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Challenges in Influencer Marketing, Native Advertising and Online Reviews

Influencer marketing, native advertising and online reviews have become popular marketing tools for many companies given the popularity of social media.  To address consumer protection concerns relating to the use of such endorsements, the FTC has issued guidelines.  With the popularity of social media and marketers’ reliance on this form of advertising, it is important that companies review and implement these guidelines into their online marketing.  Notably, the guidelines require that endorsements reflect the honest opinion of the endorser, that the endorsements are not misleading, that the endorsements are not used to make a claim that the product’s marketer could not legally make, and that if there is a connection between an endorser and the marketer that consumers would not expect and would affect how consumers evaluate the endorsement, that connection should be disclosed.

On December 6th, the American Bar Association held a conference call to discuss the unique legal and compliance challenges that exist when using such marketing methods, and included helpful guidance from the FTC, as well as practical tips for in-house counsel.  Among the guidance provided on the call, were the helpful tips set forth below.

When considering content that is posted by influencers, the FTC views that anyone that influences the content is responsible, which can include the brand, the advertising agency, the publisher and others who may be involved with the content.  The FTC expects companies to ensure that they are doing three main things when they deal with influencers: 1) have a robust training program to ensure that their influencers make all necessary disclosures when posting content; 2) have a monitoring function to look at the content posted by influencers to make sure that the necessary disclosures are included in the content; and 3) have enforcement procedures so that influencers are required to fix problems in their content if the brand sees that there is an issue.

When it comes to using influencers, native advertising and online reviews, it is important that companies make the proper disclosures so that consumers are not misled.  While the FTC has a strong preference for words such as ad, advertisement or paid, other words such as sponsored or brand name partner could be acceptable as well, but should be used with caution.  Companies should remember that all disclosures need to be above the fold so consumers do not need to scroll down on a page to see the disclosure.  Video content needs to have the necessary disclosure right in the beginning in written format.  Content that is directed towards children needs to have disclosures in audio and video format in a way that is even more clear.  Companies also need to be sure that the disclosures that are made travel with the content, which can be challenging when third parties repost content on other platforms and when videos go viral. 

While implementing the necessary disclosures can be challenging for companies, it is important for companies to understand and follow through on the necessary requirements.

A Five Point Compliance Plan was recommended:

  1. Have an internal policy;
  2. Make sure the company’s marketing team is trained on the policy and that they can then educate whatever agencies they may use on the policy;
  3. Put the policy into practice ensuring that the disclosure guidelines are being followed;
  4. Once the post is published, have the marketing team monitor and audit the posts;
  5. Enforcement – If posts need to be modified or taken down, they should be and if a particular influencer does not follow the company policy, they should not be used again. 

Moreover, some helpful tips in negotiation agreements with influencers were mentioned.  For instance, it is important that companies have approval rights over the content that is posted by influencers and that companies request a right to have content taken down if it does not comply with the company’s policy.  Often this would be the only way that a company can have content taken down as the company does not control the site that the content is posted on.  Another helpful tip in negotiating the agreement with influencers is that only a portion of the payment should be paid prior to the post going live and the remainder should be paid after the company knows the influencer followed the company’s policy.  It is also important to have a morals clause in the agreement, as the company will need recourse if something happens with the influencer that puts the company in a bad light.  Additionally, since many influencers are paid significant amounts of money for their posts, companies may want to consider putting guarantees in the agreements with the influencers to ensure that the company gets the amount of views/shares/likes, etc. that they planned to get.

TAKEAWAY: Influencer marketing, native advertising and online reviews are popular marketing tools that can prove to be very beneficial to companies who use these marketing methods; however, these marketing methods have unique challenges and companies need to ensure that when using such marketing methods they are cognizant of the FTC’s guidelines regarding the use of endorsements and testimonials, that all required disclosures are made and that consumers are not deceived. 

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