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November 16, 2017

Legal considerations for influencer marketing partnerships

Written by Investis Digital

Influencer partnerships have become a hot topic in the digital marketing landscape. With so many consumers actively engaged in a host of online social media channels — from LinkedIn to Instagram and everything in between — savvy marketers and brands have discovered that exerting influence with their audiences has become both more cost-effective and more powerful than ever before.

Influencer marketing in the 21st century 

What is influencer marketing? It's leveraging the personal impact of people — "influencers" — who have a significant following on whatever social media channel or channels reach a desired audience. While celebrities like Kim Kardashian, Justin Bieber and Katy Perry could certainly be described as influencers, many others are far from household names. The top influencers on YouTube, for instance, include such names as HolaSoyGerman, Jenna Marbles and Smosh, among others.


Have you heard of them? Probably not, unless you're a member of the niche audiences they speak to. However, what their audiences lack in size they make up for in engagement. That kind of fierce loyalty can be harnessed by brands looking to connect with audiences in authentic and effective ways.

The power of influencer partnerships 

This all started quite organically as marketers realized the power that those with large online audiences and loyal followings could have in terms of generating positive word-of-mouth, a feat that's long been pursued through traditional communication channels.


But the online world is different, and influencers have come up against cries of foul. The Federal Trade Commission (FTC) has taken notice, driven by its task of protecting consumers from false and misleading advertising. Influencers, believe the FTC, have the potential to offer just that — providing their support to products, causes and events through their social media activities without revealing that they're being compensated for these efforts. 

Influencer missteps

The issue of disclosure related to compensation is where the rubber meets the road for communicators seeking to use influencers to hawk their products and services. It can be costly to ignore this requirement, as companies like Lord & Taylor, Warner Bros. and Sony have found after reaching settlements with the FTC.


In May 2017, a scandal arose over the use of a number of influencers to help promote the infamously disastrous Fyre Festival, a luxury music weekend in the Bahamas. According to a story in Vice, Kendall Jenner was paid $250,000 to post an Instagram photo promoting the event.


Another recent FTC action, its first levied against individual online influencers, involved two personalities known on YouTube as TmarTn and Syndicate, who promoted an online gambling site without revealing that they owned the gambling company.


The bottom line for communicators: If you're compensating — in any way — an individual or organization to say positive things about your company or its products or services, that relationship must be fully disclosed. 

Best practices in influencer partnerships 

While seeking word-of-mouth recommendations is still a legitimate best practice for individuals and organizations, when influencer partnerships extend beyond organic comments to paid relationships, certain rules and guidelines must be followed. When in doubt, always consult your company's legal counsel.


In a letter sent out to more than 90 influencers and marketers in March 2017, the FTC outlines what these rules are. Key among them:

  • If there is a "material connection" between an influencer and a brand, product or service, that relationship must be "clearly and conspicuously disclosed" in endorsements.
  • Disclosures should be articulated in "unambiguous language" and should "stand out."
  • Consumers must be able to see the disclosure clearly without having to search for it.

While this specific letter addressed infractions that occurred on Instagram, FTC regulations apply to all paid endorsements, including payment in the form of product samples. The FTC's Endorsement Guidelines go into additional detail and provide a number of examples of influencer partnerships that cross the line.


At the end of the day, an easy way to remember the legal considerations of influencer partnerships is this simple rhyme: "If you pay, you have to say."


Download our  .futurology report to see why influencer marketing plays an increasingly important part of the marketing mix.

Linda Pophal, MA, SHRM-SCP is owner/CEO of Strategic Communications, LLC, and a marketing and communication strategist with expertise in strategic planning, PR/media relations, social media and SEO and corporate communications. Linda is the author of several books on marketing and business practices. Pophal is an accredited member of SHRM, IABC and the American Marketing Association.

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