The Complete Guide to the FTC’s Influencer Endorsement Regulations

Exactly what you need to disclose in which scenario on each social media platform

Dave Davies
Oct 24 · 9 min read
Photo by ipse dixit on Unsplash

In the old days of advertising, the CEO of Proctor & Gamble could joke that he knew for certain that half of all his company’s advertising worked…just not which half.

In the new world of social media and influencer marketing, he would know which half was working. In fact, if he were paying attention, he would even know how much each tweet, post, or product placement contributed to the bottom line.

It’s a considerable amount.

  • According to the Harvard Business Review, around 18% of all consumers have purchased a product in the past year because it was promoted by an influencer on social media.
  • That percentage doubles for consumers under the age of 25.
  • Influencer marketing campaigns earn on average $5 in free social media exposure for every $1 spent on influencers (from Influencer Marketing Hub).
  • That number triples for prominent influencers.
  • As calculated by Forbes, companies are on track to spend at least $3 billion on influencer social media marketing in 2019 — and that’s expected to double in 2020.

Suffice it to say that these numbers have got companies paying attention.

They’ve also caught the attention of the Federal Trade Commission, who are the agency responsible for enforcing federal laws on advertising and promotions. The FTC applies the same rules to influencer marketing that they do to all other types of advertising: the influencer must disclose if they’re being compensated by the brands they’re promoting.

Since 2017, the FTC has been busy cracking down on influencers, and the companies that use them, if they break advertising laws.

They started gently, by mailing warning letters to major influencers and their brands., but they soon graduated to the harsher stuff — enforcement actions with monetary penalties.

Whether you’re an influencer or a brand marketer, the question is this: are you ready for tougher scrutiny by the FTC?

The good news is that following the FTC’s new rules is easier than you might think.


What Does The FTC Require From Influencer Social Media Promotions?

The FTC follows one simple principle when monitoring paid influencer social media promotions:

If you pay an influencer to pitch your product on social media, but it’s not obvious that person is being paid to pitch the product, that’s misleading. The audience may think the endorsement is voluntary and hence more believable.

The FTC requires any influencer with a material connection to the brand to clearly and obviously disclose that material connection any and every time they promote the product. It’s that simple.

Don’t get hung up in a thicket of rules or best practices. If the material connection is obviously and clearly stated in a social media post, the FTC is happy. No letter, no enforcement action.


What Is Material Connection?

Well, maybe it’s not that simple. What does the FTC mean by a “material connection”? Being paid to promote a product is a no-brainer, but what about a free sample? What about an invitation to a party?

According to FTC guidelines and enforcement letters,

A material connection

  • An unpaid, voluntary endorsement
  • A free product, trip, service, discount, or upgrade offered generally to the public
  • An event invitation offered generally to the public
  • Former employment, stock ownership, or business relationship

A material connection

  • Payment
  • A free product, trip, or service
  • A special discount or upgrade
  • A special invitation to an event
  • Employment or being related to an employee
  • Significant stock ownership
  • A business relationship

What Is A Material Connection Disclosure?

The FTC simply requires the influencer to “clearly disclose any material connection” with any brand or product they’re promoting on social media.

As you might have guessed, there’s more to it than that.

Again, according to FTC enforcement letters and guidelines, the disclosure of a material connection must not be:

  • In any part of a post requiring clicking a link to read, in an unreadable font, or hidden in hashtags or other text
  • Peripheral — placed on a part of the post readers are less likely to view or read or must scroll to find
  • Ambiguous or unclear on the relationship (“Thank you Brand A”)
  • An ambiguous or confusing hashtag (like #spon or #thanks) or a clearly stated hashtag surrounded by other hashtags
  • Confusing or misleading which brand is being promoted, particularly if multiple brands are featured or pictured
  • Implies that content authored by the company is original content by the poster

The disclosure of a material connection must be:

  • Prominent
  • Central — placed on the part of the social media post the audience is most likely to view
  • Clear on the exact relationship (“Sponsored by Brand A” or “Thank you to Brand A for the free product”)
  • Alternatively, a clearly stated hashtag (the FTC prefers #ad or #sponsored)
  • Clear about which brand or company is being promoted (“Sponsored by Company A” or “#ad @brandname”)
  • Clearly states if the post, or any image or video, was authored or co-authored by the brand’s company (“partnered with,” “collaborated with,” or “#ad” are sufficient)

Sometimes this might seem confusing, but it really isn’t. The FTC does not regard a disclosure to be “clear” if one of these criteria is not met.

