How the FTC’s influencer marketing warning may disrupt brand and creator deals

When a brand tasks an influencer with creating sponsored content, the goal is generally for that social media post to resemble the creator’s unsponsored content as closely as possible. This is especially true when it comes to short-form video, which consumers will often instantly scroll past if they detect any whiff of blatant advertising. A new warning from the Federal Trade Commission, however, is throwing a wrench in that widely embraced model of influencer marketing. The regulatory body last week announced it had distributed warning letters to a dozen health and nutrition influencers and two trade groups that had sponsored their social media content promoting the safety of aspartame: American Beverage Association—whose members include Coca-Cola Co. and PepsiCo—and the Canadian Sugar Institute. Check out the latest Ad Age events and award programs Nearly all of these creators had disclosed that their Instagram Reels and TikTok videos were sponsored, whether through the platforms’ built-in “paid partnership” labels or hashtags such as #ad or #sponsored. But, as the FTC wrote in its letters to the influencers, those disclosures were not “clear and conspicuous” enough to fulfill the revised endorsement guides that the organization updated in June. To adhere to these new guidelines, influencers must indicate their content is sponsored in both the “visual and audible portions” of a video—or, put more simply, they must directly state the video is sponsored, and the video itself must have some indication that it’s sponsored, whether through on-screen text or another visual element. (The American Beverage Association said in a statement that it had taken “proactive, prudent and meticulous steps to be transparent about our partnership with credible experts who spoke to the science behind the safety of aspartame and the FDA’s determination that it is safe.”) View this post on Instagram A post shared by Nichole Andrews, RDN | The Oncology Dietitian (@oncology.nutrition.rd) Though these guidelines have technically been in place since June, the FTC hadn’t strictly enforced them prior to issuing these warnings. Influencer marketers are concerned about the implications the FTC’s more stringent regulation of sponsored content could have for the future of traditional brand deals. Read more: FTC issues influencer marketing warnings “I think the reason why influencer marketing has been so powerful is not only because we really gravitate towards individuals, but it’s kind of blended in with organic content,” said Lindsey Gamble, associate director of influencer innovation at influencer marketing platform Mavrck. “That's the whole reason why TikTok has kind of become the hotspot of influencer marketing. When you watch a video, it may have that paid partnership label, but if you were to strip that away, it would be kind of hard to decipher whether it's a sponsored piece of content or just created organically.” For the past few years, that blurring of the lines when it comes to sponsored videos posted to an influencer’s account has largely been intentional. After all, TikTok itself has repeatedly advised brands to make their videos blend seamlessly into those of TikTok users with its mantra, “Don’t make ads, make TikToks.” Though that guidance may have initially applied to brands’ own TikTok videos, the mindset has bled into their influencer partnerships, too, and made brands eager to have creators’ sponsored content look as far from an advertisement as possible. To maintain that illusion of creators’ sponsored video not actually being an advertisement, some brands will even go as far as requesting a creator doesn’t include hashtags such as #ad or #sponsored on the video, or not use the “paid partnership” label, according to videos from some TikTok influencers, including a recent one from lawyer and lifestyle creator Grace Ann. @lipsticksndlattes Trust i will be adding Esq. to the end of that email! #fyp #attorney #influencerattorney #ftc #ftclaws ♬ original sound - Meme page In a comment on the video, she elaborated, “Plenty of brands ask either to not disclose or phrase it in a way that doesn’t actually comply with the law!” Kristen Bousquet, a creator monetization coach, has made several TikTok videos outlining the FTC’s endorsement guidelines for influencers unfamiliar with the rules entirely or confused by the legal jargon within them. And, without fail, she receives at least one comment on each video from a creator saying they’ve worked with a brand that asked them not to include any sponsorship disclosures in their videos’ captions, she said. “Brands don’t want videos to look sponsored, because, in 95% of cases, sponsored content does not perform as well as regular, organic content,” Bousquet said. “And it’s tough, because creators feel like they’re in a position where they’re afraid to push back to the brand and be like, ‘No, I need that [disclosure] in there,’ because they don’t want the brand to get pissed off and cancel the partnership because the creator is being ‘difficult to work with.’” @kbousq FTC GUIDELINES 101 📝 IF YOU WORK WITH BRANDS, YOU NEED TO