Commercial Relationship Disclosure On Social Media: What Does The FTC Require?

At the SocialPro conference in Las Vegas, Danny Sullivan discusses social media disclosure rules with the FTC's Mary Engle. Columnist Mark Traphagen boils down the key takeaways for managers of social media accounts.

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mary-engle-danny-sullivan-1920At the recent Marketing Land SocialPro conference in Las Vegas, Danny Sullivan interviewed Mary Engle, associate director for Advertising Practices at the US Federal Trade Commission, during a keynote presentation.

Sullivan asked Engle to clarify aspects of the FTC’s guidelines for online advertisers, content producers and social media account owners. Search Engine Land Editor-in-Chief Matt McGee published a very thorough live blog of the conversation here on Marketing Land.

The FTC has published an extensive FAQ that covers the guidelines and attempts to answer many questions about them.

In this article, I will provide my own commentary on the guidelines and Engle’s responses to Sullivan, as well as some of the main takeaways that I think will be most useful to managers of social media accounts.

TL;DR “It Depends”

First, let me share with you a brief anecdote that I think will set the tone for how you ought to think about all of this, as well as a small disclaimer.

After Engle’s onstage interview, Eric Enge, our company’s CEO, and I had a chance to chat with her privately. I joked that in some ways her entire presentation could be summed up in two words: “It depends.” She laughed, but then said that this wasn’t far from the truth.

Or as Captain Barbossa would put it:

Every individual circumstance of brand-related content will be different, as will any determination of whether or not it is really an advertisement or compensated endorsement. The lines will always be somewhat fuzzy.

It’s therefore important to be wise, err on the side of caution (without being paranoid), and simply apply common sense. If you think you’re doing something that might deceive a consumer, don’t do it.

Now the disclaimer: I am not a lawyer. I don’t even play one on social media. Everything in this column is simply my own personal “take” on the FTC guidelines and what Engle shared about them and in no way should be taken as legal advice for any of your own actions. Please consult your own legal counsel regarding any of your own situations. Thanks. And now back to your regularly scheduled post…

So What’s The Issue?

One of the mandates of the FTC is “truth in advertising.” That covers not only the veracity of claims advertisers make about their products, but also the idea that consumers have the right to know when they are being advertised to.

Consumers also have the right to know when an endorsement or review of a product or service may have been influenced by some sort of compensation from or connection with the product or brand mentioned.

It is that last concern that comes most into play with social media.

Let me give an example of a situation where a potential commercial relationship comes into play in social media. Say there is a Twitter user who has become an influencer in the area of fitness and nutrition.

An energy bar manufacturer promises her a lifetime free supply of their bars if she will talk about them on Twitter. Soon, the influencer starts regularly posting tweets about how much she loves these energy bars.

The FTC guidelines would seem to indicate that this is a clear case in which disclosure is needed. If consumers knew that the influencer had been compensated, it would probably affect how much weight they might put on that influencer’s glowing tweets.

Therefore, not disclosing that information is seen by the FTC as a deceptive practice, and it could result in the agency taking action against either the influencer, her sponsor or both. (In actual practice, Engle said most cases are settled with a “letter of understanding” between the FTC and the alleged perpetrators, wherein the parties agree to make proper disclosures in future posts.)

Here’s an example of social media influencer Jeff Bullas using a #sponsored hashtag to disclose a tweet endorsement for which he received some kind of compensation.

When And How To Disclose

In any event, the proper way to prevent any possibility of consumer deception, according to the FTC, is to provide a clear disclosure that the reviewer, promoter, sharer or endorser of a brand, product or service was compensated in some way. Forms of compensation can include (but are not limited to) payment, free products or services, discounts or gifts.

Being employed by the endorsed company, or having that company as a client, is also considered compensation and must be disclosed.

Where it gets a little gray again is when it comes to exactly what constitutes compensation that must be disclosed. The FTC says it must be “material compensation,” which means that it is enough that one could reasonably expect it might influence the review or endorsement.

For example, let’s take the case of a contest where contestants are required to make or reshare a social media post about the brand in order to qualify for a prize. If the chances of winning are relatively small (as in a big contest where there will be many entries but only a few prizes), then no disclosure is required.

However, if chances of winning a substantial prize are high (e.g., if you are one of only a few finalists in the contest), then you should disclose that you may win a prize for your post.

It’s important to note that the FTC requires that any disclosure be clear, appear with the content itself, and in a way that the consumer is likely to see it. That means, for instance, that it is not enough to have a general disclaimer in your social media profile or on your website.

Even in the case of a tweet, the disclosure must appear in the endorsing tweet itself. (In such cases, because of the character limitations of a tweet, some tweeters have adopted one-word hashtags such as #sponsored or #ad. Be aware, though, that so far, the FTC has not ruled specifically on whether such hashtags constitute sufficient disclosure.)

Employee Disclosures
I asked Engle if merely sharing the non-commercial, non-promotional content of one’s employer or client is considered a compensated endorsement that needs to be disclosed.

I offered as an example the following: My employer produces a helpful how-to video. The video does not advertise my employer’s products or services (other than mentioning our brand name) and does not make any pitch for people to buy anything. Would my sharing post need a disclosure?

When I posed that question during the public Q&A, Engle answered no, she did not think disclosure was needed in that case. However, when I asked her again in private afterward, and walked her through the scenario again, she changed her mind and stated that I probably should make a disclosure in that case.

She added, though, that it could be as simple as saying, “Here’s a helpful video from my company” or “Our CEO has some tips…”

So, Really, When Do I Need To Disclose?

I found the exchange with Engle to be very revealing. Decisions about where and when and under what circumstances disclosure is required are never cut and dried.

I actually think that was the subtle message she wanted to communicate in her interview. There is no way to make absolute, one-size-fits-all rules about this, and so social media managers and posters are going to have to use wisdom.

Basically, avoid even the appearance of evil. If there is any chance that consumers might feel they were misled or deceived by not knowing your relationship with the brand or product being promoted, then disclose that relationship.

On the other hand, my other impression is that there is no need to be paranoid about this. Adopting a policy of including a disclosure on every single social media post would be absurd and non-productive.

But as I said above, if at all in doubt, consult your own legal counsel on your decisions about when to disclose and when it is not needed.

Another takeaway: Brands and online publishers should begin to develop their own policies and guidelines concerning the FTC disclosure guidelines.

For brands, all employees should be informed of the policy, not just those responsible for social media posting, as it is possible other employees may want to post company- or client-related content on their own social accounts. Brands should also make these policies clear to anyone they’re asking to review or endorse their products or services.

Publishers should also develop endorsement and review guidelines, and make those guidelines a part of their agreements and contracts with content producers. If your site accepts guest posts from writers not in your employ, I strongly recommend that you require them to agree to and conform with your policy before publishing their work.

After reading my impressions, Matt McGee’s live blog and the FTC guidelines themselves, what do you think about the need to disclose commercial relationships on social media? Will you or your company change the way you post and share in response to this?

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About the author

Mark Traphagen
Mark Traphagen is VP of Product Marketing and Training for seoClarity, a leading enterprise SaaS SEO platform. Mark is a sought-after speaker and writer on the topics of SEO, social media and content marketing.

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