Celebrity Endorsements and Social Media

If you follow any celebrities or sports stars on social media, you may have seen one of them endorsing or promoting a product. Just the other day, Katy Perry posted a photo of herself on Instagram, wearing a Prada outfit with the hashtag “#Prada.”

The fact that I follow Katy on Instagram may shock you, but here’s something even more shocking: did you know that Federal Trade Commission rules require celebrities and influencers to disclose their relationships with brands on social media? You may not be the only one to just learn that. The FTC recently sent out more than 90 letters to various celebrities, athletes, and other social media influencers, reminding them of their obligation to clearly disclose their relationships to brands when promoting or endorsing products on social media. When I look at that picture posted by Katy, I wonder whether Prada paid her to promote their products? Or did they give her the outfit for free? Is she just posting in Prada spontaneously? You can’t tell from her post.

The FTC has endorsement guidelines that apply to these situations. If there is a “material connection” between an endorser and an advertiser, they have to clearly and conspicuously disclose that connection, unless it is already clear from the context. A material connection is a connection that might affect the credibility that consumers give the endorsement. It can be a business or family relationship, a monetary payment, or a gift of free product. These guidelines don’t just apply to the celebrities like Katy Perry or Donald Trump; they also apply to the marketers like Prada. So if Katy wore that Prada outfit just because she loves how she looks and feels in Prada (and who doesn’t?), that’s one thing. But if Prada pays her to wear their outfits and post pictures on Instagram, then it’s not quite as compelling an endorsement. The same applies if Donald Trump tweets about how wonderful Ivanka’s fashion line is. She’s his daughter, so there’s a material connection that affects the amount of credibility we give to Trump’s tweet. On the other hand, in the specific case of Donald and Ivanka Trump, the family relationship is well known, so there may not be a need for an explicit disclosure.

In the letters, the FTC noted that in the case of Instagram posts, consumers may only see the first three lines of longer posts, unless they click the “more” button. According to the FTC, when making endorsements on Instagram, celebrities should disclose the material connection about the “more” button. The same general concept applies to other social media – Facebook, Snapchat, Twitter, etc.

It is common in these posts to provide multiple hashtags, generally at the end of a post. Putting a disclosure in such a location is not conspicuous enough. Also, some techniques influencers may use to disclose material connections may not be sufficient. For example, the FTC noted that consumers may not understand disclosures such as “#sp” or “Thanks [brand name].”

Consequently, brands and marketers should develop an “influencer policy” that provides guidelines to the various celebrities and other influencers that endorse their products on social media. The brands should try to agree in advance as to the disclosure that the influencer will make, rather than leave it up to the influencer’s discretion. Using a hashtag such as #ad or #advertisement is appropriate in cases where the brand has had input in the content. A hashtag such as #sponsor (rather than #sp) is appropriate in other cases. Also, the policy should require that disclosures be made at the top of a post, and be separate from long hashtag strings.

By taking a more proactive approach to how celebrities and influencers endorse products on social media, brands can minimize their liability for misleading endorsements. Are you paying attention, Katy?