Regular Instagram users post pictures of products they love all the time, whether it’s an entree from the bistro down the street, a new shade of nail polish or a unicorn frappucino.
Most users also know that many high-profile “influencers” occasionally post promotional images for which they receive payment. Some Instagramers treat their accounts as businesses, while others are celebrities or internet personalities who treat such endorsements as a side line. In either case, such posts are generally indicated with hashtags such as #ad or #sponsored.
The Federal Trade Commission, however, has recently taken issue with how such social media personalities disclose their relationship with brands.
The FTC recently sent letters to 90 influencers and marketers, reminding them that they need to clearly disclose any “material connection” between the endorser and the brand being endorsed. This not only includes monetary compensation, but also gifts and free products sent for the influencer to try.
This is all fairly typical. But the trickier portion of the letter is the one that attempted to clarify how to make such a disclosure “clear” and “conspicuous.” According to the FTC, since mobile Instagram users typically see only the first three lines of a post, the disclosure needs to appear in those first three lines. A hashtag included in a longer list of hashtags is also not enough, since “readers may just skip over them, especially where they appear at the end of a long post.” The FTC also took issue with tags like #sp (short for “sponsored”) or #partner, arguing that they may not be sufficiently clear to all followers.
I have no problem with the idea that influencers should disclose paid promotion. This practice has long been standard on websites that host sponsored content, from personal blogs to big-name media companies, and it makes sense to extend it to social media too. But requiring such disclosure in the first three lines of an Instagram post reaches an unnecessary level of micromanagement.
The FTC did not come to this issue without some cause. There have been high-profile cases in which retailers paid influencers to promote their products without disclosing that such posts were ads, including a Lord & Taylor campaign in 2015. The Kardashians, who regularly promote products on their Instagram and other social media accounts, drew the disapproval of the consumer advocacy group Truth in Advertising last summer; the group said it would notify the FTC of the “plethora” of promotional posts that were not clearly labeled as ads. (Kim Kardashian West also discovered the hard way that when the brand you praise is a pharmaceutical, the Food and Drug Administration can get involved, prompting a disclosure much longer than three lines.)
But what about Instagram users who include “#ad” in good faith, but put it at the end of a post instead of the beginning?
Or take this problem a step farther. Say a well-known musician has an ongoing endorsement relationship with Yamaha, and the company sends the musician a keyboard. If the musician posts an image to Instagram in which that keyboard (and its logo) appears, but the brand is not mentioned in the content otherwise, does the post require a disclosure?
For comparison, the FTC has said that TV product placement does not require a disclosure; if everyone on the crime drama “Elementary” happens to be using Dell laptops with nary a MacBook in sight, savvy viewers can draw their own conclusions. So if a post that is not about a brand includes an image of that brand for which the influencer is compensated, does the FTC believe it has greater authority over Instagram or YouTube than it does over TV broadcasts? If so, I’d like to know where such authority comes from.
Product placement in broadcast and cable television and broadcast radio does fall under the purview of the Federal Communications Commission, for what it’s worth. Such “embedded advertising” often prompts an end-of-show mention indicating “promotional consideration provided by” the brand or brands involved, a disclosure method familiar to reality and game show fans in particular. But the FCC has not attempted to extend its jurisdiction and rules to social media, leaving that turf to the FTC, which last formally updated its rules in 2010.
Though fairly recent, those rules are hardly clear. What if an influencer or celebrity appears in fashion without identifying it? Say Beyonce posts a picture of herself on Instagram wearing a beautiful dress she received at no charge to an event, but leaves it to interested fans to discover the designer for themselves. Does she still have to say something in the first three lines of her message? Why treat Beyonce’s online post differently from all the photos the paparazzi will take of her wearing the same dress, which will appear in publications all over the world?
Celebrities and influencers should acknowledge when they have been paid to promote a brand. But requiring such a disclosure in the first three lines of an Instagram post is impractical if you want influencers to retain the audiences they influence. So while I understand the FTC staff’s motives and agree with the principle, they are going to need to be more realistic about what influencers can accomplish.
