By Christopher Borders

With millions of young people spending hours every day on social networks to share everything from their political beliefs to cat videos and pictures of their favorite vegan dishes, it’s no wonder that brands are spending big dollars to advertise on these platforms. But since millennials are notoriously unresponsive to traditional ads, brands know that reaching its target, younger audience now requires something more – like, say, teaming up with the celebrities who hold the biggest megaphones on social networks. (Hello, Taylor Swift!) Of course, while celebrity endorsements are practically as old as advertising itself, in the social media era, celebrities are now blurring the lines between spontaneous personal endorsements and paid-for ads like never before.

I am totally obsessed with these @vitafede hoops✌️

A photo posted by Hilary Duff (@hilaryduff) on

Masking a paid celebrity ad as an authentic personal opinion has always been false advertising, as federal law makes clear. But do the old rules transfer to social media? It’s easy to say that social media marketing is relatively new and still evolving, and to think that we should cut them some slack. But, that’s not exactly true; social media is no longer a babe in diapers or the wild west – at least if Facebook’s $17 billion in 2015 ad revenue is any indication. Not to mention that brands now spend four times as much to reach millennials on social media than they do to reach other audiences. Which is why the deceptive marketing tactics that seem to run rampant on social media (particularly among celebrities) are more than a little troubling, if not entirely surprising. Deceptive marketing tactics run rampant on social media, particularly among celebrities. 

Deceptive marketing tactics seem to run rampant on social media, particularly among celebrities

[tweetthis]Deceptive marketing tactics seem to run rampant on social media, particularly among celebrities[/tweetthis]

The latest high-profile example of how celebrities are flouting advertising laws and regulations comes from none other than the Kardashian media circus empire. Most everyone knows that if you come across a tweet, post or Instagram photo in which a celebrity is gushing about their favorite exercise gear, or weight loss hacks, it’s a pretty safe bet that it’s an advertisement. The problem is that a lot of them aren’t clearly or transparently labelled as such, even though they the law says that they should be.

While the Kardashians are hardly the only celebrities guilty of this kind of careless (if not deceptive) social media marketing, they do seem to be especially prolific. And, sadly, sometimes it takes a Kardashian-size megaphone before we start listening – figuratively speaking.

In a recent letter addressed to Kris Jenner and the family’s lawyers, Truth in Advertising, Inc., a nonprofit consumer advocacy group that fights deceptive marketing, claimed that dozens of the Kardashian sisters’ posts on Instagram were in violation of the Federal Trade Commission’s (FTC) guidelines with respect to social media endorsements. Those guidelines state that, if a person “has been paid or given something of value” in exchange for an endorsement, it needs to be labelled in such a way that it is “clear and conspicuous” to consumers that it’s an ad, not a testimonial.

According to The New York Times, after receiving the letter, the Kardashian sisters went back and changed the language in dozens of Instagram posts and deleted others.

In the Kardashians’ defense, while the FTC recommends including “#ad” or “#sponsored” captions to posts on social media to denote endorsements, there are no “hard and fast rules,” and the FTC tries not to be “prescriptive” about methodology, as the FTC told the Times.

When shared by a celebrity on social media, content feels more intimate.

[tweetthis]When shared by a celebrity on social media, content feels more intimate[/tweetthis]

Brands and celebrities are supposed to figure out how to ensure that a consumer knows when a post is a paid ad. This lack of guidance is a large part of the reason why endorsements on social media seem to hang in a bit of a gray area, and why many celebrities may appear careless in how they articulate their relationships with some brands on these platforms.

Making matters more difficult is the fact that brands are eager to take advantage of how communication or sharing on social media is perceived to be more personal, or more authentic (even if we all know that many people spend a lot of time if not money curating their social media feeds). If it were a print ad in a magazine, the impact of Kim Kardashian saying that she loves to hang out on the couch and eat Frosted Mini Wheats probably wouldn’t register. But when shared directly by a celebrity on their social media accounts, the same content feels more intimate – making the ad more effective, but making any false advertising all the more damaging.

What’s more, there is the perception that, at the end of the day, consumers don’t really want to know if a brand is paying their favorite celebrity to fawn over their product. It might ruin the mood by challenging their false sense of familiarity. However, publicizing the amount of money celebrities earn for endorsing these products on social media may change consumers’ tune. According to Captive8, via The New York Times, someone with “three million to seven million followers can charge, on average, $187,000 for a post on YouTube, $75,000 for a post on Instagram or Snapchat and $30,000 for a post on Twitter.” That’s right, 15 seconds of shaky Snapchat video might be netting your favorite TV star $75,000 or more.

Afternoon chill with snacks and a bit @glossybox_de glow #glossybox #ad

A photo posted by Stefanie Giesinger (@stefaniegiesinger) on

As the amount of money brands pay celebrities for social media posts continues to skyrocket, and as social media platforms continue to benefit from the practice, there is a much greater urgency and need for the FTC to act as a more diligent watchdog. And hopefully a greater incentive for the FTC to work with brands and celebrities to come to some rules-of-the-road before this all gets too out of hand.

The FTC’s recent settlement with Warner Bros. may or may not represent a first step in that direction.  For those unfamiliar, Warner ran a marketing campaign using YouTube video game influencers where the required endorsement disclosures were only visible “if users clicked the ‘Show More’ button under the videos.” Close, but no cigar. The FTC had no problem calling this one out of bounds.

There’s no way to reveal the true relationships between brands and influencers.

[tweetthis]There’s no way to reveal the true relationships between brands and influencers[/tweetthis]

But if the Warner Bros. case (which followed another with Lord & Taylor earlier this year), is any indication, there are more settlements to come. As Bloomberg reported last month, the misleading marketing tactics that now seem to run rampant on social media haven’t gone unnoticed by the federal government. Of course, while the FTC may be eager to crackdown on absent or improper disclosures, the onus of finding solutions needs to start with the FTC developing clearer requirements and implementing more consistent enforcement.

Another complication is that many brands and marketing agencies believe that certain types of influencer posts simply aren’t the same as traditional advertising and thus don’t require conspicuous disclosure. Plus, there’s the fact that there’s no easy or obvious way to disclose the nature of relationships between brands and influencers on some platforms, like Snapchat, where videos are ephemeral and may only last for a few seconds.

Just checked into our NYC penthouse. Thanks @airbnb for the gift of our home away from home.

A photo posted by Kim Kardashian West (@kimkardashian) on

In most cases, the FTC would say that doesn’t matter how hard it may be to provide required disclosures or how a specific platform presents unique challenges; if a consumer’s perception of the endorsement would be altered by knowing that the influencer was compensated, then it needs to come with a clear disclosure.

On the bright side, in an effort to bring some order to the chaos, some brands are taking matters into their own hands. Salesforce, for example, recently posted its guidance on how to properly handle influencer marketing, which is a great starter guide for celebrities, agencies, marketers and social media platforms looking to stay on the FTC’s good side.

Hopefully, celebrities and other brands will take a cue from Salesforce and develop their own guidelines to ensure clear endorsement disclosures – at least until the FTC and industry provide something more definitive. Perhaps that is the lesson learned from the Kardashian’s endorsement kerfuffle.

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About the author

Christopher Borders

Christopher Borders

Christopher is an experienced business lawyer, litigator and entrepreneur. He helps clients with strategic analysis, contracts, business formation, IP and technology law, marketing and advertising matters and general business operations. He specializes in technology licensing and agreements, and commercial contracts with partners, developers, suppliers and vendors, among others. He is a former big law partner and has served as general counsel to both venture-backed and public companies.

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