an affiliate relationship (the influencer's cousin is the CEO of the brand they are promoting). If a material connection exists between the influencer and the brand, then consumers need to be aware of this. A few instances that often confuse people are experiences or hosted events. If an influencer is invited to a wine tasting by a winery or invited on a cruise on behalf of a brand, this information needs to be disclosed when the influencer posts information about the wine tasting or cruise.
The FTC outlines three main rules for disclosure:
Some other helpful disclosure tips that are outlined in the Influencer Marketing Podcast episode titled “Disclosure and the FTC” include:
Disclosure guidelines may seem complicated, but they really just come down to one simple idea. If an influencer is related to a brand they are promoting or being paid in some way to tout a product or service, then consumers deserve to know this information. So brands and influencers, don’t try to be sneaky or clever. Be honest and transparent and you will be in the clear.