For instance, Facebook, Instagram, and YouTube offer “branded content tools” that mark posts as promotional or advertising content. The FTC warns that these branded content tools do not meet the disclosure requirement. Why? Even though the branded content symbol is a) clear and b) prominent, it is not c) central. It appears in the title or very top of the post, which most readers ignore. What’s central is the content itself: the post, the picture, or the video.


What Brand Promotions Require A Disclosure?

What kind of social media posts require a material connection disclosure? What exactly converts a social media post into an “ad” or “promotion”?

This question is quite complicated.

The FTC requires influencers to disclose their material connection to a brand:

  • Before the active period of the promotional agreement or contract
  • Comments written by others
  • Mentioning or promoting the brand when answering questions or responding to comments

  • During the active period of the promotional agreement or contract
  • On any written or audio mention or tagging of the brand by the influencer in any social media post
  • On any mention, promotion, or tagging of the brand in influencer comments
  • On any picture or video including or featuring the brand
  • On any product placement of the brand in a picture or video

After the promotion contract or agreement has been completed. The FTC jury is still out on this one. There have been no enforcement letters…yet.

With one exception: these rules do not include celebrities or spokespeople who are widely known from other media to be paid promoters of a particular brand.


Guide To FTC Disclosures On Facebook, Instagram, Twitter, Snapchat And YouTube

We’re clear on material connections, disclosures, and what the FTC considers a “promotion” on social media. What are the actual mechanics? That depends on the medium.

On Facebook, Instagram, Twitter, Snapchat, and YouTube, there are a variety of ways to make a material connection disclosure:

  • A disclosure statement in the post, caption, or description.
  • A hashtag disclosure in the post, caption, or description.
  • A platform’s “branded content tool” which identifies a post as a promotion or advertisement (though, as mentioned, this cannot be the only form of disclosure).
  • A written disclosure or tag overlaying an image.
  • A written disclosure or tag overlaying a video or live-stream video
  • An audio disclosure on a video or live-stream video

Where you make the disclosure will depend on what’s “central” to the post. For instance, an image is not “central” to a Facebook post unless there is no written post, so it may not require a written disclosure on the image. However, images are central to Instagram posts, so they will always require a written overlay, even if there’s a written disclosure in the caption.


Disclosure Requirements

Disclosure Statement

: Completely within all the characters in a post before the “Show more” link.

Completely within the first 125 characters of the caption

: FTC suggests hashtags

: FTC suggests hashtags

: FTC suggests hashtags

Hashtags

:#ad, #sponsored, or #paid followed by brand in caption, before the “See more” link.

#ad, #sponsored, or #paid followed by brand in caption. First 125 characters.

: #ad, #sponsored, or #paid followed by brand in caption. First 125 characters.

#ad, #sponsored, or #paid followed by brand in caption

Near the beginning

Branded content tool

: Required by Facebook

: Does not meet FTC requirements

: Not applicable.

: Optional. Does not meet FTC requirements

: Not applicable.

Written disclosure on images

Optional, but required if the image does not include a written post or caption.

#ad or #sponsored followed by the brand.

Optional, but required if the image does not include a written post or caption. #ad or #sponsored followed by the brand.

#ad or #sponsored followed by the brand

#ad or #sponsored followed by the brand

not applicable

Visual disclosure on video

In first 30 seconds of the video. Of sufficient duration to allow viewers time to read the disclosure. Multiple disclosures throughout the video recommended.

In the first 30 seconds of the video. Of sufficient duration to allow viewers time to read the disclosure. Multiple disclosures throughout the video recommended.