Until now, the FTC has mainly concerned itself with the brands paying for such advertising, but the recent letters directly to Instagramers suggests this may be changing. That could leave influencers in a tricky position and may make some of them less eager to take on endorsement deals in the first place. Businesses will certainly try to avoid this outcome; brands reportedly spend more than $255 million per month on Instagram influencer marketing alone, which suggests that such marketing has demonstrated a strong return.
Newer social media channels pose even more of a challenge. Instagram’s “Stories” feature, designed to compete with Snapchat, does not include text except as a brief overlay to an image or short video, so there is no place to include a hashtag. In addition, the content disappears after 24 hours. By its nature, this feature is hard to track and could serve as a backdoor for unlabeled endorsements.
Some platforms are trying to make it easier for users to play by the rules where sponsored content is concerned. Consider YouTube, a platform where branded content and product placement have long been part of the landscape. While many users disclose an endorsement relationship in their video’s “outro,” or end section, the FTC frowns on this practice and suggests that a disclosure at the beginning – or, better yet, throughout – would be preferable. However, YouTube offers a checkbox when uploading to indicate a “video contains paid promotion,” and offers additional (optional) features such as automatically adding a note that says “includes paid promotion” to the corner of the video. These options may help creators follow the rules, though I suspect YouTube will eventually want a cut of its own when it is so easy to identify paid or promotional content.
Facebook, which owns Instagram, recently rolled out several changes to the way it deals with branded content, though for now these tools are meant for influencers and celebrities with verified pages, not everyday users. It is possible such tools may make their way to Instagram eventually. The FTC may have better luck reaching out to Facebook and other social media platforms directly.
An overreaching rule that gets struck down accomplishes no more than no rule at all. Maybe the FTC knows this. The language in its letter to Instagram users was quite polite and nonthreatening, which is always pleasantly surprising when a government agency is involved. Ultimately, reasonable rules that protect an audience from manipulation while not destroying the entertainment value of the content would be something we could all “like.”
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book
The High Achiever’s Guide To Wealth.
Posted by Larry M. Elkin, CPA, CFP®
#Ad or just #Breakfast? Photo by Chiara Cremaschi.
Regular Instagram users post pictures of products they love all the time, whether it’s an entree from the bistro down the street, a new shade of nail polish or a unicorn frappucino.
Most users also know that many high-profile “influencers” occasionally post promotional images for which they receive payment. Some Instagramers treat their accounts as businesses, while others are celebrities or internet personalities who treat such endorsements as a side line. In either case, such posts are generally indicated with hashtags such as #ad or #sponsored.
The Federal Trade Commission, however, has recently taken issue with how such social media personalities disclose their relationship with brands.
The FTC recently sent letters to 90 influencers and marketers, reminding them that they need to clearly disclose any “material connection” between the endorser and the brand being endorsed. This not only includes monetary compensation, but also gifts and free products sent for the influencer to try.
This is all fairly typical. But the trickier portion of the letter is the one that attempted to clarify how to make such a disclosure “clear” and “conspicuous.” According to the FTC, since mobile Instagram users typically see only the first three lines of a post, the disclosure needs to appear in those first three lines. A hashtag included in a longer list of hashtags is also not enough, since “readers may just skip over them, especially where they appear at the end of a long post.” The FTC also took issue with tags like #sp (short for “sponsored”) or #partner, arguing that they may not be sufficiently clear to all followers.
I have no problem with the idea that influencers should disclose paid promotion. This practice has long been standard on websites that host sponsored content, from personal blogs to big-name media companies, and it makes sense to extend it to social media too. But requiring such disclosure in the first three lines of an Instagram post reaches an unnecessary level of micromanagement.
The FTC did not come to this issue without some cause. There have been high-profile cases in which retailers paid influencers to promote their products without disclosing that such posts were ads, including a Lord & Taylor campaign in 2015. The Kardashians, who regularly promote products on their Instagram and other social media accounts, drew the disapproval of the consumer advocacy group Truth in Advertising last summer; the group said it would notify the FTC of the “plethora” of promotional posts that were not clearly labeled as ads. (Kim Kardashian West also discovered the hard way that when the brand you praise is a pharmaceutical, the Food and Drug Administration can get involved, prompting a disclosure much longer than three lines.)
