FTC Guidelines Around Disclosures

FTC Enforcement is here to stay and Rakuten Marketing aims to lead advertisers, publishers and influencers in the right direction. Read about when FTC disclosures are required and how your organization can protect itself from the pitfalls of advertising compliance.

Please note: The information and opinions within this content are for information purposes only. They are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.

With the exponential growth of affiliate and influencer marketing, the Federal Trade Commission (FTC) has increased its focus on ensuring that advertisers, publishers and influencers are disclosing that there is a “material connection” between the advertiser and publisher or influencer, or other that other necessary disclosures are present in advertisements.

Material Connection

So, what is a “material connection?” Well, it’s when one person or entity makes money off another for sponsoring, promoting, or otherwise advertising a product or brand. In the affiliate marketing space, when a publisher puts an affiliate link on their blog or webpage and a user clicks the link, the publisher often gets a small payout from the advertiser for generating the potential sale. This is a “material connection.” Or, within the social media space, if an influencer, i.e. social media poster, posts an image or comment about a brand or product and has been paid or has otherwise received a free product or item as compensation for the post.

For many advertisers and publishers, the “material connection” disclosure has been unnecessary. That’s not to say that advertisers and publishers have intentionally tried to deceive or mislead consumers, it’s just that it never really seemed to be that important to disclose the relationship.

That is, until now!

A Lack of Proper Disclosures

Over the past two years, the FTC has stepped up its enforcement actions and has begun to increase its focus on advertisers, publishers, and influencers and whether these groups are including proper disclosures in their posts. The FTC has brought cases against influencers, publishers and advertisers resulting in fines, onerous compliance restrictions, and complicated work process adjustments. Additionally, within the last year, the FTC has reached out to influencers and advertisers individually to ask them to disclose their relationships or face potential consequences.

Yet, despite all of FTC’s actions, publishers, advertisers, and influencers are still not properly disclosing. A recent study by Princeton Researchers, examining FTC required affiliate link disclosures on YouTube and Pinterest, recently revealed that only 10.49% of videos identified on YouTube with affiliate links contained disclosure language. Even fewer Pinterest posts (7.03%) contained proper disclosure language. More surprisingly, fewer than 3% of the posts that contained disclosure language followed the recommended language of the FTC.

Why is it that advertisers, publishers and influencers are so hesitant to post proper disclosures and risk an FTC enforcement action? A common thought is that a disclosure ruins the aura of authenticity among a publisher or influencers following. However, a recent study by eMarketer revealed that 85% of an influencer’s audience sentiment had either no change or a positive change towards the influencer when a material connection was disclosed. The fact is people like the truth. It’s incumbent upon advertisers, publishers and influencers to make sure they get it.

Increase Enforcement

It can be difficult to make sure that affiliates are making proper disclosures around every product that may be on their page. Additionally, the FTC guidelines can be convoluted and confusing, and it may not be easy to identify whether a disclosure meets the outlined rules and regulations. This is where an agency can help in your compliance efforts. An agency should have a dedicated team that can monitor and track your publishers to ensure that appropriate disclosures are being made on each platform. Moreover, an agency will be up to date with the most recent trends and risks and can assist in setting up a program that will prevent issues before they arise.

All indicators point to continued and even increased enforcement by the FTC around disclosures in advertising. Let Rakuten Marketing help you in your compliance efforts by assisting your team in creating a comprehensive compliance system that will help to avoid FTC attention. Our dedicated Brand Quality and Regulatory Compliance team has a thorough understanding of the FTC guidelines and can provide you with a complete and comprehensive service that will monitor your publishers, identify issues, and remediate any problems that may arise throughout the course of a campaign.

For more information on FTC guidelines and how to prevent compliance issues, please review some of our prior blog posts.

Please note: The information and opinions within this content are for information purposes only. They are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.