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Done well, influencer marketing can sway the purchasing decisions of millions by organically incorporating a product or service into a YouTuber’s videos, Instagrammer’s photo, or Snapchatter’s Story in creative and engaging ways; in fact, Sprout Social found that 74% of consumers rely on social media content to make purchasing decisions. As influencer campaigns become more prevalent, however, the U.S. Federal Trade Commission (FTC) has started to closely scrutinize influencer marketing initiatives/content and penalize brands found in violation of advertising regulations.
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Violating FTC regulations regarding fair advertising practices can damage a brand’s reputation and/or result in costly penalties, fines, and legal fees. To avoid an FTC disaster, learn from the influencer campaign mistakes made by the following companies:
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In 2014, Microsoft partnered with YouTube multi-channel network Machinima to promote the new Xbox One gaming console. The campaign enlisted and paid several top gaming influencers to endorse the new console by featuring it for at least 30 seconds in video gaming reviews and commentary.
It was soon found, however, that Machinima failed to ask influencers to disclose the fact that their content was part of a paid advertisement campaign. This violated the FTC guideline that says endorsers are liable if they don’t “clearly and conspicuously” inform audiences that they were paid to promote a product. As a result, the FTC indicted Machinima and later reached a settlement that prohibited the channel from “misrepresenting that paid endorsers in influencer campaigns are independent reviewers” (FTC).
In 2015, the FTC alleged that luxury department store Lord & Taylor violated advertising guidelines by failing to disclose the brand’s influencer campaign. 50 leading Instagram influencers were given $1,000–$4,000 to promote the store’s new dress by posting Instagram content featuring the attire, a tag to Lord & Taylor’s Instagram handle, and the hashtag #DesignLab (Wall Street Journal).
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Lord & Taylor also collaborated with Nylon magazine for a similarly veiled sponsored influencer campaign. Although the campaign was devised by Lord & Taylor with the help of a third-party influencer marketing agency, the FTC declared the department store as the guilty party. In 2016, the two sides reached a settlement that required Lord & Taylor to undergo monitoring to ensure it would not misrepresent paid ads in the future.
Warner Bros. looked to promote its new game, Middle-Earth: Shadow Of Mordor by partnering with Plaid Social (an influencer marketing company) and collaborating with high-profile influencers to create sponsored YouTube videos. PewDiePie and other top YouTubers were paid tens of thousands of dollars by Warner Bros. to produce positive, call-to-action reviews from the game (Vice).
Because the influencer videos weren’t properly disclosed as paid sponsorship, the FTC found the campaign in violation of its guidelines. Although PewDiePie included an advertisement disclosure in the description of his review, the FTC declared it unacceptable since its was added under the “show more” line. A settlement was later reached that banned Warner Bros. from similar campaigns in the future.
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For brands, these cases illustrate the consequences of failing to sufficiently disclose advertisements/promotional content and highlight the importance of effectively communicating with social influencers to ensure all sponsored content adheres to the FTC’s advertising guidelines. Before launching an influencer marketing campaign, brands would be well-advised to learn everything about FTC regulations or work with an agency that has experience developing and launching properly-disclosed influencer campaigns.