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Federal Trade Commission setting stricter guildelines on paid celebrity posts that aren’t clear ads

The Federal Trade Commission has cracked down on celebrities and Internet personalities who may be posting or promoting a brand or product but omitting the fact that they are being paid to endorse the content or product.

celebrity branding

According to a Bloomberg news article, the FTC is putting more pressure on advertisers to comply with its Ad Practices Division rather than allowing the practice of endorsing a product without saying so.

Influential celebrities posting brand messages on their personal accounts may not be as authentic as it appears, a fact that has not gone unnoticed by the U.S. government. According to the article, the Federal Trade Commission is planning to get tougher on users who need to be clear when they're getting paid to promote something, and hashtags like #ad, #sp, #sponsored --common forms of identification-- are not always enough. The FTC is reportedly putting the onus on advertisers to make sure they comply, according to Michael Ostheimer , a deputy in the FTC’s Ad Practices Division who was quoted in the article. It's a move that could make the posts seem less authentic, reducing their impact.

“We’ve been interested in deceptive endorsements for decades and this is a new way in which they are appearing,” said Ostheimer. “We believe consumers put stock in endorsements and we want to make sure they are not being deceived."

The article notes that companies have been spending marketing dollars on social media endorsements, and part of the motivation to do so is that reaching consumers, especially milllennials, is increasingly difficult because of television’s waning marketing power. Social media is where marketing dollars are headed with brands already spending more than $255m on influencer marketing every month just on Instagram according to the article.

Some advertisers say influencer posts don’t deserve such careful disclosure, according to the article and some Instagram stars and YouTubers often only work with the brands that they genuinely like and use.

Yet, the FTC states that in this case, a consumer should be informed in some way if the endorser is compensated at some level for promoting a brand.

The FTC has already changed some practices in the industry by bringing recent lawsuits. “For a lot of years it was really really loose, and you could get away with a lot more,” Nick Cicero, the CEO of influencer marketing agency Delmondo, said. "Now he’s telling all of his clients to use the hashtag #ad."

The FTC has been speaking out with online webinars and guides, speeches and engaging trade associations according to the Bloomberg story. “We’re not calling up each individual ad agency,” Ostheimer said. It will also continue to go after the advertisers with legal action. While it hasn’t charged an influencer for deceptive advertising, it hasn’t ruled that out, the article notes.

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