The rise of digital advertising in the 2010s provided more and more opportunities for marketers to use innovative methods to create, format and deliver targeted messages. But the confluence of social media and digital advertising has created two new problems in advertising law: the use of influencers for marketing and the ownership of native advertising.
Leveraging the popularity and credibility of athletes and celebrities to market a product or brand has long been part of advertising, but the popularity of social media has enabled a new generation of celebrities and ordinary people with strong personalities. presence on social networks to market to consumers. The other issue, native advertising, which is paid content that looks like news, feature articles, product reviews, or whatever material surrounds it, has also grown in popularity as consumers have moved online and so has media spending.
The Federal Trade Commission (FTC) and the National Advertising Division (NAD) of the BBB’s National Programs provided advice on these emerging issues in the 2010s. The “aughts” were NAD’s fifth decade of advertising work. advertising law, following the creation of the division in 1971.
Throughout the 2010s, NAD shifted its surveillance efforts toward native advertising, surveying major advertisers and media platforms to provide advice on when disclosure was required that content was advertising. NAD’s first case was about advertising for Qualcomm, the maker of microchips used in electronic devices, which sponsored a series of articles called “What’s Inside” on Mashable.com. In enforcing the FTC’s deceptively formatted advertising guidelines, NAD felt that “consumers can be misled when an advertiser delivers a commercial message without revealing that it is the author of the message, because the content sponsored can convey an explicit or implicit message about a product, the advantages of using the product, or the disadvantages of a competing product.
Additionally, NAD reviewed the ad for American Express and explained that when linking consumers to advertising content, advertisers must be transparent that the linked content is advertising.
Social media influencers
As part of its watch program, NAD also took issue with social media influencers who did not disclose material ties to the brands that engaged them.
For example, NAD reviewed the advertisement for Fit Tea LLC and social media endorsements by Kourtney Kardashian, Khloe Kardashian and Kylie Jenner. NAD questioned whether the important links between the endorsers and the product had been adequately disclosed to consumers.
As NAD noted in its decision, when the author of a social media post expresses a personal opinion about how much he or she likes a product or how often they use a product, consumers can not be able to determine whether the post is a paid endorsement or whether it is an unsolicited recommendation made without any payment or other compensation. This is why the disclosure of hard links is so important.
Well-known companies came under scrutiny by the FTC in the 2010s when they failed to apply accepted principles of advertising law when advertising in new formats. For example, the 2015 FTC Rules with Lord & Taylor was aimed at both native advertising and influencers.
The control began when Lord & Taylor launched an advertising campaign for a clothing line featuring a cashmere dress. The marketing plan included social media with Lord & Taylor branded blog posts, photos, video downloads, native advertising editorials in online fashion magazines and the use of ‘fashion influencers’ recruited for their style and subscriber base on social media platforms.
Lord & Taylor donated the dress to several fashion influencers who were paid to post photos of themselves during a specific weekend wearing the dress and contractually required the influencers to mention the company using the designation “@lordandtaylor” and include the campaign hashtag “#DesignLab” in the photo caption. Additionally, Lord & Taylor representatives pre-approved each of the Instagram posts to ensure that the required hashtag and proper designation was used and paid for for a post about the new collection that appeared on the Nylon Magazine website and for a post on Nylon’s Instagram account.
The FTC complaint alleged that Lord & Taylor did not clearly disclose that the Instagram images and captions were part of a paid advertising campaign to promote the new collection and that influencers were not impartial. The FTC consent agreement prohibited Lord & Taylor from falsely claiming that an endorser of a product is independent and that paid commercial advertising is a statement or opinion of an independent publisher or source or goal. In addition, the regulations required Lord & Taylor to clearly and conspicuously disclose when there is a material connection between Lord & Taylor and the endorsers.
With many innovative new marketing practices, unscrupulous actors are finding ways to smear new practices by engaging in illegal contacts. The FTC action against Devumi, LLC, is a great example. The FTC alleged that Devumi and its owner and CEO sold false indicators of social media influence, including fake followers, followers, views and likes to users of social media platforms such as LinkedIn, Twitter, YouTube, Pinterest and others to improve their social media. presence. The business went bankrupt, but the owner was ordered to pay $ 2.5 million, the amount he received from the business.
In addition, the FTC concluded a settlement agreement with skin care company Sunday Riley Modern Skincare and its owner resolving allegations that company directors and employees wrote reviews for company products using fake accounts created to hide their identities .
The accuracy of claims, legitimacy and transparency of followers, likes, clicks, and other forms of engagement are not only important to individual brands, but also critical to the integrity of the broader digital marketplace.
New and updated guides
NAD was particularly able to address some of these issues in the early cases which guided advertisers on the rules of the road in the new digital landscape. The NAD cases were followed by enforcement action from the FTC as well as the release of policy statements and targeted business guidance. When it comes to influencers, the FTC has updated its approval guides and provided layers of commercial orientation on influencer marketing. Regarding native advertising, the FTC published a Deceptive Format Advertising Enforcement Policy Statement and provided commercial orientation on native advertising. Competitors began to challenge the use of these new practices at NAD and, in turn, NAD applied the new FTC guidelines to resolve these cases. As a result, self-regulation of advertising has broadened the impact of the FTC’s efforts. By working in tandem, NAD and the FTC have been able to help brands increase transparency in digital marketing and work towards a more trusted market for consumers.