Why the FTC’s Influencer Disclosure Policy Is Completely Off Target

Why the FTC’s Influencer Disclosure Policy Is Completely Off Target

Author: Gil Eyal / Source: Entrepreneur It appears that some of the world’s most prominent celebrities have found themselves in hot water

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Why the FTC's Influencer Disclosure Policy Is Completely Off Target

It appears that some of the world’s most prominent celebrities have found themselves in hot water after failing to disclose sponsored relationships with brands on their Instagram posts. The Federal Trade Commission sent letters to 45 major celebrities and social influencers claiming as such, and is threatening to take action against them.

The letters arrived just as many of these celebrities were involved in one of the biggest fiascos in music event history. With white sand beaches, five-star villas and supermodel attendees such as Bella Hadid and Emily Ratajkowski, the Fyre Festival organizers sold an uber-luxe fantasy — contradicted by the eventual images of the FEMA-like tents and soggy sandwich boxes that were reality. The marketing campaign, which featured several sponsored Instagram posts from celebrity influencers (paid as much as $250,000 for one post alone, according to reports) has resulted in a class-action lawsuit that the FTC labelled as a direct violation of its disclosure guidelines.

In the letter described earlier, the FTC targeted 45 celebrity influencers, including Jennifer Lopez, Lindsay Lohan and Kourtney Kardashian, and asked for “clear and conspicuous” messaging in an effort to stop misleading consumers. Paid posts must be mentioned in the first three lines of the caption; cryptically thanking the brand won’t cut it, nor will burying #sp amongst rows of hashtags.

With influencer marketing claiming a $2 billion market share in 2016, the number of brands and companies activating influencers is on the rise. Press reports of influencers failing to disclose paid posts have been rife, and it’s clear the FTC felt compelled to act. Establishing these guidelines is a start, but there are some serious flaws in its strategy for pursuing macro-influencers with mammoth followings.

Social media users are savvy. They know that Kim Kardashian West probably doesn’t wear a Waist Gang Society Waist Trainer, just like LeBron doesn’t drive a Kia. And she doesn’t take SugarBearHair Vitamins. At least, not for free. These big names don’t praise products without being compensated, and their fans have long stopped believing that they are promoting anything just for the heck of it.

You have to wonder whether including a proper disclosure would have stopped anyone from spending money on tickets to the Fyre Festival. Despite claims in the media that this could signal the death of influencer marketing, you’d be hard struck to find any attendees who claim they would not have bought one if only those celebrities included a disclosure that they were paid to endorse the event. The fans knew they were being compensated, and these disclosures…

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