Whenever celebrities or journalists post to social media about their appetites, preferences, and predilections for specific brands, astute readers may wonder: Is this personal? Or is it an advertisement, endorsement, or testimonial? Lawyers, though, should ask: is this legal?
So it was around New Year’s Day this year, when two ESPN journalists posted nearly identical tweets about their excitement at the prospect of staying home, watching football, and enjoying Domino’s Pizza. A few days later, another ESPN journalist told her followers that they could find her at the Buick tent at the College Football Playoffs, ending with the hashtag #ThatsABuick.
What’s the problem?
The Federal Trade Commission Act prohibits, among other things, “unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(1). The Act’s prohibitions are far-reaching, touching on advertising, marketing and promotions, and sales practices. In 2000, the Federal Trade Commission (FTC) issued guidance instructing advertisers on how to comply with the law in the context of rapidly changing online and digital media, including small-screen technology (like smartphones) and social media. The FTC updated the guidance—officially known as the “.com Disclosures”—nearly three years ago to emphasize that, when disclosures are necessary to prevent an ad from being deceptive or unfair, such disclosures need to be clear and conspicuous on all devices and platforms that consumers can use to view the ad.
To assist advertisers in complying, the 2013 guidance addressed many methods for making disclosures—from hyperlinks to pop ups—in a variety of contexts, including Twitter. The FTC suggested that tweeted ads could comply by including “Ad:” or “sponsored” in the text.
In December 2014, the FTC issued supplemental guidance called “Native Advertising: A Guide for Business.” (Native advertising, according to the FTC, is “content that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it online.”) This new guidance focused on transparency: “An advertisement or promotional message shouldn’t suggest or imply to consumers that it’s anything other than an ad.” So businesses often need to disclose that content, such as a tweet, is native advertising, and “disclosures are not effective unless consumers understand them to mean that native ads are commercial advertising.”
And in mid-2015, further driving home the point, the FTC revised its “Endorsement Guides: What People Are Asking” website. The core principle wasn’t new: a relationship between an advertiser and endorser had to be “clearly and conspicuously” disclosed on social media. But the revision got more specific about growing social media issues.
These rules come into play when celebrities tweet about products and services. Often, it can be hard to discern if the tweets are heartfelt expressions of appreciation or camouflaged promotional messages. For example, when Kim Kardashian tweeted “Pregnancy lips … @EOS to the rescue!” and Miley Cyrus tweeted “Thanks @blackjet for the flight to the Silicon Valley!”, were they promoting lip balm and private jet services? As it turns out: yes, an endorsement relationship existed in each case. The same is true of the ESPN examples above. (ESPN later admitted that the Domino’s tweets were part of a marketing campaign and that future tweets would comply with the rules. The Buick tweet was deleted and replaced it with one beginning with “#ad:”.)
The FTC has taken a dim view of undisclosed native advertising. In 2014, the FTC settled charges against Sony and its advertising agency, which had conscripted employees to tweet that the new PlayStation was a “#gamechanger.” The year before, after Lauren Bacall promoted a drug on the Today show without disclosing that she was a paid promoter, the FTC warned marketers about such practices.
The uncertainty consumers feel when viewing undisclosed native advertising is what motivates the FTC’s rules: If consumers are to be swayed by celebrity testimonials, they are at least entitled to know that the endorser received compensation for it. Yet ESPN and its journalists are not alone: most people have no idea these rules exist, and consequently compliance is spotty.
Given past scoldings and settlements, and the proliferation of native advertising in the social media space, the FTC is sure to step up enforcement actions in this area. It would be wise for marketers, their endorsers—and the lawyers who advise them—to become familiar with the rules.