FTC spanks Warner Brothers for failure to disclose social influencer payments

You’d think that US brands and companies would know by now that if they pay “influencers” to promote a product and don’t disclose that fact, the Federal Trade Commission (FTC) will come after them. This happened earlier this year with gaming network Machinima and retailer Lord & Taylor, and now it has happened to Warner Bros. Home Entertainment (Warner).

Machinima failed to disclose that it had paid two YouTube gaming personalities up to $30,000 to produce videos promoting Xbox One and various games. The videos didn’t reveal that they were essentially ads and purported to be reviews, thus potentially deceiving consumers.

Lord & Taylor paid fashion influencers on Instagram to promote a specific dress, which was part of a new fashion line. The paid-promotional nature of the posts was not revealed.

As a consequence of these failures, the retailer and Machinima had to enter into monitoring and review programs to prevent similarly deceptive campaigns in the future.

Now, the FTC is spanking and shaming Warner in connection with failure to properly disclose influencer promotion in association with a video game, “Middle Earth: Shadow of Mordor.” Like the others before it, Warner must ensure that in the future it does not allow the misrepresentation of advertising as “objective, independent opinions of video game enthusiasts or influencers.”

According to the FTC settlement:

[T]he order specifies the minimum steps that Warner Bros., or any entity it hires to conduct an influencer campaign, must take to ensure that future campaigns comply with the terms of the order. These steps include educating influencers regarding sponsorship disclosures, monitoring sponsored influencer videos for compliance, and, under certain circumstances, terminating or withholding payment from influencers or ad agencies for non-compliance.

Influencer campaigns are a form of native advertising, and they’re often appealing to brands, not just because of large influencer audiences, but because content appears authentic and “organic” — the exact opposite of advertising. The influencers confer their credibility, authority and goodwill upon the product. Ad-related disclosures, by definition, dampen or diminish the impact of these campaigns.

Ad blocking and consumer resistance to “traditional” digital advertising is driving more brands into native and content marketing. With these ongoing efforts, the FTC is signaling that it will continue to strongly police native and influencer campaigns.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.