Transparency In Influencer Marketing: Saying It's An Ad May Not Be Enough

Last month, the Federal Trade Commission issued a warning regarding insufficient disclosures in influencer marketing to the American Beverage Association and The Canadian Sugar Institute, along with a dozen online health influencers. The warning related to insufficient disclosures on posts promoting the safety of the artificial sweetener aspartame, or sugar consumption.

The influencer marketing efforts were part of a broader campaign attempting to address public perception in the wake of the WHO’s decision to reclassify aspartame as “possibly carcinogenic” to humans this summer -- an issue especially important to the beverage industry.

We caught up with Laura Brett, who leads the National Advertising Division at BBB National Programs, to discuss what CPG brands should take away from the FTC’s warnings.

This interview has been edited for length and clarity.

CPG Insider: Can you explain a bit more about how your division works and its relationship with advertisers and the FTC?

Laura Brett: We hold brands to the standards set by the FTC. Companies participate on a voluntary basis. At the end of an inquiry, we issue a decision with recommendations for changes. If a company chooses not to participate or doesn’t follow our guidance, we will refer the issue to the FTC. We release over 100 decisions a year, many of which hit on issues the FTC may have provided guidance on without giving specific examples.

What was your initial reaction to the FTC’s recent influencer marketing warning letters?

The FTC has been making it clear for several years that they are concerned about the ways in which brands use endorsements in influencer marketing. It’s not a shift so much as an evolution in them making this a priority.

Can you address some of the specifics of the FTC’s warning letter?

The FTC indicated that they felt that some of the tools used to advise the consumer that this was a sponsored post or advertising were not sufficient. Specifically, with the platform tools on Instagram Reels and TikTok, the paid partnership tool was not sufficient to advise consumers.

What we’re seeing is the FTC providing more specific examples of updates to endorsement guidelines.

Was there anything here advertisers might find surprising?

The ruling that “#ad” was insufficient here, that consumers might not understand who sponsored the post. If you look at the endorsement guidelines, the FTC stated that disclosure of an ad itself might not be sufficient. But here the FTC was concerned that the viewer of the post would not understand what was being promoted.

Does this being a health issue come into play here?

The health and safety issues that these posts addressed was of particular interest to the FTC. The FTC has indicated that they are concerned about truth and transparency in influencer marketing, and are particularly concerned with health- and safety-related claims. You have a dovetailing of those two priorities there, making it something the FTC would scrutinize.

The FTC’s perspective is looking at influencer marketing by dieticians and the impact that that’s going to have: Consumers are going to be following these dieticians because they’re looking for advice from someone they consider to be an expert in that field. If that expert has a connection to one of those industries that’s sponsoring the post, that’s a material connection that the viewer would want to know, not just that someone sponsored the post. Who sponsored the post would matter.

The FTC is clear that they’re only looking at the transparency issue, and don’t say anything about whether or not there should be sponsored posts by dieticians, or dig at all into the truth or falsity of the statements. This only addresses transparency.

In several of these cases, it was industry lobbying organizations behind the influencer marketing rather than brands. Does that influence the FTC’s perspective?

Part of the problem is, the consumer is less likely to know these organizations, and less likely to think it’s one of these organizations that’s sponsoring this content. One of the interesting things about these letters is that in one of them there was a disclosure, but it used abbreviations, rather than spelling out the organization’s full name. The FTC said, there is a disclosure there -- but the consumer is unlikely to understand who that is.

What should brands -- especially, CPG brands -- take away from these cases?

There’s been a lot of chatter about some of the things that were in the FTC’s updated 2023 influencer marketing guidelines, and whether the FTC was serious about it. Some of what we’re seeing here is enforcement of that updated guidance.

When brands are looking at influencer marketing, they should be looking to make sure that viewers understand the material connection between the content and the endorser. Looking at it from just the brand perspective may not be enough. They really want to be looking at it from a consumer perspective – putting themselves in the consumer’s shoes will really help.

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