From radio personalities to podcasters, endorsement ads have grown into a lucrative sales tool for audio companies. But proposed changes to the Federal Trade Commission guidelines for endorsement ads designed to make the fact they are a paid mention more “clear and conspicuous” could be just the start to an FTC that takes a tougher line with marketers.
“I think the FTC is going to be more aggressive going up against influencers. I think they think that’s one way to chill some of the aggressive behavior that they are seeing,” said attorney Len Gordon, who oversees the Advertising and Marketing Group at the law firm Venable. During a webinar on Tuesday (June 28), he said the FTC expects ad agencies and other intermediaries between the brand and the influencer would also likely be under additional scrutiny as it expects them to do a better job of policing the ad format.
“Obvious claims are going to be the ones that get the FTC’s attention, and especially when a lot of clients are relying on ad agencies or consultants to manage the relationship between the marketer and the endorsers,” said Gordon. “That includes making sure the endorsers are making disclosures about compensation and other material connections – when they don’t do that, it is when you’ll see intermediaries getting tagged.”
Venable regulation attorney Alex Megaris said the proposed changes are in response to situations in the past where both sides pointed at the other, with neither the client nor the ad agency taking responsibility and leaving the FTC unsure who to go after.
“The FTC was getting tired of playing hot potato and blaming each other for not knowing the responsibilities,” said Megaris. She said that was even a bigger problem on social media where influencers do not always write their own posts. “The FTC is now saying everyone can be responsible,” she said.
Among the revisions under consideration would be a more explicit rule that specifies whatever format the endorsement comes in, it would have to feature the disclosure too. For audio ads on radio or in podcasts, that means the disclosure would need to be in the ad’s audible portion.
“If the triggering claim is visual, the disclosure needs to be made in the visible portion of the endorsement. And if the claim is audible, at a minimum the disclosure should be made in the audible portion,” said Gordon. “Not surprisingly, the FTC thinks doing both is best, but that’s a decision the advertiser is going to have to make depending on real estate and the media.”
In a shift that would have a bigger impact on Spanish-language broadcasters, the proposed disclosures would also need to be in the same language as the endorsement. “If your ad is in Spanish, the disclaimer needs to be in Spanish – you can’t make the claim in something other than English and have the disclosure in English,” Gordon said. The FTC rules would also be more explicitly guided by the idea that someone in the targeted group should understand it is a paid endorsement, with special attention placed on seniors and children.
The FTC voted last month to move forward with the update of its Endorsement Guides, first issued in 1980 and last amended in 2009. But so far the actual rulemaking document has not been released, with the comment filing window not opening until it appears in the Federal Register.
It’s a little curious -- perhaps there are further revisions, perhaps they are thinking about doing something else,” said Gordon. He said the arrival of recently confirmed FTC Commissioner Alvaro Bedoya may also be upending the timeline. “It’s odd given the amount of time they took putting it together and creating the updated guides that they are now waiting almost two months to put it in the Federal Register,” Gordon said. “The longer that it gets, the more suspicious you get that there’s going to be something else that happens, whether they try to turn this into a rulemaking procedure or make some significant revisions to the guides.”
The revisions come as the FTC believes the global influencer marketing industry is set to grow to roughly $16.4 billion in 2022. And more than three-quarters of brand marketers intend to dedicate a budget to influencer marketing this year.