In first 30 seconds of the video. Of sufficient duration to allow viewers time to read the disclosure. Multiple disclosures throughout the video recommended.

: In first 30 seconds of the video. Of sufficient duration to allow viewers time to read the disclosure. Multiple disclosures throughout the video recommended.

In first 30 seconds of the video. Of sufficient duration to allow viewers time to read the disclosure. Multiple disclosures throughout the video recommended.

Audible disclosure on video

Recommended. At the beginning of the video.

Recommended. At the beginning of the video.

Recommended. At the beginning of the video.

Recommended. At the beginning of the video.

At the beginning of the video

Visual disclosure on video stream

Throughout the video stream

Throughout the video stream

Throughout the video stream

Not applicable.

Throughout the video stream.

Audible disclosure on video stream

At the beginning and at regular intervals throughout the live stream.

At the beginning and at regular intervals throughout the live stream

At the beginning and at regular intervals throughout the live stream

Not applicable.

: At the beginning and at regular intervals throughout the live stream

Disclosure on stories

Not applicable

Not applicable

Audible or visual disclosure at the beginning. Sequential stories only require disclosure at the beginning of the series #ad, #sponsored or #paid followed by the brand is sufficient.

Audible or visual disclosure at the beginning. Sequential stories only require disclosure at the beginning of the series. #ad, #sponsored or #paid followed by the brand is sufficient.

Not applicable.


Don’t Forget the Other Federal Rules

In 2019, several e-cigarette companies ran afoul of the FTC when paid influencers pitched their vaping products on Facebook, Instagram, Twitter, and YouTube.

The companies and their influencers followed all the FTC rules about disclosure but the FTC still went after them.

They forgot one very important detail: the FTC and FDA require all e-cigarette advertising to contain a warning about the addictive nature of nicotine. That includes influencer promotions and product placement.

Oops.

The takeaway is that you must remember that all laws and regulations governing advertising apply to influencer marketing. That includes FDA warnings, state-mandated warnings, FTC regulations, and the Lanham Act (which allows companies to sue if rival advertising disparages their brands or products).


Good News About the FTC’s Endorsement Guidelines

In 2018 and 2019, Influencer Marketing Hub estimated that somewhere between 25% and 30% of influencers were instructed by brand promoters not to disclose their material connection to the product.

It’s certainly a dodgy practice, but it seems to make sense. After all, consumers are more likely to be influenced by an endorsement they believe is voluntary and unsolicited, right?

Actually, wrong.

We now suspect, thanks to multi-year research done by Alice Audrezet of the Institut Supérieur de Gestion, Paris, that material connection disclosures no longer significantly affect responses to influencer marketing. In fact, in the crucial under-25 consumer demographic, material connection disclosures have no effect on depressing response. They even may actually increase response.

How’s that? Part of the reason, according to Audrezet, is that almost 90% of younger consumers consider any brand placement or promotion by a well-known influencer to be paid for even in the absence of a disclosure. It could be that young consumers trust the influencer and brand more because they’re upfront about the material connection.

More importantly, younger consumers value influencers because they’re influencers. Many aspire to be influencers themselves. As much as follower numbers, paid promotions are a prominent signal of an influencer’s social media status. As a result, younger consumers tend to regard them more seriously than voluntary endorsements.

In fact, brand marketers are now facing the opposite problem. In the crucial under-25 consumer demographic, social media wannabes are pretending to be paid to promote brands. Crunching the market numbers used by Forbes and The Atlantic, up to half of all material connection disclosures on social media are probably faked!

The good news is that as the FTC cracks down on material connection disclosures, these disclosures are rapidly becoming valuable social media assets. In that sense, the problem, it seems, is quickly solving itself.

Better Marketing

Advice & case studies

Dave Davies

Written by

I’m a father, husband and an SEO. I run Beanstalk Internet Marketing with my wife Mary and if I’m not there I’m probably in Whistler. :)

Better Marketing

Advice & case studies

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade