Influencer Marketing: Trendy, Effective, and Potentially Deceptive Under Section 5 of the FTC Act

Influencer marketing has become an attractive prospect for companies seeking to advertise to younger generations and social media users.

Today’s consumers have many options to avoid the traditional platforms used by advertisers: streaming music helps consumers avoid radio commercials, streaming television prevents exposure to television commercials, ad blockers help to avoid advertisements online, and upgrade options on media providers such as Hulu, Spotify, and YouTube disable most of the advertising on those platforms. As more consumers are exercising their ability to “turn off” advertisements from their lives, advertisers are perilously trying to adapt.

Here is where the influencer comes in. From the Instagram model to the YouTube star, influencers, or social media users with significant followings on social media, have the unique ability to “influence” their followers. Influencers run the gamut from makeup artists to fitness gurus, from world travelers to gamers. Advertisers have been keen to explore this medium of advertising and are spending millions on influencer marketing each month. Indeed, many influencers can command thousands of dollars per post. 

While influencer marketing may feel like a foreign concept to many, it emerged from the recognizable celebrity endorsement. Social media has made the status of “celebrity” or “public figure” significantly more accessible and those same social media platforms provide a way for influencers to directly engage with their followers. Advertisers, in turn, are happy to provide free products or a sponsorship to influencers in exchange for the influencer featuring the advertiser’s products in their social media posts. For instance, a clothing company may pay an Instagram model to wear their clothing in his social media posts or a video game company may pay a gamer in exchange for reviewing one of their games or DLCs. 

Followers of influencers often aspire to emulate the influencer, and influencers can establish and develop a rapport with their followers that makes them appear trustworthy. The problem with social media marketing, however, is just that—it doesn’t feel like an advertisement, at least not one consumers are familiar with. It doesn’t feel different than an Instagrammer who is simply sharing personal content about her life, product preferences, and other favorite things. Therein lies the problem: that content is an advertisement. And just like other forms of advertisements, it is subject to the FTC and Section 5 of the FTC Act which prohibits unfair and deceptive advertising.

In fact, the FTC has been sending enforcement letters to various influencers for not using proper disclosures, for hiding the proper disclosures in ambiguous hashtags, or for burying the disclosure in a paragraph of hashtags so that a follower is unlikely to ever see it. The FTC has released an endorsement guide and engaged in a Twitter Q&A session about how to avoid deceptive advertising through and by influencers on social media.  

Finally, new and unsettling research has been released that explores the negative repercussions of social media use; these can include unhappiness, addiction, and detrimental effects on self esteem. As many followers devote their time, energy, and resources trying to emulate influencers without realizing the staged nature of the social media posts, social media marketers should, in addition to following the FTC regulatory requirements, consider how misuse of influencer marketing, combined with the power of social media to influence, could serve as a contributing factor to some of the negative impacts of social media.

In the wake of the fallout from the Cambridge Analytica revelations, it’s clearer than ever that it is difficult for adults to wade through fact and fiction online. Children, who make up a significant number of social media users and frequently follow influencers, face an even more challenging task. Further, unethical behavior by companies when exposed can spread like wildfire throughout social media, making the potential to cause serious brand damage within a matter of minutes or hours a real possibility. In sum, disclose, disclose, disclose. It can be as easy as #sponsored, #ad, or #advertisement placed at the beginning of a post.

This issue can be exacerbated by the fact that using influencers takes some control out of the advertisers’ hands by depending on the discretion of the sponsored influencer. Many influencers choose not to disclose, which puts the influencer and the sponsoring brand at risk. It may be worth considering formalizing your arrangements through a contract delineating the requirements for the influencer’s content, including disclosures. 

Influencers can be a powerful tool for entrepreneurs seeking to get their name out there, but make no mistake—sponsored posts on social media are advertisements and the FTC can take action on them as such. The same ethical quandaries inherent in advertising are being presented in a new medium with the potential to cause serious psychological damage to consumers, many of whom are children who cannot easily discern the difference between a recommendation from someone they look up to and an advertisement. These issues can be exacerbated by using non reputable or non compliant influencers who knowingly deceive their followers as opposed to fully disclosing their affiliations.

Like a filtered and Facetuned photo, don’t take influencer marketing at its face value while ignoring the legal, regulatory, and ethical reality behind the social media posts.