US/UK Regulators Agree: Social Media Marketing Must Be Transparent

You Say “Obviously Identifiable,” I Say “Clear And Conspicuous”

“Obviously identifiable” is the phrase used by the United Kingdom’s Advertising Standards Authority (ASA) to set the standard for how brands and their marketers must distinguish to audiences “marketing communications.” In the United States, a parallel body to the ASA, known as the Federal Trade Commission (FTC), uses a similar phrase to explain its advertising disclosure standard: “clear and conspicuous” “from the perspective of a reasonable consumer.” Both authorities have made it clear in their guidelines and investigatory actions that the requirement of transparency applies whether the marketing content is in traditional media – or in a tweet, a post or a pin.

The FTC

The FTC is a U.S. federal agency with a broad regulatory mission to “prevent business practices that are anticompetitive or deceptive or unfair to consumers.” It has called itself “the nation’s consumer protection agency.” In 2009, it expanded it advertising guidance to include social media marketing examples. See, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising. In 2013, it expanded its guidance with its .comDisclosures document elaborating in great detail on how disclosures should be made in digital advertising.

The ASA

The ASA, in contrast to the FTC, is an “independent regulator” of advertising, not a governmental authority. In 2010, the responsibilities of the ASA were officially expanded to include social media advertising.

The ASA notes that it relies much on the persuasive power of “bad publicity” to bring compliance with its decisions, though it can resort to other sanctions to inspire compliance with its rulings as well.

Yes, US and UK Regulators Tweet!

Both regulatory authorities can be found on Twitter: @ASA_UK and @FTC.

Cole Haan’s #WanderingSole Contest Wanders Too Far For The FTC

In 2014, the FTC conducted an investigation into whether Cole Haan, Inc., a major retailer of shoes and bags, violated a requirement under the FTC Act that compels “the disclosure of a material connection between a marketer and an endorser when their relationship is not otherwise apparent from the context of the communication that contains the endorsement”.

The marketing campaign that caught the FTC’s attention was a social media contest on Pinterest that invited consumers to create a “board” entitled “Wandering Sole”, with five shoe images from Cole Haan’s own board and five images of the contestant’s “favorite places to wander,” along with the hashtag #WanderingSole in each pin description. The most creative entrant was to receive $1,000 shopping spree.

The FTC’s Problem With Cole Haan’s Pinterest Contest?

A Lack Of Transparency.

In particular, the FTC was “concerned that Cole Haan did not instruct contestants to label their pins and Pinterest boards to make it clear that they had pinned Cole Haan products as part of a contest”. The FTC concluded that the required #WanderingSole hashtag was simply not enough to alert other viewers of the pins that they were being posted as part of a contest. From a regulatory perspective, the absence of such transparency would be likely to mislead other viewers of the pins.

The FTC Takes Cole Haan’s Contest In Stride

Taking Cole Haan’s contest in stride, the FTC decided not to recommend an enforcement action against the brand, noting that the FTC had not previously addressed the issue of whether the entry into a contest is a form of “material connection” requiring disclosure and whether a “pin” could be deemed an endorsement. It further noted that the scope of the contest was small and Cole Haan agreed to adopt a social media policy addressing the FTC’s concerns and to take steps to “monitor social media influencers’ compliance” with the duty to “disclose material connections when endorsing its products”.

Oreo Cookies Takes A Licking From The ASA

In November of 2014, the ASA issued an adjudication against Mondelez UK Ltd, the owner of the Oreo cookies brand, for a YouTube social media influencer campaign that had invited influential YouTube vloggers (people who create and post videos online) to post specific content about a contest to see who could lick the cream from an Oreo cookie the fastest.

The ASA’s Problem With Oreos’ YouTube Contest?

A Lack Of Transparency.

In its ruling, the ASA cited five YouTube videos from “vloggers” (i.e., people who create and post videos online) that failed to meet the ASA’s standard of being “obviously identifiable” as “marketing communications”.

Mondelez UK Ltd confirmed that the vloggers were paid to participate in their campaign, but said that it had thought that the ASA’s disclosure requirements would be met by variations of disclosure statement the vloggers included in their videos: “Thanks to Oreo for helping make this video happen!”

The ASA cited two problems with Oreos vlogger disclosures: (1) they did not “clearly indicate that there was a commercial relationship between the advertiser and the vloggers” and (2) the disclosures did not appear “before consumer engagement with the material.” The ASA instructed Mondelez UK Ltd that the videos “must not appear again in their current form”.

Truth In Advertising Is All About Transparency

Businesses leaders and marketers will often be heard to lament the difficulty of staying on top of evolving social media law. Although such law is in a state of evolution, the core of it, whether in the US or UK, is familiar to marketers: marketing communications must be obvious as such to prevent consumers from being misled. This has long been the standard in traditional media and it remains a guiding principle in new media.

Takeaways:

Giving an endorsement in social media while not disclosing that a sponsored relationship exists between the brand and endorser is misleading – and likely unlawful.
Entry into a contest to receive a “significant prize” in exchange for posting or pinning or tweeting triggers a “material connection” that requires disclosure.
If you are asking consumers to pin or post or tweet as part of a contest, require that they disclose somewhere in the pin or post or tweet that the content is part of a contest.
Disclosures of material relationships between endorsers and brands should be “obviously identifiable / clear and conspicuous” and appear before consumers are asked to engage with the sponsored content.
Have reasonable procedures in place to monitor incentivized bloggers for compliance with their duty to disclose material connections.
Adopt a social media policy that addresses the requirement of transparency in social media marketing communications.
Both brands and bloggers risk reputational damage by not being transparent in their marketing campaigns.
Follow the FTC and ASA on Twitter to stay abreast of their latest rulings! Read more here

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