Get All Access for $5/mo

FTC Wants Better Disclosures for Sponsored Social Media Posts If a company is paying you to shill a product on social media, you better do more than write a little #ad hashtag at the very end of your post.

By David Murphy

This story originally appeared on PCMag

Kohei Hara | Getty Images

If you follow a bunch of celebrities on various social media accounts -- or even just a few of the more self-promoting ones --then you've probably seen all kinds of sponsored advertising. That's not a big deal. In some cases, you might have no idea whether the celebrity is naturally interested in the product being featured or whether the person is getting paid to promote the item. That's not good, and it's that kind of practice that the Federal Trade Commission is looking to crack down on: deceptive endorsements.

According to a report from Bloomberg, the FTC is trying to enforce a greater level of disclosure for those endorsing products on social media, lest they run afoul of FTC guidelines. And, no, simply adding a tiny little hashtag -- like #sp -- isn't enough to convey that the content is sponsored, not original. It also depends where you might put these hashtags: an #ad at the beginning of an endorsement is much more effective, in the FTC's eyes, than one buried at the end.

"If consumers don't read the words, then there is no effective disclosure. If you have seven other hashtags at the end of a tweet and it's mixed up with all these other things, it's easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?" said Michael Ostheimer, of the FTC's Ad Practices division, in an interview with Bloomberg.

Advertisers, and possibly even endorsers, have balked a bit at the FTC's heavy-handedness, claiming that most of those endorsing products on social media are actually using what they're promoting. They claim that these promos don't really count as traditional advertising, where a celebrity might appear in an obviously targeted video spot being run under a brand's name (or an account themed to its advertising campaign). The FTC disagrees, noting that endorsers have to ask themselves whether those viewing their endorsements would be affected if they knew, clearly and plainly, that these posts were sponsored content. If so, disclosure is necessary.

Though the FTC hasn't gone after any endorsers for deceptive endorsements -- only the brands involved -- that doesn't mean that they won't at some future point.

"We hope by bringing these cases that we not only stop the marketer and influencer who didn't have adequate disclosures previously, but also get the message out that other companies should have clear and conspicuous disclosures," Ostheimer told Bloomberg.

Warner Bros. recently settled with the FTC following allegations that the company was deceiving customers by not disclosing that it had paid social media influencers to promote the video game Middle Earth: Shadow of Mordor. According to the FTC, Warner Bros. paid these people for their promotions and basically told them what to say. However, Warner Bros. didn't force them to indicate that their endorsements were sponsored.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Marketing

Are Your Business's Local Listings Accurate and Up-to-Date? Here Are the Consequences You Could Face If Not.

Why accurate local listings are crucial for business success — and how to avoid the pitfalls of outdated information.

Money & Finance

Day Traders Often Ignore This One Topic At Their Peril

Boring things — like taxes — can sometimes be highly profitable.

Productivity

Want to Be More Productive Than Ever? Treat Your Personal Life Like a Work Project.

It pays to emphasize efficiency and efficacy when managing personal time.

Business News

'Passing By Wide Margins': Elon Musk Celebrates His 'Guaranteed Win' of the Highest Pay Package in U.S. Corporate History

Musk's Tesla pay package is almost 140 times higher than the annual pay of other high-performing CEOs.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.

Starting a Business

I Left the Corporate World to Start a Chicken Coop Business — Here Are 3 Valuable Lessons I Learned Along the Way

Board meetings were traded for barnyards as a thriving new venture hatched.