KNOW THESE THINGS BY HEART 👇 When you have a financial, employment, personal or family relationship with the brand - GIFTED OR PAID - It needs to be disclosed. Do you FULLY understand FTC guidelines? #influencertips #creatortips101 #contentstrategytips ♬ original sound - Kristen 🪩 Creator Biz Coach Ambiguous sponsorship disclosures are also common in the world of product gifting and seeding, where influencers typically don’t label their posts as sponsored because money technically isn’t trading hands. And brands often prefer it that way. In fact, influencer marketing agencies such as Collectively and Obviously have recently seen an uptick in client requests to send out free products to influencers en masse ahead of the holidays in hopes of having those products featured in creators’ “unsponsored” holiday gift guides. “[Product seeding] was really popular several years ago, but I feel like then we swung into, ‘Okay, we're going to collaborate very closely with influencers, give them a very specific creative brief, and then really be all over the content approval process,” said Mae Karwowski, founder and CEO of Obviously. “But [brands] are seeing the content that’s driving sales and making their products go viral is when creators just organically posting if they love the product [they’re gifted] ... They want to get into gift guides and be in more places without it necessarily being a completely sponsored post.” Per the FTC’s guidelines, however, “financial relationships aren’t limited to money,” and influencers must clearly disclose any “material connection” to a brand—including the brand giving them “free or discounted products or services.” @angelaypark Holiday Gift Guide!! 🎁♥️ Products I recommend for the beauty lovers in your life: MAKEUP @Dior Addict Lipstick @YSL Beauty Rouge Volupté Shine HAIRCARE @ghd Platinum+ Flat Iron @dyson_usa Supersonic Hair Dryer FRAGRANCE @Kayali @maisonmargielafragrances SKINCARE @Clarins USA Double Serum @Lancôme Rénergie H.C.F. Triple Serum @Guerlain Youth Watery Oil @Tatcha - creams in general. my favorite is the Indigo Overnight Repair @Guerlain Honey Treatment Day/Night Cream(s) @Charlotte Tilbury Magic Eye Rescue #holidaygiftguide #sephorasale #holidaymakeup #makeupgift #diorbeautylovers #giftedbymargielafragrances #replicabythefireplace #dyson ♬ Cafe-style sophisticated jazz piano band 9 minutes(871496) - ricca Though the FTC updated its guidelines in June to include the rule that influencers disclose sponsorships in both the visual and audio elements of a TikTok video or Instagram Reel, few brands have required creators to include overlaid text in their sponsored videos. Some brands have even pushed back against the requirement for creators to verbally acknowledge their post is sponsored, said Jennifer Quigley-Jones, founder and CEO of influencer marketing agency Digital Voices. That resistance to the FTC guidelines is particularly strong on TikTok, where creators’ sponsored content could just be set against music or a trending sound and a verbal ad disclosure would be jarring and bring the video closer to a blatant advertisement, Quigley-Jones said. Since the FTC’s June update to its endorsement guidelines, the agency has frequently had to debate with clients about the necessity of including visual and verbal disclosures in their influencer partners’ video content, she said. Check out more influencer marketing news here Most of their clients have heeded the agency’s advice and added the necessary disclosures to avoid legal issues, but “one brand we worked with agreed to a contractual amendment where they agreed to take on any liability,” Quigley-Jones said. “They were like, ‘We'll give you an exemption because we know we’ve pushed back on this level of regulation,’” she said. “It was such an interesting negotiation, because if a brand gets in trouble for a campaign, it could reflect badly on the agency. So, when a brand is reluctant, we normally insist on it, but we got to a stage with them where they were like, ‘We don't want the content going out looking like this at all.’” That brand, in particular, was concerned the sponsored post would “look too different from [the influencer’s] normal content” and perform poorly as a result, Quigley-Jones added. And that concern may be a valid one. Over the past two years, several alcohol brands have seen a sharp drop in engagement on sponsored Instagram posts after the Distilled Spirits Council of the United States—a trade association whose members include Campari Group, Diageo and Constellation Brands—updated its responsible advertising code to require influencers to include “social responsibility statements” at the beginning of their captions of any sponsored post, said Permele Doyle, founder and president of influencer marketing agency Billion Dollar Boy. “Now, we have to account for a big drop in the engagement on creator content when working with alcohol brands,” she said. “And [the disclosure] isn’t actually even in the video.” Brands such as Le Creuset, though, aren’t anticipating any significant changes to their influencer marketing strategy in light of the FTC’s seemingly stricter enforcement of its endorsement guidelines. Much of Le Cruset’s content made by creators is posted on the cookware brand’s own social media channels, rather than the influencers’ accounts, said Rachel Coffey, the brand’s manager of social media marketing—and influencer content shared to a brand’s channel isn’t subjected to the same endorsement guidelines as a sponsored post would be. @lecreuset Cheesy, creamy, and fluffy: @whatsgabycookin’s White Cheddar Mashed Potatoes are a Thanksgiving crowd-pleaser. 