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The FTC has once again invoked the .com Disclosures, this time in a lawsuit against Warner Bros. (WB) over an influencer campaign for video games. The FTC announced today that it has settled the lawsuit in which it alleged that WB “failed[ed] to adequately disclose that it paid online influencers” to post positive game reviews on YouTube and social media. An advertising agency named “Plaid Social Labs” was hired to create the campaign.
What’s really interesting about this case is that WB did require the influencers to “disclose” and gave specific instructions. Read on to find out why the disclosure requirements were still not adequate.
The Influencer Campaign
WB not only gave the games to the influencers for free but also paid the influencers for their work. The requirements of the influencers included terms we often see like:
- The video would include a call to action (CTA) for viewers to learn more about the game.
- The video would promote a “positive sentiment” about the game.
- The video would not communicate a “negative sentiment” or show “bugs or glitches.”
- The influencer would have to post the review once on Twitter or Facebook.
Because of these requirements, the FTC deemed the videos “sponsored advertisements.”
WB actually did include in the terms that the influencers had to disclose their sponsorships in a particular way. Those requirements included:
- The YouTube description box would include “information about the game above the fold.”
- The description box would include an FTC disclaimer that the post was sponsored.
The FTC alleged that because of this placement, the sponsorship was not “visible without consumers having to scroll down or click on a link.” In addition, the influencers were not required to place a disclosure clearly and conspicuously in the video itself. Also, when the videos were promoted on Twitter of Facebook, consumers were even less likely to see the disclosure information.
This paragraph in the Complaint was particularly interesting to me:
“On at least two occasions, the YouTube influencers disclosed only that they had been
given early access to the game, and did not adequately disclose that they had also been paid to
post the video. For example, one influencer’s disclosure states: “This has been one of my favorite sponsored games, so thanks that I could play it for free!!” This statement implies that the only compensation this YouTube influencer received was free access to the Shadow of Mordor video game. In fact, this YouTube influencer also received monetary compensation of thousands of dollars in return for his positive gameplay video and social media postings about Shadow of Mordor.”
This calls into question the type of language some of us have been using when we receive a free product but also a flat payment or a performance based commission.
The WB Settlement
An Agreement Containing Consent Order shows the settlement between the FTC and WB. Once again the influencers were not impacted (but that doesn’t mean we shouldn’t be doing the right thing–keep reading to see why). The Definitions section reiterates some of the things we have known for awhile. In particular it gives more detail about what “Clearly and Conspicuously” means including:
- “A visual disclosure, by its size, contrast, location, the length of time it appears,
and other characteristics, must stand out from any accompanying text or other
visual elements so that it is easily noticed, read, and understood.”
- “An audible disclosure, including by telephone or streaming video, must be
delivered in a volume, speed, and cadence sufficient for ordinary consumers to
easily hear and understand it.”
- “In any communication using an interactive electronic medium, such as the internet
or software, the disclosure must be unavoidable.”
In the Settlement, WB is essentially put on notice that it will not violate any of these rules in any future influencer campaign. It will also in future campaigns have to:
- Provide influencers with a statement of THEIR responsibility to disclose and have the influencer sign and date they received the statement and will comply with it.
- Establish a system to monitor and review the disclosures.
- Immediately terminate and cease payment to any influencer who does not comply. If they believe it was inadvertent, they can give them a chance to fix it before terminating them.
- Create and maintain reports showing the monitoring.
Takeaways for Bloggers, Affiliate Marketers, and Other Influencers
As with some of the other actions, the FTC is taking a case and making it the example that other advertisers need to start following. Some of the things we can learn from this:
- Advertisers/Agencies are obligated to inform the bloggers/influencers about the disclosure rules. They should be very specific in their requirements.
- Bloggers/Influencers may not be held liable by the FTC right now, but the advertiser can cancel your payment immediately even after you have done all the work if you did not disclose properly.
- Even if you are technically disclosing, if the disclosure is not effective, the FTC can still come after you.
- Even though this was an “influencer” case, the Guidelines are the exact same that are applied to affiliate marketing.
- Influencer campaigns that use video are now put on notice of how the Guidelines apply to them.
What do you think about this new case? Does it apply to anything you are currently doing?
Full FTC case including the timeline, Complaint, Exhibits, etc.
Affiliates Take Note: New FTC Disclosure Guidelines (I keep this post updated frequently)
Thank you for this article. I have seen the headline floating around, and when I wanted more information I found your article. I hope with all the affiliate marketing that I do I can stay within the guidelines that are required. Have a good one!
Durk Price says
Affiliates are still kind of in “stuck”. Most sophisticated consumers, search engines and authority groups can easily recognize the affiliate network link structure or redirect URL and catalog and understand that ad as a performance opportunity. But is that really going to be enough if a specific supposedly unsuspecting consumer or consumer group decides the affiliate placement isn’t prominent “enough”? Not sure. But for sure we know you’ll provide guidance. Thanks
Durk Price says
Clarification question: If an affiliate blogger does a video, unsolicited by and unpaid by the advertiser, the affiliate blogger must still disclose that they have a financial gain in the case of a purchase by a consumer?
If so, how or where does the affiliate need to display this confession?
Tricia Meyer says
That’s a really good question, Durk. I’ve been puzzling over how this applies to us. It seems like if an affiliate is making a video for use on their page or linking to their page in the Description box…and then on that page they have affiliate links, they have to disclose that they are making money. But it seems weird to think about doing wine club review videos (for example) and mentioning at the start of every one of them that I am an affiliate making money from them.
Then I think about how YouTube works. If I am just talking up the merchant in the video and don’t include any links in the video, the video isn’t monetized. So the disclosure would have to happen where the actual monetization is. That’s different than the WB influencers where they were getting paid a flat rate just to make the video.
I don’t think it’s clear how this applies if the affiliate buys the product themselves and makes the video but then puts affiliate links on their site. It’s only clear that if the merchant gives them the product to review, they have to mention that. It also seems like the more control the merchant has over the video review (like approving it in advance, giving talking points, etc), the greater chance that the video itself will be viewed as an advertisement as opposed to a true review.
I hate that I can’t give a clear answer on this one! Personally, I am going to continue to mention in the video when I get the product for free or when I am being paid for the video itself. Also if I put the affiliate link in the video. If I am just making the video and then only putting affiliate links on my own site, I will continue to put the disclosure only on my own site.