But what about Instagram users who include “#ad” in good faith, but put it at the end of a post instead of the beginning?
Or take this problem a step farther. Say a well-known musician has an ongoing endorsement relationship with Yamaha, and the company sends the musician a keyboard. If the musician posts an image to Instagram in which that keyboard (and its logo) appears, but the brand is not mentioned in the content otherwise, does the post require a disclosure?
For comparison, the FTC has said that TV product placement does not require a disclosure; if everyone on the crime drama “Elementary” happens to be using Dell laptops with nary a MacBook in sight, savvy viewers can draw their own conclusions. So if a post that is not about a brand includes an image of that brand for which the influencer is compensated, does the FTC believe it has greater authority over Instagram or YouTube than it does over TV broadcasts? If so, I’d like to know where such authority comes from.
Product placement in broadcast and cable television and broadcast radio does fall under the purview of the Federal Communications Commission, for what it’s worth. Such “embedded advertising” often prompts an end-of-show mention indicating “promotional consideration provided by” the brand or brands involved, a disclosure method familiar to reality and game show fans in particular. But the FCC has not attempted to extend its jurisdiction and rules to social media, leaving that turf to the FTC, which last formally updated its rules in 2010.
Though fairly recent, those rules are hardly clear. What if an influencer or celebrity appears in fashion without identifying it? Say Beyonce posts a picture of herself on Instagram wearing a beautiful dress she received at no charge to an event, but leaves it to interested fans to discover the designer for themselves. Does she still have to say something in the first three lines of her message? Why treat Beyonce’s online post differently from all the photos the paparazzi will take of her wearing the same dress, which will appear in publications all over the world?
Celebrities and influencers should acknowledge when they have been paid to promote a brand. But requiring such a disclosure in the first three lines of an Instagram post is impractical if you want influencers to retain the audiences they influence. So while I understand the FTC staff’s motives and agree with the principle, they are going to need to be more realistic about what influencers can accomplish.
Until now, the FTC has mainly concerned itself with the brands paying for such advertising, but the recent letters directly to Instagramers suggests this may be changing. That could leave influencers in a tricky position and may make some of them less eager to take on endorsement deals in the first place. Businesses will certainly try to avoid this outcome; brands reportedly spend more than $255 million per month on Instagram influencer marketing alone, which suggests that such marketing has demonstrated a strong return.
Newer social media channels pose even more of a challenge. Instagram’s “Stories” feature, designed to compete with Snapchat, does not include text except as a brief overlay to an image or short video, so there is no place to include a hashtag. In addition, the content disappears after 24 hours. By its nature, this feature is hard to track and could serve as a backdoor for unlabeled endorsements.
Some platforms are trying to make it easier for users to play by the rules where sponsored content is concerned. Consider YouTube, a platform where branded content and product placement have long been part of the landscape. While many users disclose an endorsement relationship in their video’s “outro,” or end section, the FTC frowns on this practice and suggests that a disclosure at the beginning – or, better yet, throughout – would be preferable. However, YouTube offers a checkbox when uploading to indicate a “video contains paid promotion,” and offers additional (optional) features such as automatically adding a note that says “includes paid promotion” to the corner of the video. These options may help creators follow the rules, though I suspect YouTube will eventually want a cut of its own when it is so easy to identify paid or promotional content.
Facebook, which owns Instagram, recently rolled out several changes to the way it deals with branded content, though for now these tools are meant for influencers and celebrities with verified pages, not everyday users. It is possible such tools may make their way to Instagram eventually. The FTC may have better luck reaching out to Facebook and other social media platforms directly.
An overreaching rule that gets struck down accomplishes no more than no rule at all. Maybe the FTC knows this. The language in its letter to Instagram users was quite polite and nonthreatening, which is always pleasantly surprising when a government agency is involved. Ultimately, reasonable rules that protect an audience from manipulation while not destroying the entertainment value of the content would be something we could all “like.”
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