The Problem With Influencers and Disclosure
By: Paul Warren
Tags: Influencers, Disclosure, Influencer Marketing, Regulation, Marketing

Yesterday, the Federal Trade Commission (or FTC as the acronym goes) announced that it had settled a suit against Warner Bros. for failing to “adequately disclose” its involvement in an influencer marketing campaign for the game Middle Earth: Shadow of Mordor. To my ears, the term adequate disclosure sounds pretty benign. The reality is people have been getting swindled on an unprecedented scale by brands taking advantage of poorly regulated social marketing platforms, which are only growing in influence and strength.

To frame the issue, influencer marketing is the practice of paying people with large followings on social media and other platforms to promote products. Because of its efficacy and cost efficiency (with $6.50 earned for every $1 spent), it’s growing incredibly fast. Polls indicate somewhere between 60–80% of marketers are planning on increasing their influencer marketing budgets over the next year.

The dark side of this rapidly expanding marketing channel (littered with young stars) is the gaping holes in consumer protection that come with its relative newness and lack of clear regulations.

Disclosures in Descriptions

The Warner Bros. controversy stands out in that it has brings up names going all the way to the top of the influencer food chain. The list includes YouTube’s PewDiePie (real name Felix Kjellberg) whose video for the campaign in question, which can be found here, was watched over 3.7 million times.

The 7-minute clip shows Pewds running around killing Orcs with his signature Let’s-Play antics, occasionally making jokes and shouting. The whole thing is tied up nicely with a quick, “I had a lot of fun playing this game, so, I hope you did as well”. I’m not a huge fan of PewDiePie’s work generally, but all in all a pretty well put together piece for the world’s largest YouTube star.

The issue here is that Kjellberg’s involvement in the promotion, for which he was paid thousands of dollars and given direct instructions on what he could or couldn’t say and show, is only mentioned deep in the description where it’s unlikely to be seen.

The FTC release itself states:

Because Warner Bros. also required other information to be placed in that box, the vast majority of sponsorship disclosures appeared “below the fold,” visible only if consumers clicked on the “Show More” button in the description box. In addition, when influencers posted YouTube videos on Facebook or Twitter, the posting did not include the “Show More” button, making it even less likely that consumers would see the sponsorship disclosures.

To see this in practice, take a look here:

Who Is Harmed

The part which gets to me is that influencers are often watched, followed, and trusted by younger viewers, who may be unlikely to look into whether or not the recommendations they get from their idols are unbiased or wholly genuine.

According to Variety, 8 of the top 10 stars by measure of influence with teens were YouTubers. Research has also shown that recommendations from influencers are trusted nearly as much as those from real friends, with 40% of people in one study saying they made a purchase online after seeing it used by influencers on social media.

Put simply, there is a large, impressionable audience out there that is likely unaware of the fact that content they are watching is closer to an advertisement than a real endorsement. What’s more, they’re highly likely to make a purchase based on potentially misleading videos and posts. These people need to be protected.

The FTC Won’t Let Me Be

Before I get too preachy, it’s not that Warner Bros., or any other company for that matter, shouldn’t be able to promote their products through people who have built an audience in their target market. They should. It just needs to be communicated clearly.

In the FTC report, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, states, “Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches … Companies like Warner Brothers need to be straight with consumers in their online ad campaigns.”

In the case of video, it’s only logical that such disclosures would be made in the videos themselves — ideally both stated and visually marked.

Disclosures also need to be in a place where they won’t be missed easily. This means right at the beginning in short-form video and repeatedly in a continuous video stream rather than hidden somewhere below.

It’s obviously the right thing to do.

Is Disclosure Really So Bad

At the end of last year, the FTC introduced new guidelines and an enforcement policy which signaled that their intent to take this problem seriously. This new report makes it clear that brands (and the ad agencies who work for them) have a responsibility to educate the influencers they use in campaigns on good disclosure practices and ensure that the content is compliant.

What isn’t highlighted by the greater policing on the issue (likely because it’s my own personal opinion and isn’t yet backed by much hard data) is the potential opportunity in disclosure. The thing is, many of these online personalities and channels have been built on a rawer personal connection with their audience. This authentic connection espouses a kind of trust. In this new media-scape, transparency might well prove to increase rather than decrease conversions … but maybe I’m just being naive.

One Final Message

Finally, to the influencers out there, here are a couple reasons you should always be straightforward and open about where the products you’re reviewing or endorsing are coming from:

In many ways, your value as an influencer is built on trust as much as followers or subscribers (okay, maybe not equally, but still). It’s the law.

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