Social Media Marketing: Cool, Creative, and Confusing for Consumers

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Earlier this year, somebody at the Food and Drug Administration was tasked with reviewing Kim Kardashian’s social media posts to determine whether they were false or misleading. The post at issue (since removed) featured Kardashian holding a pill bottle with the caption, “my #morningsickness has been pretty bad…(my doctor) prescribed me  #Diclegis, I felt a lot better and most importantly, it’s been studied and there was no increased risk to the baby.”[1]  The post garnered close to 500,000 ‘likes’ and resulted in a 500 percent increase in digital buzz for Diclegis.[2]

The FDA concluded that the post amounted to false and misleading advertising because it didn’t contain any of the relevant risk information that is required for drug ads (these disclosures typically take the form of dense small print accompanying a magazine ad or a breathless recitation of risks accompanying a commercial on TV).[3] Shortly thereafter, Kardashian posted a #CorrectiveAd outlining the risks, which got another 400,000 ‘likes.’

Social media has given rise to new ways for companies to reach consumers. Unfortunately, there seems to be some confusion about whether online endorsements are subject to the same advertising rules as other mediums. The Federal Trade Commission has made its position clear: the standards governing advertising “didn’t change when marketing moved to social media.”[4]

The FTC maintains that if there is a material connection between a marketer and an endorser, it must be disclosed.[5] The FTC’s position is that whenever a company (or advertiser) gives somebody something of value to mention a product, the transaction is governed by advertising law and the relationship must be disclosed.[6]

But what if the ‘something of value’ is de minimis, like a bottle of shampoo? What if the ‘something of value’ is given retroactively? Or what if that ‘something of value’ is never guaranteed to begin with?

For example, imagine that you are a budding fitness blogger; you happen to know that your successful fitness-blogging friend was sent a box of free, high-end athletic wear after he posted a photo of himself wearing the brand and the photo went viral. You decide to make your own post about how much you like this particular brand in the hopes that your post gets noticed and the company also sends you a box of free gear. The post you make isn’t made in exchange for something of value, but it is motivated by a desire to get noticed and rewarded by the company, even if the reward is not guaranteed.

Of course, it may not be fair or practicable to hold the company responsible for the subjective motivations underlying your post; but there does appear to be a potential loophole here. If a company in the blogging community is anecdotally known for rewarding bloggers for endorsing their product, an incentive for people to endorse the product exists even if no formal agreement is in place. In other words, a company could essentially sidestep the disclosure requirements by rewarding certain posts after they have been made and letting the de facto incentive spread through word-of-mouth.

These issues arise in other contexts as well. A few months ago, I noticed that many of my friends were eating at a new restaurant in town. I noticed because I would see one to three posts per week that stated my social media friends were at the restaurant. While researching the menu online, I saw that the restaurant was running a promotion: if you ‘checked-in’ to the restaurant on social media (in other words, made a post that you were at the restaurant), you got a free appetizer. Were my social media friends endorsers within the FTC’s definition? They certainly received something of value in exchange for mentioning the company. But were they advertising? I’m sure I wasn’t the only person enticed by the perception that this restaurant was popular with my friends.

Another trend in advertising is sweepstakes that encourage consumers to post about a company for a chance to win a prize. For example, one online retailer incentivizes consumers to post its clothing, shoes, and accessories by running a weekly contest that awards the person with the best photo a $200 gift card.[7]  Another retailer ran a brilliant contest around the holiday season where customers were encouraged to post wish lists of what they wanted from the store for a chance to win those items.[8]

The FTC has stated that it is appropriate for consumers to make a disclosure when they posting about a product or brand in order to be entered into a sweepstakes, but it’s unclear whether companies have any responsibility to police contest entries for these disclosures.[9]

These examples highlight precisely why social media is such a valuable (and potentially dangerous) marketing tool; there isn’t always a clear line between user-generated content and advertising. It’s exciting to see the consumer experience become more interactive and democratized but it’s important for advertisers and endorsers to be mindful of making appropriate disclosures and preserving truth-in-advertising.

I often find myself wondering whether my friends are posting of their own volition or because they are getting (or hoping to get) something for it. Recently, I was grateful – and amused – to see a short, clarifying note accompanying a friend’s check-in at a nightclub: “only checking in so I can get a free bottle of water.”

[1] Kim Kardashian West’s Latest Endorsement Raises a Few Eyebrows, Anna Almendrala, Huffington Post, July 20, 2015, http://www.huffingtonpost.com/entry/kim-kardashian-wests-latest-endorsement-raises-a-few-eyebrows_55ad3a65e4b0d2ded39f9205

[2] FDA Rebukes Kim Kardashian for Morning-Sickness Drug Ad on Instagram, Christopher Heine, AdWeek, August 11, 2015, http://www.adweek.com/news/technology/fda-rebukes-kim-kardashian-morning-sickness-drug-ad-instagram-166348

[3] Department of Health and Human Services, Warning Letter, Addressed to Eric Gervais of Duchesnay, Inc., August 7, 2015, Reference ID: 3803443.

[4] Mything the Point: 6 (OK, maybe 7) Myths about Endorsements, Lesley Fair, FTC Business Blog, September 10, 2015, https://www.ftc.gov/news-events/blogs/business-blog/2015/09/mything-point-6-ok-maybe-7-myths-about-endorsements

[5] Venable LLP has published a comprehensive guide on social media marketing and its one of the best resources I came across during my search: When Marketing Through Social Media, Legal Risks Can Go Viral, Melissa Landau Steinman and Mikhia Hawkins, May 2010, https://www.venable.com/files/Publication/b4f467b9-0666-4b36-b021-351540962d65/Presentation/PublicationAttachment/019f4e5f-d6f8-4eeb-af43-40a4323b9ff1/Social_Media_white_paper.pdf

[6] Guides Concerning Use of Endorsements and Testimonials in Advertising, 16 C.F.R. § 255 (2009)

[7] In case you are interested, it’s Lulu’s.

[8] The people at VS Pink are geniuses.

[9] The FTC’S Endorsement Guides: What People Are Asking, FTC Business Center Guidance, May 2015, https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking


About the Authors

Emma Kazaryan

Emma is an associate in the firm's litigation and employment practice groups.

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