The Federal Trade Commission (FTC) recently unveiled its long-awaited final revisions to the Guides Concerning the Use of Endorsements and Testimonials in Advertising, much to the delight of marketers and influencers who have been eagerly awaiting clarity on this important aspect of digital marketing. With these revisions, the FTC aims to crack down on deceptive endorsement practices and bring transparency to the world of influencer marketing.
The crux of the revised guidelines revolves around the definition of “clear and conspicuous” disclosures. These disclosures are crucial when there is a material connection between the endorser and the product seller, ensuring that consumers can make informed decisions. The new definition emphasizes that such disclosures should be easy to notice and understand by ordinary consumers. Moreover, if an endorsement targets a specific audience, like older adults, the disclosure should cater to that audience’s comprehension level.
Visual endorsements demand visual disclosures, audible endorsements require audible disclosures, and when both mediums are used, both visual and audible disclosures are necessary. In the realm of interactive electronic mediums, like social media, the disclosure must be unavoidable, ensuring consumers cannot miss it.
The updated FTC FAQs provide specific examples to help marketers and influencers navigate this disclosure minefield. For instance, while “Ad,” “Paid ad,” or “#ad” continue to be acceptable for paid endorsements and free product reviews, the use of ambiguous terms like “#ambassador” or “#partner” is discouraged. Instead, coupling the brand name with these terms may make the disclosure clearer.
Social media platforms also receive attention in the revised guidelines. TikTok videos, for example, must have superimposed disclosures within the video, and disclosures in the comments section of Facebook posts are deemed inadequate.
The FTC also addresses the issue of “significant minority” when determining whether a material connection disclosure is necessary. The new standard posits that if a substantial portion of the audience fails to understand or expect the connection between the endorser and the product seller, a disclosure is required. While the guidelines provide examples of what constitutes a material connection, such as monetary payment or free products, the exact definition of “significant minority” remains open-ended, possibly requiring empirical testing in some cases.
Affiliate marketing disclosures also get their share of the spotlight. Bloggers promoting products with affiliate links must “clearly and conspicuously” disclose their compensation. The same applies to YouTube reviewers using affiliate links. “Affiliate link” alone or a simple “buy now” button does not cut it as an adequate disclosure; instead, using “paid link” alongside the affiliate link is suggested.
Advertisers and endorsers must be aware of their liabilities under the revised guidelines. Advertisers are responsible for monitoring their endorsers’ posts, even after the contractual relationship ends, for a reasonable period. Endorsers can be held accountable for deceptive statements and failing to disclose material connections. Furthermore, intermediaries like advertising agencies and public relations firms may also be liable for disseminating deceptive endorsements.
While the FTC didn’t provide extensive guidance on endorsements directed at children, it highlights that disclosures effective with adults might not work with younger children, urging caution in such endorsements.
The revised Endorsement Guides shed light on the FTC’s stance on deceptive endorsement practices. While not legally binding, these guidelines demand attention from companies and influencers alike. To navigate this complex landscape successfully, marketers should review their current practices and ensure compliance with the FTC’s transparency objectives. The world of endorsements may have some room for interpretation, but staying on the right side of the FTC’s views will undoubtedly be worth it in the long run.
