FTC’s social media “Product Placement” rules vs. TV/Movie product placements

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Starbucks Ad—BMW product placement

Since the Federal Trade Commission has been talking about “cracking down” on brands, ad agencies and PR firms in the social media space, I thought I’d take a better look at the FTC’s actual language.

In a nutshell, the FTC wants social media “influencers” to clearly attribute posts as being an ad, sponsorship or endorsement if they show or mention a product in which the influencer has had some engagement with the brand or its agency. Back in April, the FTC actually sent out letters to 90 celebrities they believe have been some of the “worst” offenders on social media. I think this move is starting to get attention now that the FTC is serious. The FTC has also taken action against a brand or two directly.

While I believe in truth-in-advertising principles, the FTC’s new rules, compared to the product placement rules in TV shows and movies, don’t seem fair to brands and agencies that rely heavily on brand ambassadors and influencers. Why? Mainly because the FTC wants influencers to “clearly disclose” a “material connection” in the first 3 lines of an Instagram post. Ugly, right? Have you ever seen a TV show put “#ProductPlacement” text directly on screen when a character or reality star is drinking a #paidplacement coffee or driving a #paidplacement car? No, you haven’t. But they want it to happen in social media.

The FTC has essentially given two options:

1. Use a hashtag like #Ad or #Sponsored in the beginning of your post, separate from the other hashtags at the end (and apparently #Partner is not good enough).

2. Use a disclosure like “Company X gave me this product to try…” or “Company X gave me [name of product], and I think it’s ______.” This is very similar to the FTC’s guidelines they developed for blogs, back in 2011.

I think option two is a fair enough solution by the FTC, especially for people like the Kardashians who literally speak like a brand’s paid actor on their social media channels. But what if an influencer didn’t plan on writing anything about the product in the post? Many influencers merely wear, or show, a product in their image and hashtag the brand (because it’s often harder to see logos on mobile’s small screens), which to me, is exactly the same as product placement in a TV show or movie. So what is the FTC’s position on product placement in TV or movies?

The FTC has expressed the opinion that under the FTC Act, product placement (merely showing products or brands in third-party entertainment content – as distinguished from sponsored content or disguised commercials) doesn’t require a disclosure that the advertiser paid for the placement.

Great. Let’s follow the stated FTC Act for social media then, right? Not so fast. Because this is how the FTC answers a make-believe influencer question on their official site:

Q: If I post a picture of myself to Instagram and tag the brand of dress I’m wearing, but don’t say anything about the brand in my description of the picture, is that an endorsement? And, even if it is an endorsement, wouldn’t my followers understand that I only tag the brands of my sponsors?

A: Tagging a brand you are wearing is an endorsement of the brand and, just like any other endorsement, could require a disclosure if you have a relationship with that brand.

Because the FTC uses the word “could”, I feel they have allowed an opening for interpretation and that everyone should follow the FTC Act on brands in third-party entertainment. After all, don’t we as consumers go to social media for entertainment and news? Why, in this respect, should social media be treated differently? And remember, these are the same social media platforms where political ads don’t have any disclosure mandatories. (But I’m no lawyer and my agency will defer to what our clients’ lawyers decide.)

No matter how you decide to treat social media influencers, it’s worth reading these two documents from the FTC. I would love to know your opinions on all of this.

FTC Endorsement Guides

FTC Brand Disclosure

Lastly, if you want a good laugh and you are not easily offended or mind the F-word, watch HBO’s John Oliver have a little fun mocking all of Starbuck’s paid placement this month:

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