Breaking Down FTC's New Rules on Influencer Marketing: What You Need to Know

I'm delighted that BH&P (Becky Holland & Partners) is working with RippleXn on a new technology that monitors social video at scale. Aside from the fact that this is a piece of exciting tech, and the agency's latest venture marketing (revenue share) client, it's forced me to get up close and personal with the FTC rules on affiliate marketing, endorsement and - of course - influencers.

In my quest to understand the new rules, I searched for articles that explained the legislation, and found myself facing a wall of unintelligible information. So, for my own sanity as much as anything, I've written this article about the new rules, and specifically, how they apply to agencies.

PS The FTC may govern the US market, but since influencer content can be created anywhere, and viewed from anywhere, if you are an agency or brand producing social content anywhere in the world, the rules almost certainly apply to you too. So, read on.

FTC Ad Compliance: Here's what I found out ...

In February 2020, the Federal Trade Commission (FTC) began to crack down on undisclosed influencer marketing social media posts. These guidelines were designed to ensure honesty and transparency in endorsements and testimonials. If someone promoted a product, it had to be their genuine opinion, and any connections with the brand needed clear disclosure. This aimed to prevent misleading advertising and protect consumers.

In June 2023, the FTC updated its guidelines to keep up with the ever-changing world of digital marketing, especially influencer marketing on social media. The new rules apply to endorsements made on any media platform. Whether it's a YouTube or Twitch?video or an Instagram post, influencers must disclose any relationship with the brand they are promoting.

Why Does This Matter to Agencies?

This matters a lot to marketing agencies because they could be held legally responsible for any misleading content created by the influencers they work with. The FTC now extends liability to agencies for a whole year after the content goes live. If they can't effectively monitor the video content or other forms of endorsements, they could find themselves in serious trouble.

Imagine an influencer they work with promotes a product with false claims or fails to disclose their connection to the brand. If the agency can't catch this and rectify it, they could be facing hefty fines or even legal actions.

The possible fines for non-compliance are huge - up to $50,000 per claim.??

So it pays to be in the know …

What Agencies Need to Do

Agencies have to be vigilant and implement measures to ensure full compliance with the updated FTC rules. They must closely monitor the content produced by influencers, making sure they disclose any relationships with brands. This means staying on top of social media posts, videos, and reviews for a whole year after they go live.

The new rules emphasize the need for transparency and honesty in influencer marketing. Agencies need to be transparent with their clients about these responsibilities and work closely with influencers to make sure they understand and follow the guidelines.

More than this, however, they need to ensure that their monitoring and analytics are up-to-scratch.? Monitoring samples or transcripts is broad,? shallow and inaccurate.

At the time of writing, only Ripple Xn is?able to monitor video at scale,? regardless of industry (for gaming and eSports,?aggero offers a comparable(ish) technology). In a digital world where information spreads rapidly, agencies must prioritize compliance to protect their reputation and the brands they represent. By taking proactive steps to monitor and enforce FTC guidelines, agencies can build trust with consumers and clients alike.

RippleXn have created an eBook to explain the new regulations in detail, which you can read here.

Key Implications of the Updated Guides and Proposed Rules

1. Expanded Definition of Endorsements: The updated Guides now cover various forms of endorsements, including verbal statements, tags in social media posts, demonstrations, video and more. The FTC clarifies that both real and fictitious endorsers are subject to scrutiny.
2. Clear and Conspicuous Disclosures: The FTC emphasizes the importance of clear and easily noticeable disclosures in endorsements to inform consumers of any material connections between endorsers and brands. Disclosures must match the format of the communication, whether audio or visual.
3. Incentivized Reviews and Employee Endorsements: Companies must provide clear and conspicuous disclosures in incentivized reviews, ensuring that the incentive doesn't compromise the authenticity of the review. Employers are responsible for monitoring and disclosing endorsements by their employees.
4. Review Manipulation: The FTC forbids manipulating consumer reviews, including suppressing negative reviews or publishing reviews for a different product. Intermediaries, such as advertising agencies, also face potential liability for deceptive endorsements.
5. Increased Liability for Advertisers: Advertisers are responsible for monitoring their endorsers and may be held liable for deceptive endorsements, even when the endorser is not. Using endorsements from unrelated third parties in advertisements could make advertisers liable.

Why This Matters to Agencies and Brands

From a moral and respnsible perspective, it's always been important that agencies and brands put the needs of customers first - especially minors and vulnerable people.

For example - are your influencers promoting alcohol, cosmetic treatments of 18+ games to children? Do you know???? Are you certain? Did you watch every video, check it yourself? Thought not ....

The updated FTC Guidelines directly impact agencies and brands involved in influencer marketing and endorsements. As influencer marketing thrives on social media and online platforms, the FTC has adapted the Guides to reflect current market realities. Agencies and brands must ensure transparent and compliant practices to avoid massive financial penalties and legal actions (up to $50k per infringement)

Non-compliance could lead to severe consequences for both the agency's reputation and the brands they represent. Sticking to the updated guidelines is critical to building trust with consumers and maintaining a credible brand image in the digital era.

As with the introduction of the GDPR (General Data Protection Regulations) in the UK, innovation typically trails regulation - it’s a time to take stock,?and to drive improvement across the sector. One thing is certain - those that take note,? will rise to the top.?

And those that don’t,?well …. I think we all know what will happen to them.