🦃 Use your #LeCreuset Dutch Oven to make the potatoes, then bring the pot straight to the table to serve – it looks beautiful, and the enameled cast iron retains heat so it will keep the potatoes warm enough for a second helping! Ingredients: 3 pounds Yukon Gold potatoes ½ cup heavy cream or whole milk, plus more if needed, warmed 3 tablespoons unsalted butter, warmed ½ lb shredded white cheddar Kosher salt and freshly cracked black pepper, to taste Freshly chopped chives Instructions: 1. Peel and dice potatoes, making sure all are in about 1-inch cubes. 2. Place in a large pot or Dutch oven and cover with water. Bring to a boil over medium-high heat and then reduce heat to medium low to maintain a rolling boil. Cook until potatoes are fork tender and you can easily pierce them with a fork when touched. 3. Remove the potatoes from the heat and drain off the water. Place the diced potatoes through a ricer and then place back into the warm pot. Alternatively, if you don't have a ricer, mash the potatoes with a masher and place back into the warm pot 4. Add the warm cream, butter, cheddar and stir to incorporate. Season with salt and pepper and fold in the chopped chives before serving. Add more heavy cream or chicken stock to thin out / make smooth as needed. #lecreusettiktok #foodtok #thanksgiving #friendsgiving #thanksgivingrecipe #mashedpotatoes ♬ original sound - Le Creuset According to the FTC’s updated endorsement guides, advertisers are potentially liable if the influencers whose content they’re sponsoring don’t adhere to the FTC’s disclosure rules and the brand doesn’t “monitor their endorsers’ compliance” and “take action sufficient to remedy non-compliance and prevent future non-compliance,” and would be forced to pay up to $50,120 in civil penalties per violation, according to the FTC’s new round of warning letters. But creators don’t need to include on-screen or verbal disclosures if their content is posted on a brand’s social media account. After all, consumers expect a brand’s social media content to be a promotion of that brand. The more lenient rules around influencer content on a brand’s social account could potentially spur brands to partner with creators on posts that will only be posted to the brand’s account in order to avoid including the on-screen and verbal disclosures that would stick out like a sore thumb on influencers’ accounts, Gamble said. Brands may choose to “start working with creators more on user-generated content … and just run that asset as paid media” or on the brand’s owned social channels, he said. Over the past year, a number of brands have already been moving in this direction, or tapping creators to produce video content for the brand’s social accounts rather than sponsoring a post on an influencer’s account, both Gamble and Quigley-Jones pointed out. Agencies such as Edelman have introduced offerings to connect clients to user-generated content (a term the industry has adopted despite it being more aptly described as “creator-generated content”). Others, such as TBWA\Chiat\Day New York have seen this type of content “being more seriously considered” by clients, as those posts typically perform better than content created by the brand itself, said Lesley Parks, the agency’s executive strategy director of social and content. For creators, the need to make their brand sponsors more conspicuous may drive them to “take fewer brand deals or be a little more cautious about the brand deals they do,” to avoid having their social media accounts filled with videos that closely resemble advertisements, Gamble said. “Creators want to balance organic content with sponsored content, because if you’re just doing sponsored content it’s like watching a show with back-to-back commercials—you probably won’t want to watch it,” he said. Additionally, influencers may increasingly seek out long-term partnerships with one or two brands rather than partnering with several on just a few posts, he said. In that scenario, though the sponsorship disclosures would be more glaring, the fact that the creator intentionally chose to partner with that single brand could emphasize to their audience that “this is a brand, a product or service that the creator actually uses,” Gamble added. “I think this is going to cause brands to be more diligent with their influencer campaigns,” he said. “There’s a lot of focus around the creative strategy and the creative brief, but I would say the most important aspect of influencer marketing is making sure that you have those disclosures and know the rules, whether it's yourself as a brand or your agency partners.”

How the FTC’s influencer marketing warning may disrupt brand and creator deals

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