Social media endorsements: How to pay influencers to endorse your brand

It’s becoming popular for companies to pay social media users with big followings to endorse their products or share content about their brand. It’s a great way to get your message out to a wider network of target customers in an authentic way.

But the Federal Trade Commission (FTC) is paying attention and enforcing rules that say you can’t do it without disclosing the relationship.

Recently, the FTC reached settlements with such brands as Lord & Taylor and Warner Bros. Home Entertainment over their failure to disclose such relationships.

In the Lord & Taylor case, the company paid influencers up to $4,000 for an endorsement without disclosing the relationship, in clear violation of the FTC rules.

However, in many situations it’s not quite as clear, such as when a business trades merchandise or a promise of future payment for an endorsement on Instagram. It’s also complicated when the social media influencers don’t have clear sponsorship agreements with the brand.

Still, the FTC asserts that consumers have a right to know whether the so-called influencer is commenting about a product of his or her own volition, or whether he or she was given the product for free in exchange for reviewing it.

In addition, the consumer advocacy group Public Citizen is raising awareness about potentially unfair advertising practices on social media and has been asking the FTC to pay closer attention to content from influencers, particularly on Instagram.

The group recently requested an FTC enforcement action against both paid influencers that fail to disclose and the brands that hired them in the first place.

Regardless of any action the FTC takes on that request, brands would be wise to disclose their relationships with social media influencers, no matter what the relationship is or what was exchanged.

To avoid an FTC violation, you must disclose any “material connection” between your brand and an influencer every time an endorsement is made. That includes payment, future payment, a new product preview, free products or anything else.

That can easily be done using a hashtag. The hashtag must be “clearly and conspicuously” presented, as defined by how consumers would understand the disclosure. For example, #ad or #advertisement or #sponsoredpost would likely meet the standard.

To be even more clear, be sure to put hashtags before a video or post instead of after, so they don’t get buried. A note of thanks to the company for the product isn’t enough without the hashtag disclosure.

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